Global Market Influences and Barriers: Siemens AG Business Report

This report provides a comprehensive analysis of Siemens AG's global business environment. It begins by examining the impact of various factors, including cost, market, and environmental considerations, on the company's operations. The report then delves into the strategic challenges Siemens faces when operating globally, such as international trade laws, risk management, and complexities in the international supply chain. Furthermore, the analysis evaluates the global market influences on Siemens using the McKinsey 7S model and Hofstede's cultural dimensions to understand organizational structure and cultural impacts. Finally, the report critically assesses the key barriers that Siemens encounters in doing business internationally, offering a thorough understanding of the global business landscape and its effects on a major multinational corporation. This detailed analysis is intended for students and professionals seeking insights into global business strategy and challenges.

Global Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
Activity 1.........................................................................................................................................1
Critically analyse the impact of key factors on the global business environment......................1
ACTIVITY 2....................................................................................................................................2
Determine of the strategic challenges associated with operating in a global environment.........2
Activity 3.........................................................................................................................................4
Critically evaluate the global market influences by using appropriate theories ........................4
Activity 4.........................................................................................................................................1
Influence of globalisation by analysing key barriers in doing business internationally............1
CONCLUSION................................................................................................................................2
REFERENCES................................................................................................................................4

INTRODUCTION
Business Environment refers to the sum total of all individuals, institutions and other
forces which are outside the control of business enterprise but affects the overall performance
and sustainability of business. In today's complex environment globalisation refers to the trend
where companies expand their business operations at a global level and serve customer needs.
Many companies are expanding at a global level and therefore facing challenges of global
business environment (Black, Morrison and Gregersen, 2013)Cavusgiland et. al., 2014). In this
report, chosen organisation is Siemens AG. It is a global multinational company which
specialises in electronics business and has a turnover of £53 billion, headquartered in Munich,
Germany. It operates in more than 190 separate nation states. This report covers the impact of
cost, market and environment on global business environment. It also analyses the strategic
challenges and global market influences faced by Siemens. At last it critically evaluates key
barriers in doing business internationally.
Activity 1
Critically analyse the impact of key factors on the global business environment
Expanding business globally will help benefit the respective company but has to face
various challenges in order to be success. It is the responsibility of Siemens AG to identify the
impact of such factors and formulate strategies accordingly in order to attain set targets. Impact
of various factors on global business environment is discussed below-
 Cost factor- It is an most important factor which is to be considered when expanding
business globally. As the respective organisation is operating globally, it requires lot of
investment for set up as well as producing goods according to the needs of local people.
This sometimes proves to be a challenge for the company as it requires huge investment
to expand business globally and attain goals by meeting needs of local people. Benefits
of this cost factor will help Siemens AG to increase its profits and productivity at a large
scale and attains a good image all over the world.
 Market Factor- Increase in the customers expectation and changing lifestyle influences
Siemens AG to take in consideration market factor while planning to expand their
business at a global level. As the respective company is operating in various countries it
has to careful analyse the needs of local people. This would benefit the company to meet

customer requirements and maintains economies of scale through specialisation of
products as meeting local needs is key performance of Siemens. This is also a challenge
for the company as they have to produce goods according to the different demands of the
customer in various countries which will require lot of skills and technologies and have to
take separate decisions about the separate activities which makes its task a complex one.
 Environmental- When expanding business at a global level, respective company has to
consider various environmental factors such as political, social, technological, legal
environment. Analysing these factors helps the company to understand laws, rules and
regulation of the particular country and formulate strategies accordingly. This would
benefit them in increasing profits (Ferraro and Briody, 2013). But the major challenge
faced by the company is that they face various governmental and legal regulations in
different countries which makes them difficult to perform according to rules and
regulations of countries.
 Competition- In order to succeed globally respective company should analyse the level
of competition in particular country and frame strategies and provide superior products
which meets customer requirement. Siemens greatly benefits from the competitive factor
as it provides full spectrum of products according to local people needs and captures
larger share of market in US. This assist the company to have competitive advantages and
attracts customer towards their product. But company faces challenges from competitive
factor as they have to carefully analyse the competitors strategies and their products and
formulate plans accordingly in various countries which makes it a complex task for the
Siemens to analyse its competitors it various countries (Kasemsap, 2014).
ACTIVITY 2
Determine of the strategic challenges associated with operating in a global environment.
Operating in global business environment not only provides the scope of of meeting the
needs of customer and enhancing economies of scale but also has strategic complexities
associated with it. In context to Siemens AG there are some strategic challenges faced which are
discussed below-
 Impacts of international trade law- International trade is the exchange of goods and
services between countries. Companies when expanding business operations at a global

