Global Business Environment: Siemens' Market and Structure Analysis

This report provides a comprehensive analysis of Siemens AG within the context of the global business environment. It begins with a critical examination of key factors impacting the company, utilizing Porter's Five Forces model to assess threats of new entry, substitutes, supplier and customer bargaining power, and competitive rivalry. The report then delves into the strategic challenges Siemens faces, including risks, international trade law compliance, and supply chain management complexities. Furthermore, it evaluates Siemens' global market influence, organizational structure, and cultural aspects, employing the McKinsey 7S model and Hofstede’s Dimensions of Culture model for a comparative analysis. Finally, the report identifies key barriers to international business operations and offers recommendations for Siemens to navigate these challenges effectively. The analysis covers various aspects of global business operations, providing a detailed overview of the company's strategies, challenges, and market positioning.

Unit 18: Global Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
ACTIVITY 1....................................................................................................................................1
Critical analysis of impact of key factors over business.............................................................1
ACTIVITY 2....................................................................................................................................3
Analysis of strategic challenges faced by Siemens.....................................................................3
ACTIVITY 3....................................................................................................................................5
Critical evaluation of global market influence and organisational structure and culture of
global business............................................................................................................................5
ACTIVITY 4....................................................................................................................................8
Key barriers of business in doing business internationally.........................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Global business environment is the environment which includes businesses of different
countries along with the influencing factors of home country effecting their decision making
process in order to use the resources and capabilities held by them. Siemens AG is a multi
national company which manufactures electrical and electronics products in all over the world.
The study will include a critical analysis of key factors' impacts over the business, a critical
analysis of all the strategic challenges faced by the company. Further, it also includes a
comparison of Siemens with other business organisation for evaluating the global market
influences by using McKinsey 7s model and a brief analysis of key barriers for performing
business operations in international business market along with recommendation for the
company in this regard.
ACTIVITY 1
Critical analysis of impact of key factors over business
There are numerous key factors which impacts the business of the Siemens such as cost,
market, competition on global market, business environment, etc. they have both positive and
negative impact on the organisation. This impact over Siemnes can be effectively analysed with
the help of poerter's five forces model.
Porter's five forces model:
Threats of new entry
A profitable market always have a threat of new entries in the market. This threat
increases when it is determining with the context of global market. This threat leads in reduction
of profitability of the market along reduction of market share in the global market.
Although, this threat canbe reduces by the Siemens by developing and adopting effective
strategies in the global business of the company (Zhao, 2016). Before making such strategy,
company need to analyse various factors. Managers of the company need to take decisions as per
the change in environmental factors of a country. Rapid growth in population may lead in
increase in sales of the business, as Increase in population can result in increase in demand of the
product of the organisation.
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Development of business strategies accordingly may help the company in building strong
plans for it through which they can prevent the business from the new entries and sustain its in
the global market for long time.
Threats of substitutes
Lack of customer satisfaction always result in substituting the customers towards other
company's product. Siemens always need to make frequent research over the market of the
product. It helps it in innovating the product as per the demand of customers and develop new
products according to the latest market trend as wel (Mathooko and Ogutu, 2015)l. It would help
in sustaining the customers with the company for long time at global level. Which will
automatically reduce the risk of substitution of customers towards other company's product. It
could help the company in increasing its profitability in global market.
Supplier's bargain power
It shows the power of suppliers to increase the cost of raw material. Cost efficiency of the
Siemens provides it a huge benefit to reduce the requirement of fund in the business. On the
other hand, inefficiency in the cost can become the greatest challenge for the business operation
of the company. Increase in cost directly effects the increase in selling price of product.
Customer's bargain power
Customers always have a power to bargain the price of product or services. This power of
customer leads in decreasing the price of the product internationality. Which directly effects the
profitability of company. Siemens can reduce this power by providing them the best quality of
product along with some unique features for which it can make the customers to pay any price
for the product manufactured by it.
Competition rivalry
Level of competition is always high in the global market. Due to inclusion of large
number of electronic and electrical manufacturing companies at global level, Siemens need to
face higher level of competition in the market.
