Critical Analysis On Siemens Case Study
This assignment is based on the two Siemens case studies in your book “Exploring Strategy – Text and cases”, 11th edition, by Johnson, Whittington, Scholes, Angwin & Regnér, published by Pearson (ISBN 978-1-292-14512-9):
• “Siemens A: exploring the future”, pages 557 – 562
• “Siemens B: implementing the strategy”, pages 744 - 749
Additional and useful sources of information are:
1. Analyse which success criteria for evaluating strategic options appear to have been used.
2. Identify which type(s) of the different strategy development processes was/were used.
3. Argue if structure and systems were used to reinforce the Vision 2020 strategy.
4. Argue whether the change levers used were appropriate and sufficient.
5. Analyse which type(s) of strategic change Siemens went through.
6. If the CEO would ask you which strategists he should have involved in the subjects digitalisation, creating an ownership culture, and implementing the strategy, what would you advise him?
As per the given Siemens case study, the Siemens is the giant company deals majorly with value chain electrification also dealing in several other fields such as medical, technology, power and many others. The success criteria that can be identified through evaluation of strategic options can be developed through several methods such as Porter's five forces that identify the insight knowledge of the firm in performing particular business operations in the global market. SWOT analysis and PESTEL analysis are other sources that can be useful to analyze different business aspects of the firm and its appropriateness. In the Siemens case study, the company presents various types of the strategic development process such as strategic leadership for the leaders provide efficient leadership skills in integrating all the working members and motivating to enhance their performances. Moreover, more strategic planning related to the company is discussed in the Siemens case study analysis. Siemens have set a vision and structure to achieve that is subjected to acquire a certain change in the management and functional process of the firm. There can be several identifications of levers that are associated with strategic change defined in several steps of Johan Kotter’s change model. Also, the firm has to undergo several changes in its business and management activities where proper suggestion in appointing of an efficient digital strategist is discussed in the Siemens case study analysis.
Success criteria for evaluating strategic options
Suitability, feasibility and acceptability can be witnessed in the Siemens case study to be used to analyze strategic analysis for the firm. To analyze the microenvironment of the company PESTEL and Porter's five forces followed by the through SWOT analysis can be depicted in the Siemens case study (Scholes et al. 2014).
The electrical sector that is electrical products are majorly seen as a primary sector the Siemens deals with, therefore, porters five forces can be used to analyze the entire electrical manufacturing and services industries based on five points.
- Rivalry: it shows the level of competition is quite tough as many different big industries are associated with them.
- The bargaining of customers: the bargaining accessibility for the customers is very low as most of the product manufactured is highly specified products that are purchased by big firms and government-based organizations.
- The bargaining of suppliers: the suppliers also experiences limited accessibility of bargaining.
- New entrant’s threats: to enter in this particular field of manufacturing and services the company needs good credibility along with heavy investment requirement. Therefore, the entrance for new companies is obstructed.
- Substitutes threats: with the advancement in technology smaller companies and firms have enrolled themselves in these market enforced with reduced cost concerning any small limited field of production.
Moreover, PESTEL analysis that includes political, economic, social, technological, environmental and legal related terms. The Siemens must analyze the political aspects research for the various things like the countries where it may find difficulties in the implementation process, evaluation of potential risk before initiating the market, communities influence over-trading. As different countries work with a different perspective of political laws similarly, economic circumstances remain fluctuated for many countries that need to be considered for the Siemens. Considering currency, exchange rates remain to change from time to time. Along with the social and cultural difference, it is very tough to survive and remain in the business due to uncertain contradiction and collapses. Although Siemens acquire great advantage of technological aspects however, in a few countries it lacks due to higher prices of the equipment as the government cannot afford to adopt that equipment. As per the readings of the Siemens case study, with the increasing concern of global warming and environmental factors, many countries are adopting environment-friendly products where Siemens can take advantage through manufacturing such products and services. Moreover, there is a need to adopt legal norms and rules for appropriate regulation of the firm.
SWOT analysis for Siemens can be an effective approach towards success criteria in the evaluation of strategic options. The strength of the firm like a strong brand value in the market, presenting optimized quality products stability in the financial performance evaluation depicts its efficiency. Whereas with certain weaknesses like developing products or innovating it in limited budgets, weak cash flow of the company can restrict the foreign investors to invest and many other issues like downgraded credibility can be seen. Moreover, it can witness opportunities of acquiring small companies and merge them. Also, environment-friendly products manufactured by Siemens can be in great demand. Furthermore, it can also experience certain threats like regulatory reforms from the regulatory boards that may limit, restrict or change the process of manufacturing that could come as problematic cause for Siemens (Sammut?Bonnici and Galea 2015).
Different types of the strategic development process
The strategic development process can be termed as the planning or identification of the most prominent and appropriate option that can be taken in an organization for its betterment (Aaltola 2018). There can be several strategic development processes used in the Siemens case study as given below:
- Strategic leadership: leadership is a skill that needs to be occupied by the managers and the higher authorities so that they might efficiently use their workforce. Strategic leadership must be utilized for managing the employees or the working team in a working environment and motivate them thoroughly to work more passionately and deliberately. Encouraging and motivating employees are the part of strategic leadership which ensures improved working capacity and performance of the workers (Samimi, et al. 2020).
