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    Case Siemens

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    khushikohli2626

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    Case Siemens

    Uploaded by

    khushikohli2626
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    2 views2 pages

    Case Siemens

    Uploaded by

    khushikohli2626

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Siemens, The Sleeping Giant

    Siemens, the over 140-year-old German giant, is loaded with cash. The company generates
    its revenues from energy and automation, nuclear power, PBXs (private branch exchanges),
    and computer, telecommunication and security systems, medical equipment, electrical and
    automotive products, and a variety of other sources. There is some concern that the
    proliferation of products may be detrimental.
    The company’s some 350,000 employees will face a different environment in the future
    through the EC 1992 program1, which eliminated trade barriers for the twelve member states
    of the European Community. In the past, Siemens benefited from profitable state contracts.
    For example, the company sold cordless telephones to the state at a price eight times higher
    than the price of Japanese products.
    The goal of the CEO, Karl-Heinz Kaske, is to transform the sleeping organization into an
    aggressive multi-national corporation battling with companies such as AT&T in the field
    telecommunications and with General Electric in factory automation. The key building block
    in the new strategy is microelectronics. Indeed, the company spent more on research and
    development than its competitors, yet it lags behind many of them in profit margins.
    To prepare for the new competitive environment, the company started reorganization. In
    1998 two layers of management were eliminated, and the following year seven operating
    divisions were transformed into fifteen (later reduced to thirteen) organizational units with
    separate sales and marketing personnel. This should speed up, for example, the approval of
    new products. Unprofitable lines are being shut-down, an approach very uncommon in
    German industries. Managers who expected lifetime employment are concerned.
    Telecommunications, which lost over $100 million in a year, will be compared with the
    medical unit, which showed an annual growth rate of 17 percent.
    In the past, corporate culture placed a high value on technology but de-emphasized
    marketing. This is changing. Siemens is redirecting its focus in market share not only within
    Europe but also in the United States and Japan – two very important markets.
    The power of Central Research was reduced by giving more responsibility to the business
    units to do the application-driven research; Central Research now focuses on basic
    research. Furthermore, business units not only have responsibility for research but also are
    held more accountable for their costs. Actually, Siemens can look back at over 140 years of
    innovations. Here are some examples: the pointer telegraph was patented in 1847, the first
    electric railway in 1879, the world’s first telex network in 1938, the world’s first high-
    performance laser printer in 1977, and the first European-built 1-megabit chips in 1988.
    However, the organization structure that was appropriate in the past may not serve the future
    competitive, global market.

    Note:
    1. EC 1992 program was one of the milestones in the unification of Europe into the European
    Union. Till 1992, each of the member countries had its own borders, custom-duty structure
    and independent identity. From 1992 onwards the borders were removed, custom-duties
    were abolished ushering in a free, open community. Currency unification was destined to
    take place much later.
    Questions for Discussion

    B-1. What is the main theme of this case?

    B-2. What is the significance of EC-1992 program?

    B-3. What is the principal task of CEO Karl Heinz Kaske? How is he doing this?

    B-4. The CEO is claiming to transform Siemens. What is the compulsion for him to do this?

    B-5. Explain the re-organization taking place inside Siemens under the leadership of the CEO

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