Siemens' Case Study Paper Example

Published: 2023-04-30
Siemens' Case Study Paper Example
Type of paper:  Essay
Categories:  Company Strategic management Business strategy
Pages: 6
Wordcount: 1649 words
14 min read


Siemens is a German multinational company founded in late 1847 by Johann Halske and Werner Siemens. The firm is a public listed company headquartered in Munich city, Germany. It has been the top leading firm in electronics and electrical engineering for more than the past 150 years. The company profile reveals that the firm managed to employ approximately 400 000 employees in over 1 600 regions around the globe in the fiscal year 2007. Between 1998 and 2007, there have been increasing revenues and the company's profit, leading to an accumulation of EUR 72.45 billion in revenue and EUR4.04 billion net income. In the fiscal year ended on 30th September 2007, the company's market capitalization amounted to EUR88.15 billion. Therefore the case study is essential as it encompasses the firm's corporate strategy, the structure of top+ program, financial and strategic control, and business analysis of Siemen's performance.

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Siemens Corporate Level Strategy

In every enterprise, there are competitors, and only an effective corporate strategy can permit the business to succeed more than others. An organization not only needs vision and mission but a corporate strategy level to be more efficient (Mukhezakule & Tefera, 2019). For instance, Siemens influenced its strategic market decisions that aimed at creating superior value in the overall performance of the firm. In the period between 1998 and 2007, corporate strategy for the company created towards horizontal and vertical simultaneous optimization concepts. Siemens designed parallel optimization with the main aim of exploiting synergies within operating enterprises. Initiatives like Siemens one strengthen this concept. While vertical optimization concept creation aimed at leveraging the firm capabilities and managing tools to one operating group to achieve synergy. It comprised operational success and an active management portfolio in the field of innovation, competitiveness, and customer focus. These corporate strategies of the firm got executed with the assistance of corporate programs, including diversification.

Diversification in business means expanding the enterprise through multiple industries operation or operating under several geographical markets. Corporate diversification influences business performance (Tobiasen, 2014). Diversified industries vary depending on their diversification level. Low diversification level is a practice embarrassed by a company that operates mainly on dominant or single business ("Diversification: Definition, Levels, Strategy, Risks, Examples," 2020). For instance, between 1998 and 2007, Siemens adjusted its business portfolio that created several operating ground such as Osram, SBT (Siemens Building Technologies, and Power Generation. These working groups, together with other regional companies of about 180 within five regions, including Germany, America, Europe, Africa, and Asia-Pacific, formed a matrix organizational structure. The firm's matrix organizational structure had advantages and disadvantages.

Advantages and Disadvantage of Company's Matrix Organizational Structure

Application this structure has both benefits and challenges. These emanate from human resources, implementation, and management of the matrix organizational structure.

Firms like Siemens shared their joint resources to deliver standard quality products cost-effectively. In holding such a situation, the matrix organizational structure had to adapt in the 1960s. A matrix structure is an overlap between the project and the functional hierarchy (Schnetler, Steyn & Van-Staden, 2015). Matrix structure creates lateral communication medium that, in turn, strengthen organizational interaction. Siemen firm had some influence on central senior management and corporate functions that lead to profit. Also, the projects and events in the firm became coordinated around all the functional departmental units, and the resources at Siemens are shared, resulting in inadequate utilization of resources. Finally, the development and growth of workers and managers is another advantage due to the responsibilities given to each staff member.

The groups to leaders were members of the firm's management board. However, some strategic measures that affected how the operation of the enterprise existed. For instance, the central entity controlled operational success initiatives that were compulsory to the entire operating groups. The strategy is incontinence to some working groups, and thus it presented the disadvantage of matrix organizational structure. Siemens firm is a large firm with high complexity, which can make it ineffective. Also, it is quite expensive to sustain a sizeable standard structure due to a large number of departmental units.

Organizational Design Support to Siemens Corporate Level of Strategy

The organizational design represents a flowing methodology that defines dysfunctional elements of organizational structure, workflow, and procedures and realigns them according to business goals or situations. The process aims at improving business technical and customer relationships through developing plans that intervene in new changes (Allen, 2020). The business goal of Siemens aimed at creating superior value for the overall firm enterprise. The horizontal and vertical corporate strategy levels strengthen the firm's decision. Hence, it contributed to global development involving corporate programs and support to operational groups, which is support from organizational design. This organizational design not only leads to the implementation of many corporate projects but also acted as the talent pool for anticipated leadership functions at Siemens Company.