level face challenges from various custom and tariff laws. As the respective organization
has multiple production units sometimes it leads to export and import of goods.This
affects the functioning of business operations at a global level. There are different custom
policies, tariffs which the Siemens faces in operating in global business environment.
Siemens may face strategic challenges of import, export trade in supplying part of
product to another country (Laudon and Laudon, 2015). As the respective company
operates in different countries it has to fulfill trade laws of that particular country in order
to function smoothly.
 Risk- Globally operating company benefits from geographically diverse business
portfolio. But in addition to benefits company may face unfamiliar risk. There is lot of
added risk in international business which includes risk of language, cultural differences
and political influences. Along with this there is risk of certainty that the products
produced would satisfy customer needs and can be ahead of competitors in that particular
country. In order to perform effectively, risk should be identified before operating in a
global business environment. Siemens should frame strategies accordingly in order to
minimize the impact of risk which assist in successful operations of business.
 Complexities of the international supply chain management- When it comes to supply
and distribution of product to the market, managing suppliers and supply chain can also
be a difficult process. Supply chain complexity is described as a condition of inter-
connectedness and inter- dependencies across a network where change in one element
may effect other areas of business (LeeOlson and Trimi, 2012). As Siemen is a globally
operating corporation with multiple production sites supply chain complexity is caused
by variety of factors often results in rising customer expectations and expanded products
and services by company. These complexities has a great impact on the company and has
to face various challenges in the form of choosing the most relevant suppliers which
could supply goods to customers at a proper time as well as help in transfer of product
from production site of one country to another in order to avoid the delay in work at
respective sites.

Activity 3
Critically evaluate the global market influences by using appropriate theories
Globalisation refers to the integration between countries and regions of the world
involving greater trade across border in goods and services (SavrulIncekara and Sener, 2014).
There is a global market influence because of the different demands of the customer as well as
competition prevailing in the specific country. It has become a global trend to expand businesses
at a global level and attain high profit and productivity by meeting customer requirements. In
order to succeed globally Siemens AG is analysing the global market influences with the use of
appropriate theories.
McKinsey 7S model of organisational structure
McKinsey 7s model is a tool that analyses firm's organisational design by determining its
key internal elements such as strategy, structure, systems, shared values, styles, staff and skills..
This model will help Siemens AG to analyse the global market influence as well as helps the
organisation in improving the performance of company by effectively designing and
implementing strategy. There is a global market influence on organisational structure as the
strategies, policies, employees need to be framed and recruitment according to the market
conditions in order to attain long term sustainability. This model involves seven interdependent
factors which are categorised as hard and soft elements (Ramamurti, 2012). Siemens AG has
adapted Mc Kinsey model in order to have proper understanding of organisational structure.
Hard elements are easier to identify and defines as well as could be changed according to
business environment. These include organisational strategy, structure and systems.
Soft elements on the other hand are difficult to describe and are often influenced by the culture.
These are the organisational shared values, skills, styles and staff.

7s of McKinsey model are described below-
Hard Elements (Structure)
 Strategy- This is defined as a plan devised to maintain and build competitive advantage
over competition. In order to perform globally respective organisation has to implement
strategy according to the market condition of the particular country. It has a greater
market influence has strategy has to be formulated according to competitive pressures,
environmental issues and customer demands. In order to reduce its market influence
Siemens works with a new global strategy “Siemens One” in which customers can call
upon the potential from other Siemens groups to effectively perform in their business
units.
 Structure- Siemens AG, has an organisational structure under which company involves
different production units which are operating in various countries. Respective company
operates in range of global markets but all of them report to German Parent Company.
All the business units at multiple location produce goods according to local needs and
culture, i.e.- they have different structure of departments according to market of
Illustration 1: MC Kinsey 7s model, 2016

particular country (Simic and Dimitrijevic, 2012). All employees coordinate activities
accordingly but are responsible to the parent company.
 Systems- It defines process, procedure and routine that is being adapted by personnel of
company . In this regard Siemens AG has an unique systems of process to produce goods
according to market conditions. Systems has a great global market influence as the
process and procedures need to be adopted according to environment in specific market.
Soft Elements (Culture)
 Shared values- It determines the policies and regulations of the respective organisation
which affects behaviour of work force and management. In Siemens AG employees
share common values and beliefs to operate their business in a ethical way and is not
affected by the global market influence.
 Skills- It determines the employees capability to perform work effectively. Siemens AG
has multiple production units which requires large number of employees to perform work
according to local people needs. As the respective company operates in multiple
countries it has a greater market influence and should recruit employees who have the
potential to do work according to changing demands of customer.
 Style- Democratic style of leadership is followed by Siemens AG through which every
employee has the right has the right task to perform task which benefits the organisation.
In order to avoid global market influence of high competition leader should delegate the
responsibility to employee with the motive of long term profit and sustainability
(Solomon and et. al., 2014).
 Staff- Siemens AG employs more than 450, 000 people and operates in more than 190
nation states. Employees should be recruited according to vacancy as well as skills
required in order to perform task at multiple production units.
Hofstede’s Dimensions of Culture
Organisational culture is affected by global market influence because of the different
perceptions, culture, values and beliefs of an individual. Hofstede’s cultural Dimensions includes
major six cultural dimensions. Siemens AG has adopted Hofstede’s Dimensions Of culture to
analyse the ways in which company is influenced by globalization which has been elaborated
below-