Further, for the purpose of its rapid growth in the international market, its managers need
to develop and innovate the strategies and plans by analysing all the strategies of the competitors
in available in the market. Development of strategies in this way will lead in facing the
competition in the market effectively. It will also help the company in its rapid growth in the
international market.
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In this regard, organisation's position and impact of various factors on it can be
effectively analysed by Porter's five forces model.
ACTIVITY 2
Analysis of strategic challenges faced by Siemens
There are various factors which influences the business operations, profitability, etc of an
organisation working at global level. Impact of some key factors are as under:
Risk factors
A company doing business at international level need to face numerous risks across the
world. Attracting the best talent towards the company is a huge challenge for each globalized
firm. It is quite expensive for a company to attract and retain the best qualified staff in each
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Illustration 1: Porter's Five Forces Model
source: (What is Five Forces Analysis?, 2019)

organisation across the world. Further, level of risk also increases at global level. Threat of
competition at global level effects the whole operations of the company globally (Epstein,
2018). Further, effectively facing the competition id also a major task of Siemens and other
organisations in order to generate profit and from the global market and sustain in it as well.
For example, Frequent change in currency exchange rate is also a key risk of a global
company. This factor of risk directly effects the gains generated by the company and the amount
actually received by it due to fluctuation in currency exchange rate. Global organisation can
prepare a smart strategy to fix the exchange rate before entering into a contract to reduce the risk
of currency fluctuation.
Challenges related to International trade laws
A global business includes all the commercial transactions and activities performed by a
company at international level. In this regard, it need to follow all the rules and regulations
applicable on it. Further, each country has its own laws, rules and regulations. In this regard, it is
a major challenge for Siemens and other organisations to fulfill all the requirements of each laws
of the countries in which it has its business. Business need to make strategy for each organisation
of it across the world as per the laws and regulations applicable on it, as any non compliance
may attract the legal proceedings over the company.
For intense, A global business need to fulfill all the requirements of rules made by World
Trade organisaion. Further, rules of GATT also need to be applied by the international
companies, as it leads in promotion of fair trade practices at global level and reduced the risk
barriers for a global organisation as well. Sometimes it becomes quite challenging for a company
to prepare a business plan at international level to meet each requirement of WTO and GATT, as
its requirements may lead in non fulfillment of the overall requirement of the company.
In addition,
Supply chain management challenge
Supply chain management can be defined as a process of transportation of raw material,
product and services, etc. by the company (Bennett and Raab, 2017). A smooth flow of supply
chain can maximize the attraction of consumers towards the company. Each international
company includes range of manufacturers, distributors and customers. All these factors effects
the supply chain management of the company.
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There are numerous barriers in the supply chain management of the company. For
example, rules mentioned in UNCLOS is also a major challenge for a company like Siemens and
other businesses which is selling its products and services across the world. Sometimes due to
the laws of UNCLOS, a global business organisaion may fail to smoothly transfer its products
and services to another country. It may lead in enhancement of cost of transport, and legal
requirements to e fulfilled by the international business as well.
Lack of smoothness in supply chain of the company global level, can result in delay in
the supple of the product. It may cause a huge loss for the firm and substitution of the customers
to another company's product as well. Further, outsourcing the products manufactured by
Siemens or any other global business organisation is also a big challenge for them (Senaratne
and Wang, 2018). Involvement of numerous suppliers at different location in all over the world.
It enhances the challenges of coordination among the suppliers and distributes, maintenance of
the stock of the company at international level, supplying the sufficient number of products to
each supplier in all over the world to fulfill the demand, etc. a global business need to face all the
above challenges for the purpose of enhancement of specialization of the company in supply
chain management (Key Issues in Supply Chain Management and How to Overcome Them,
2018).
ACTIVITY 3
Critical evaluation of global market influence and organisational structure and culture of global
business
For the purpose of analysing market influence, organisational structure of the company
and its cultural difference due to globalization of business, management can apply McKinsey 7S
model and Hofstede’s Dimensions of Culture model. Evaluation through these models can be
done as under:
McKinsey 7S model
Strategy
Strategies are the plans helping the global business in growing internationally. Strategy of
the business defines the way of completion of business operations. Siemens' managers forms
their strategies taking into account all the changes at global level effecting the busienss
operations of the company.
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Structure
Structure helps the business in determining the form of company at international level.