How the Company Structured the Top+ Program

For the management of innovations and enterprise excellent, the giant in Electrical Engineering Company initiated a more systematic and structured approach in the early 1990s. Chief Executive Office Von Pierer and senior management members started the top program. In 1998, the optimized time process was of great importance for the entire firm, and thus Siemens leadership decided to use the program under the revised name top+ program.

It began as the productivity advancement initiative and then slowly developed into a vital comprehensive management development program. The program supervision was directly for the firm's managing board staff. While top+ excellence, the operation was due to the high degree of constant monitoring by Siemens senior management team; the establishment and launching of the program happened in September 2000 by Gunter Wilhelm. He was the head of A&D (automation & drives) and I&S (Industrial solution & services). Due to the program's primary aim to achieve the high operational level that exceeded across enterprise portfolio, it was structured both in the group and firm-level. In 2007, a team group of seven individuals coordinated the program in the firm corporate center. The coordination of three pillars of this program, including customer focus, innovation, and globally competitive, was assigned and coordinated by an individual. While central and other organizational units responded to the implementation of the top+ program, it initially was independent and, over time, played an integral part in the management of Siemens firm.

Oversight and Coordination of the Business Excellence Initiative

For an excellent business initiative, there is a group or individual responsible for its control and coordination. For instance, senior management and seven staff members of the Siemens firm structured the business program at the firm and group level. They later coordinated the program under the corporate level.

The team had its leader who reported directly to the firm managing board about overseeing the top+ program. Besides, several organizational units involved in the program implementation, including the firm in house consultancy and SMC (Siemens Management Consulting), which introduced approximately 160 consultants at the end of the fiscal year 2007. Team of 2-6 SMC consultants had at least a single effort to perform. Due to previous success and the need for business excellence methods, management resolved to continue the top program initiative. Hence, at the end of 2000, they created margin targets for groups that were achieved by 2003.

How Management Innovation Activity Facilitate Achievement of Siemens Corporate Objective

The function of innovation activity is pivotal for the facilitation of achievement of organizational performance and corporate objectives. It helps the firm gain a sustainable competitive advantage, contributing to long term success (Boukis, 2016). Managing both excellently and resourcefully innovative practices constitute a challenging task due to some intra-organizational actions that should be put in place to ensure successful innovation. According to former managing board staff of Siemens, Johannes Feldmayer defines management innovation activity as shifting the management system of a given firm through creating rules and principles of organizational management and structuring. Despite, Siemens occasionally introduced individual management innovation; they initiated a more systematic and structured approach for the management of innovation activity and success of the enterprise. In 1993, the firm began and continued with the top+ program, which was necessary for overall performance to the frim. Therefore, firm management improved the company's corporate objectives through a guiding approach to the success of the business.

Financial and Strategic Organizational Control

Every enterprise, despite its size and organization, should have financial and strategic organizational control policies in practice. Financial control policy guides how to keep financial accounts records, income, payments, and implemented procedures to manage the firm finances. While strategic control involves constant planning, monitoring, analysis, and implementation of the firm's initiative and objectives. Strategic organizational management help companies realize and hold a competitive advantage. Siemens Company is operating in a highly differentiated structure. However, the firm developed some strategies to ensure the effective running of all operations.

The initial strategic control developed by Siemens is a central monitoring process on the company's activities. Although the firm operated on a well-diversified structure, regional management would receive instructions from the primary department, meaning the central unit also inspects the responsibility and liability of different senior management. Therefore, the unit acts as a significant oversight authority with the primary responsibility of giving directions in some limits. The strategic change focus on Siemens improves communication in the enterprise.

Secondly, Siemens firm also had strategic control of developing leaders to gain the required skills to allow them to perform their responsibilities under minimal supervision. This strategy applies to various firms in this current world. Furthermore, Siemens Company is more focused on creating its workers to ensure it meets its objectives in the competitive market. It has created a robust performing culture that allows staff members to grow professionally. This element not only will enable Siemens to develop its employees but is also a strategic control towards creating sustainable competitiveness in today's market.

On the other hand, company management applies financial controls to drive its performance and management behavior. The business power helps the firm perform track down on individual financial performance in different regions. The better-performing employees get a better reward from the company.

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