- Strategic planning: it can be referred to as outlining of essential strategic planning and actions that may include documentation, generating guidelines, business and corporate level planning with financial targets. These might include consultation with the expert team of all the related teams such as marketing team, evaluation of the global development of the market and set a goal for another five years for Siemens (Cardoso et al. 2018).
- After the strategic planning, the growth activities of the firm is analyzed and planning is prepared for the effective market change to enhance and upscale the performance of the firm.
- Divisional strategic plan: Further, these financial and strategic plans are merged and compared at the business level with the help of divisional strategists who are also responsible to make these into coordination to perform divisional strategic planning.
- The department of corporate strategy then finally meets up the alignment between divisional strategic planning and the requirement of the growth plans considering the countries that need it.
- The finalization of the planning is done with the budget proposal that is given by the CEOs of different units to propose a review to the respective management board.
- The final stage of planning refers to the managing board of Siemen's group.
Structure and vision
The structure and vision of the Siemens changed a lot that has helped to reinforce the new strategic vision for 2020. Several changes and implementations in the firm demonstrate the reinforcement authenticity of the company. The structure of the company distributed into three forms considering Gas and Power, Smart Infrastructure and digital industries. It is evident from the Siemens case study that the managerial change in the company like accessing more freedom of entrepreneurship to the respective business accelerated the growth and achieved the targets of margin and revenue. Introduction of integrated that is internet-based devices brought a revolutionary change in the expansion of the digitization business. Moreover, these considerable changes made the company to battle back in the competition. The main intention of the change was to analyze and strengthen the essential core factors that could bring a revolutionary benefit and change in the firm. More stress on the value chain of electrification and business process was one of the prominent strategies to come out with. Also, there was a need to explore more in new fields rather luring for more opportunities. The improvement in market share, innovation techniques and enhancing the productivity of the firm can be considered to be a reinforced visionary strategic approach for the Siemens (Tarkian 2019).
The divided sectors consist of separate finance and executive chief officers that identified trends and megatrends that could lead to the future growth of the company.
Change of levers
The change levers that are used in the given Siemens case study demonstrate the Johan Kotter’s change model steps which include eight steps of change that must be adhered by the company to acquire an effective change in it. The first step includes developing urgency that deals all about creating such an environment in a workplace where discussions could take place across the organization facilitating the working employees to interact among themselves. Moreover, such steps are sufficient with context to change in levers and could help the organization in solving multiple issues in a very short period. As many of the workers are capable on their expert knowledge and establishing discussion forums could enable them to decide the effective solutions to align the organization in an appropriate direction (Brock, Peak and Bunch 2019).
Step two based on the Siemens case study deals with forming a powerful coalition with the other competent experts. Moreover, in this coalition provides backbone support at the time of change with efficient knowledge and helpful suggestions but are not sufficient to analyze the change whereas step three defines appropriate vision to lead the change that could sum up the entire organization which also includes less-skilled workers.
Step four is associated with developing an effective communication channel throughout the organization. That is appropriate as well as sufficient to analyze the change as good and effective communication incorporates of removing obstacles that refer to the identification of all the obstacles and barriers that come in between of changing of the path. The other steps involving support for the workers in case of failure that can be done through awards and motivation, maintaining the change for a longer duration are appropriate but not sufficient address the overall change of the levers as other factors also compels to bring out the change of different levers considering emotional changes.
What are the types of changes that company had to face as given in the Siemens case study?
Siemens had undergone several trends and megatrends change. The firm experienced five major changes that can be summarized as demographic, climatic, urbanization, globalization and digital transformation. Infrastructure investment considering climatic change, alternate energy sources, decentralized supply and power generation. There were identified needs to develop renewable energy storage that could benefit local power generation. Moreover, the change in the medical division can also be witnessed as the rise of interconnected devices made the firm to propagate and process the activities remotely with reduced cost and time the functioning of the firm shortened to these internet-connected devices. Digital transformation can also be termed as the major change for the Siemens where the firm now can deploy more decentralized based services that proved to be more efficient and reliable. Examples from Riyadh that benefited the firm with 1.6 billion euro with an increased energy saving of approx. 50 per cent proved the change to be beneficial. Moreover, using the advanced IT technology developing of software that could trace the activities of machines and provide accurate and precise data proved to save the customer's time up to 80 per cent (Walther 2018).
Recommendation for strategist
I would suggest the CEO of Siemens to hire efficient strategist that could provide an appropriate and efficient pathway and must acquire excellent implementation skills. As a strategist must identify the overall needs and requirements that will lead the firm into success by achieving the set goals and objectives of the firm, executing the plan in an organized and aligned way. Moreover, the digital strategist must have the capability to integrate the goals of the brand, services or the products with the need and objective of the consumer of the firm. Moreover, the digital strategist must be capable to handle clients and make feasible solutions. Ownership culture for the strategist makes them more self-dependent in their work performance that is guided by their values and ethics.
Based on the above-discussed Siemens case study there can be a conclusion draws that strategy is an eminent part of business process for the industries and companies where there is a need to implement it in a certain point of the business process. Considering the given Siemens case study it is evident that there is a need to implement strategic change in overall business processing of the firm. Moreover, different types of change considering the change levers must be implemented to adapt strategic reinforcement in the vision of future trends in leading the firm in the proper direction.
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