Structure of an international business organisaion shows the hierarchical layers of the firm at
international level.
Skills
Skills includes strengths, weaknesses, and level of knowledge of the overall organisaion.
Operations performed by the company depends upon the skill of the each firm of the company
internationally (Chimni, 2017). Skill also includes skill level of overall global business and of its
employees as well. Siemens has effective skills in manufacturing electronic and electrical
products. Further, it devlops the plans of the performing the business activities as per the skills of
the organisation and its employees.
Staff
Staffs are the key elements of every organisaion, as each activity performed by a business
depends upon the knowledge and skills of its employees. Siemens employees qualified
employees in all the organisations of it across the world. Further, it also conducts training
programs for its employees. In this regard, its has skilled staff in all over the world.
On the other hand, although, BSAF also employees best qualified employees at each post,
but its does not conduct frequent training programs for the employees.
Style
Style of an international company includes leadership styles and managerial styles of it.
There are various types of styles available for each purpose. Team leaders of BSAF a global
organisaion, need to adopt that style which could satisfy organisational objectives, culture of the
company and need of the members of team. On the other hand, management should adopt that
managerial style which could enhance the capability of the company at international level.
Systems
System of a company can be defines as a way of performing the normal course business
operations (Ravanfar, 2015). It includes both formal and informal methods of the business
operations and company. An international company need to make the system
Shred values
Shared values shows the purpose of the company for performing its activities at global
level. Shared values creates an emotion in the members of the company towards its business.
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BSAF company shares its values of the work with its employees in order to develop their interest
in their performance and enhance their efficiency for that as well.
Advantages
 It helps in improving the business performance at international level.
 It also provides helful recommendation for improving the business structure of the
company.
 This model is a perfect combinition of rational and emotional elements to be taken into
consideration by the management.
Disadvantages
 It does not consider the difference at international level.
 It is quite complex to be applied.
Hofstede’s Dimensions of Culture model
Further, for the purpose of analysing organisational culture, management can analyse the
business using Hofstede’s Dimensions of Culture model over the operations of business as
under:
Power distance
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Illustration 2: McKinsey 7S model
(source:

This model shows the level of acceptance of the all the members of the company about
the inequality of the power in the company. Siemens also have distance of power given to each
members of the company as per their post, knowledge and qualifications.
Individualism vs. collectivism
In the individualism, members are expected to take care about themselves and their
family as well. In this system, there is a loose bond among the members of the company. On the
other hand, collectivism refers to a strong bond among the members. All the employees look
after each other.
Siemens adopts collectivism in all the businesses operated by it at global level as it leads
in enhancement of affection and healthy culture within all the organisations.
Masculinity vs Femininity
Femininity refers to distribution of work performance among the members based on the
gender of each employee. Femininity refers to creation of strategies by the management by
taking care about the quality of life of its members (Mitchell, Fredendall and Cantrell, 2015).
Managers prepares their strategies to provide the members of global business. Whereas,
Masculinity refers to preparation of standards of the global business by favoring achievements of
members and prefering heroism acts of people in global organisaion.
Uncertainty avoidance
performance of global business activities leads in facing various uncertain situations by
the business. Members of the Siemens and other global organisaion gets affected by these
uncertainties. For protecting them from all the uncertainties, managers need to develop their
plans as to avoid all the uncertain problems.
Long term vs short term orientation
For the purpose of long term orientation, managers innovates the strategies whenever
they are needed by the business due to occurrence of any circumstances. On the other hand, in
short term orientation, managers adopts all the cultural differences at global level rapidly.
ACTIVITY 4
Key barriers of business in doing business internationally
If a company is performing its business at global level, it has to face various berries while
performing the business activities. Management of the global organisaion need to consider all the
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barriers which arises due to the international business transactions before developing any
strategy or plan for the company (Beugelsdijk, Maseland and Van 2015). It helps the firm in
smooth running of business and enhancement of its effectiveness as development of strategies
for the global business in order to remove the barriers helps it in achieving the organisational
goals and generation of maximum profit at international level as well.
Key barriers of the which arises in global business are as under:
 Language barrier: it is the most common barrier for each business organisation at
global level. Each country and society have their own language. Due to this difference,
Siemens and other global business organisations fails to properly understand the needs of
the customers of that company. It may result in lack of customer satisfaction in that
country.