 Power distance index – PDI is defined as less powerful members of the organization
believes that power is distributed unequally in the respective organizations according to
their position. This disturbs the organizational culture as it makes the employee's
demotivated and it leads to ineffective performance (Voegtlin, Patzer and Scherer,
2012).
 Individualism v/s collectivism - It describes the way in which individuals wants to to
perform individually or collectively task at respective organization. Siemens should
make the employees to work in team and enhance collaborative working. Organization
should enhance collectivism among employees in order to succeed globally.
 Uncertainty avoidance- It describes to extent to which people in the society are not ease
with ambiguity and uncertainty. Employees at Siemens should be prepared to face any
contingencies when expanding globally and take appropriate measures to overcome
challenges. This would maintain organizational culture reduces global market influence.
 Masculinity vs. femininity - It implies preference of society for assertiveness and
heroism. On the other hand femininity represents for cooperation and modesty
Respective industry should focus both the factors and avoid cultural differences to gain
profit while going global. This allows respective industry to succeed globally.
 Long-term orientation vs. short-term orientation- Siemens AG should work in a way
that it is able to achieve long term as well as short term goals.
 Indulgence vs. restraint - Employees with high indulgence enjoys their life on their
emotions whereas restraint employees are more concerned on their conduct and behavior
according to the social norms (Wetherly, 2014). These type of cultural differences
affects the working of Siemens AG. Company should allow the employees to work
enjoying their life and achieves organizational goals. This type of culture prevailing in
the organization helps the business to succeed globally and reduce global market
influence.

Activity 4
Influence of globalisation by analysing key barriers in doing business internationally.
When company plan for expanding its business at global level then they faced numerous
challenges in terms of investment, political, legal, technological etc. Organisation have to make
strategies into an account prior to commitment at international level. Siemens company required
constant flexibility in adopting new changes at international level because every regions has its
own values, polices culture etc. In advance organisation manager should identifies its barriers
and also finds recommendations to overcome those barriers for doing business successfully.
These barriers effects the profit of an organisation as productivity of a employee also get effected
when its comes to adopt new changes. So, its important for every organisation to examine those
barriers in advance as well as ways to overcome.
The barriers for doing business internationally are:-
 Culture and cost of doing business:- The culture is elusive term it is different in every
area or region. Its means collective programming of mind which distinguishes the
member of one human group from another. The organisation have to identifies
dimensions of culture which affect work practices in a different counties like uncertainty
avoidance, individualism & collectivism, power distance etc. the Siemens are electrical
products manufacturing company they always make product as per customer trend. So, its
essentials for them to analysis culture in which country they re expanding. The cost
which is going to be incurred should also examine by which production can be reduce in
advance (Wild, Wild and Han, 2014).
 Impact of political risk:- This challenges faced by organisation in some sort of
government actions and sometimes inactions. When exchange rate changed by
government or any crises are raises then political risk increased. Siemens have analyse
whether government of that country is stable or not because polices are changed if
government changed. The rules as well as regulations are made according to government.
 Laws and regulation:- Each country has its own laws as well as regulations like trading
law, taxation, potential tariffs, legal cost etc. Siemens should also examine very polices
related to legislations otherwise it become difficult for them expand its business at
international level.

 Technological factor:- Now a days its very important for every company to adopt
advance technology but according to market. Siemens are expanding its business at
global level then its essential for them to analyse whether that marker technology friendly
or not whatever techniques are used by country people according to that product should
be launched. Then only products would be accepted those countries people.
Recommendations to overcome those barriers
It would recommended to Siemens that while expanding its business at global level then its
essentials for analyse those challenges.
 To overcome cultural and cost barrier its essential to examine values or ethics followed
by respective country. Siemens AG should produce goods according the culture and
values of the people in specific country in order to attain long term sustainability of its
business.
 To overcome political barrier its essential for them conduct appropriate research analyse
related government polices as well as regulations which are imposed on international
trading. Through this political risk also examine and it can't be control on timely basis
only (Zhang and Huang, 2012). Siemens AG should manufacture goods as well as
import and export goods according to the governmental laws in particular country.
 To overcome technological barriers it is essential for the respective company to adopt
latest technology and various techniques which are acceptable to the people of specific
country and could succeed globally.
CONCLUSION
From the above report, it has been concluded that globalisation is a process of interaction
and integration among the people, companies and government worldwide. When expanding
business operations internationally it makes the company to earn more profitable. As the
respective company seeks to be a global leader in electronics by providing products according to
customer needs. It has been determined that there are various factors which benefits as well as
challenges the business company to expand globally. By the use of McKinsey 7S model and
Hofstede’s Dimensions of Culture it evaluates global market influence relating to organisational
structure and culture. It also determines various key barriers that effects companies to expand
business internationally.
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ONLINE
McKinsey’s 7S Model. 2016. Available through<https://www.educational-business-
articles.com/7s-model/>
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