Impact of Globalization on Siemens Market

[Unit 18: Global Business Environment]
2018

Introduction-
The globalization can be associated with several challenges like access to superior technologies,
increase in competition etc and can threaten any company to have their continuous dominance.
With an ever growth sophistication among the competitor, it pose a global threat to any company
across the world. There are several strategic management approach that can counterfeit the
current challenges through public sensitization and awareness among customers to mark
difference between the fake and genuine products, making collaboration with the government
etc. However, there have been several significant opportunities provided by the introduction of
globalization as well (Donze, 2014, p 171). The market is ever expanding and making a global
economy i.e. more stable and lower risk associated with the political interference of any country
the company is dealing with. The potential of generating profits is always high and the only
thing the company need to do is to implement strategies to manage both the threat and
opportunities as swiftly as they can. Siemens is one of the multinational giant that operates in
almost 190 countries across the globe. The scope of the company is to deal with electronic
products and services. The company is highly reputed and considered to have one of the largest
among the tally of employee i.e. 400,000 people. There are six major divisions where the
company operates i.e. Energy, Equity, Healthcare, Industry, IT solutions and Investment. The
company made approximate profit of about of €5.67 Billion. It can be considered as one of the
outstanding achievement in this growing competition in the market with some major player still
competing. The headquarters of the company is in Germany (Donze, 2015, p 161). The company
these days is dealing with certain strategic issues associated with globalization and threats
associated with the market existence in the future. The scope of this report is to highlight the

impact of globalization and the key factors association with it impacting the market of Siemens.
It will also show the strategic complexities associated with global market presence. Finally, it
will discuss the impact on organization structure, function and decision making strategies of
company based on globalization.
Key Factors of Globalization driving Siemens market-
The globalization can be defined as the market system development where without any
hindrance, the services/products can be taken across the national boundaries. Further, it can also
be called as the movement of capital, information and associated factors that allow a company to
freely trade across the globe. The globalization concept has been accepted since a long time and
it has been an inevitable reality as acknowledged by the people. There hasn’t been any restriction
on the foreign investment and it has increased through formation of legislation and policies that
encourages the flow of money. The product prices are brought down for a reason because the
goods from across the world are supplied to the market that is compensating the demands and
supply ratio. The product and services availability at a low price is improving the quality of life
and hence dealing the current issue of poverty of several under developing countries. The
globalization impact in the business environment can be described with the help of PESTEL
model that determines several factors that played a role in the business of Siemens.
Political Factor-
The most common political factor that is quite relevant with the strategic management of the
organization and their policies towards government regulations on cross border transaction and
free market enterprises. The political systems are moving ahead towards the marketing economy
concept where the business across the globe would be allowed to operate without any unwanted

interference of the government. The countries such as China were having the tight control over
the economy is now making their market liberal for others. The similar move has been taken by
the countries to ensure that their market must remain attractive for the foreign investors. The
most common threat within the political factors is the nationalization risk and the threats political
bodies feel when the importance of foreign investment is not realized.
Economic Factors-
The world economy integration has been so influenced that even if a crisis happen in one
country, the whole world will start feeling the effect. It can be declared as one of the negative
aspect of globalization. One of the best example that can be cited is the recent economy crisis in
USA that ended up in paralyzing the entire world economy. The globalization has also
introduced the concept of increased competition across the world as most of the business now
looks for invading the foreign market and challenging the existing best. Siemens has always
dominated the market of mobile phones in Germany and several other European countries as
they were able to market their product without involving much hindrance. When there was an
eruption of globalization, the cheaper phones with equivalent quality was introduced in the
market by India and China and it got a big hit among the public who really don’t mind buying
cheaper product with same features. In response, the strategy taken by Siemens was to form an
alliance in order to deal with the current competition (Berend, 2016). The alliance was quite
successful hence helped in achieving the success in the current market. For example, there was
an alliance between Siemens and Nokia that won the bid for providing broadband service to the
Taiwanese high speed trains. Another alliance between Nokia and Siemens was to win the bid to
supply optical network to the Chinese company Unicom Ltd. The raw material accessibility and
the cost associated with it was another economic impact of globalization. In order to deal with