 Difference of culture: in each country there is a different culture followed by its
population. The difference in culture also affects the demands and need of the population.
For an international business like Siemens, it is a major task to analyse the culture of each
country in which they have their business and innovate or develop product or services
accordingly (Minkov, 2017). Due to lack of understanding the cultural differences, global
organisaion may also fail to fulfill the customers' demand.
 Marketing style: being a global business, Siemens and other organisations need to
develop best marketing style for advertising their product or services across the world.
The international company need to innovate such marketing style through which in can
be able to reach and fulfill perspectives of all the customers.
 Legal issues: every country has its own laws which prescribes the rules and regulations
for doing the business. Due to this difference, a global business need to establish different
strategies, plans and system of performing the business activities in each organisaion
worldwide (Hwang and Boo, 2018). This difference of strategies and plans may result in
lack of coordination among all the business organisations of the international company.
 Political problems: political problem includes unsustainable political parties in the
countries, which leads in unsustainable rules and regulations of performing business
activities. Further, involvement of corruption is also a political problem. All these
political problems affects the business, as it leads in change in business structure and cost
of the business operations and generation of profits as well.
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 Difference in Accounting methods: there is also availability of difference in methods of
accounting followed by different organisations of an international business each
organisaion need to follow the technique provided by the laws of the country in which it
is working. It can also be termed as a barrier of an international business as different
accounting method may provide different profit, due to which management of the
global business may fail to determine the actual profit earned by the company.
 Supply chain management barrier: a global business need to supply products across
the world. Company may face some problem in exporting or importing the goods and
services, as due to different treaties and agreements among different countries can lead in
different requirements to be followed by the company (Rizos, 2015). This may result in
increase in procedure of export and import and increase in the overall cost of the
international company as well.
In this regard, Siemens and other global businesses need to face many barriers as above. For the
purpose of rapid growth and generation of profit from international business, managers of the
company need to develop their strategies through which company's ability to face the problems
can be increased.
CONCLUSION
From the above assignment, it can be concluded that Siemens is an intermnational brand
which manufactures and sales electrical and electronics products across the world. The company
has analysed all the key factors which can impact its business at global level. The management
of Siemens have also critically evaluated all the strategic challenges faced by the company like
risks, international trade laws etc. in order to develop their strategies accordingly. Further they
have also evaluated the organisational structure and culture by using appropriate threories and
model. The managers have also evaluated all the key barriers that can be faced by the company
while performing the business activities at international level in order to make their plans and
strategies so that company can grow at international level.
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REFERENCES
Books and Journals
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factors that influence the choice of response strategies adopted by public universities in
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corporate social, environmental and economic impacts. Routledge.
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perspective. Routledge.
Chimni, B. S., 2017. International institutions today: an imperial global state in the making.
In Globalization and International Organizations (pp. 41-78). Routledge.
Ravanfar, M. M., 2015. Analyzing Organizational Structure based on 7s model of
McKinsey. Global Journal of Management And Business Research.
Mitchell, B. C., Fredendall, L. D. and Cantrell, R. S., 2015. Using McKinsey’s 7 S Model to
Empirically Examine Organizational Effectiveness among the NBA Teams. International
Journal of Management & Human Resources. 3(1).
Beugelsdijk, S., Maseland, R. and Van Hoorn, A., 2015. Are Scores on H ofstede's Dimensions
of National Culture Stable over Time? A Cohort Analysis. Global Strategy Journal. 5(3).
pp.223-240.
Minkov, M. and et.al., 2017. A revision of Hofstede’s individualism-collectivism dimension: A
new national index from a 56-country study. Cross Cultural & Strategic
Management. 24(3). pp.386-404.
Hwang, J. A. and Boo, K. J., 2018. Overseas expansion of South Korean renewable energy
firms: Status and barriers. Renewable and Sustainable Energy Reviews. 81. pp.2862-
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Rizos, V. and et.al., 2015. The circular economy: Barriers and opportunities for SMEs.
Senaratne, C. and Wang, C., 2018. Organisational Ambidexterity in UK High-Tech SMEs: Key
Drivers and Barriers.
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