Potential Impact of Megatrends on Siemens Businesses

Business strategy management
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Table of contents
1. Using the identification of megatrends and/or scenarios consider the potential impact of
future environmental forces on Siemen’s businesses in terms of both threats and
opportunities...............................................................................................................................3
2. How would you describe the context of the strategic transformation that Siemens faces?...7
3. With particular reference to digitalisation and the creation of an ‘ownership culture’ what
are the main challenges Torsten Ende faces in seeking to influence the implementation of the
strategy in Siemens businesses?.................................................................................................9
4. Evaluate the steps already taken and those planned to influence the adoption of Siemens
future strategy in the businesses...............................................................................................12
Reference list............................................................................................................................14
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1. Using the identification of megatrends and/or scenarios consider the potential impact
of future environmental forces on Siemen’s businesses in terms of both threats and
opportunities.
Siemens is an electrical engineering company that provides wide range of products and
services to their customers based on power generation, power transmission, industrial
solutions and medical services. Mega trends are considered as a transformative and global
forces that can effectively devise the future world with their impact on the personal lives,
societies, economies, culture and business (Ovaskainen and Tinnilä, 2013). There are fifty
seven future trends in Siemens that can considerably affect the business of the organization.
The mega trends in Siemens can be broadly categorised into five parts namely globalisation,
digitalisation, demographic change, climatic change and urbanisation.
Strength & Opportunity - The megatrend of globalisation includes the increase in the
global competition, public sector under pressure and economic growth. The trend assisted
Siemens to enhance their industrial productivity, their trade increased in terms of sea cargo
and air. Siemens’s technology made the customers of the industrial sector more competitive;
it enabled the industry customers to attain the flexibility and reduce their energy footprint.
Threat & Weakness - The main threat and weakness faced by Siemens is that, despite being
a multinational company, it is unable to manufacture whole range of products in every
country. This is due to the scarcity of the resources and this is a challenge in the terms of
competition. Along with that, fluctuation of the price of supplied raw material is another
threat. In order to deal with this problem, the company has to impose price differentiation.
Digitalisation is considered as another megatrend for the business of Siemens which includes
automation of the process with robotics, biotech growth, and big data that is explosion of
information and integration of business activities digitally. This megatrend of digitalisation is
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considered as the strategic transformation for the business of Siemens which includes
automation of several core processes which reduce human intervention.
Strength & Opportunity - This megatrend will enhance the profit margin of the company
along with reductions in the operating cost. The errors in the business process of Siemens will
be reduced which in turn will enhance the productivity of the company. The opportunity of
digitalisation in the business of Siemens is it will enable the company to gain competitive
advantage.
Threat & Weakness - The main threat of this megatrend is the selection of the appropriate
tools and software. The threat of this megatrend is it needs large scale investment because the
company operates globally.
The megatrend of demographic change in the business of Siemens includes personalised and
affordable healthcare. As according to a survey, there are more than five hundred million
aged people worldwide and due to the increased healthcare cost they cannot afford proper
healthcare units. Siemens offers affordable healthcare solutions which includes early
diagnosis and smarter solution to the mankind.
Strength & Opportunity - This megatrend includes the maintenance of the goodwill of the
business via social activities which provides an business opportunity to expand.
Threat & Weakness - Due to the scarcity of the resources, the cost of the healthcare
solutions increases and as a result of that, the company cannot meet its social objectives.
The mega trend of climatic change of Siemens includes the efficiency of the preserving the
natural sources of energy.
Strength & Opportunity - The eco-friendly products along with the solutions of Siemens
enabled the customers to reduce the emission of CO2 by 317 million tons. The trend of
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climatic change enabled the company to serve the customers with eco-friendly products
which is environment friendly and this is considered as a strength which provides further
business opportunity to the business.
Threat & Weakness - As the company serves its customers globally, so; the scarcity of the
resources and water create hindrances for the business and this is considered as threat or
weakness.
Urbanization is the last megatrend of Siemens which includes supporting the cities with
improved infrastructure.
Strength & Opportunity - Urbanisation impacts the infrastructure because due to the
increase in the population in the urban areas the governments embark the investment on the
public welfare project ranging from public transport system to highways. Siemens supports
urbanization with smart solution and infrastructure that offers sustainability and better life
quality. Due to this trend, people are relocating to the urban areas with an expectation of the
increase in the income level and this in turn can increase the demand for durable goods,
electrical goods and fast moving consumer goods and is considered as the opportunity to the
business. Siemens can take the advantage of this trend and can gain competitive advantage
over the existing electrical engineering companies and this is considered as the strength of the
business.
Threat & Weakness - Increase in population can add a pressure on the supply system and as
a result of that, customers can switch over to the services of other companies.
PESTLE analysis
Operating in Germany and serving markets of Europe, and globally. A PESTLE analysis
further reveals the following for Seimens.
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P – Threat owing to terrorism, civil unrest owing to BREXIT, political uncertainties in the
European regions have a potential to impact Siemens’ business. Alternatively, governments
are pushing for greener companies (Siscan, 2016).
E – Economic markets of Asia is an opportunity as ease of business sanctions has been put
into effect. In terms of energy market, developing markets in Asia is a good opportunity.
Similarly, in Germany, the opting for more carbon reducing construction practices, new green
norms means a new energy market is slowly taking shape with large potentials (Ovaskainen
and Tinnilä, 2013).
S – In terms of society, energy reducing equipments are gaining ground. It is a large
opportunity for Siemens to rebrand itself as an environment friendly corporation (Cozmiuc
and Petrisor, 2018).
T – in terms of technology, better innovation in energy reducing technology offerings to
customers also is good for business. Compared to their competitors, the market allows for
leadership and better offers to customers from Siemens.
L – Legal suits may impact profitability in case the newer energy reforms are not met
E – Siemens is invested in going carbon neutral by 2030. It is also in progress to enable their
clients to reduce their carbon footprints in their businesses (Siscan, 2016).
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