Siemens Corporate Strategy and Proposed Acquisition
-
Upload
francesco-colombo -
Category
Business
-
view
3.023 -
download
5
Transcript of Siemens Corporate Strategy and Proposed Acquisition
Corporate Strategy and Proposed Acquisition
March 2015
Baessato L. , Cecchi L. , Colombo F. , Fumagalli F. , Granvillani M. , Iseppato B.
2
History• 1847-1865: BEGINNING AND INITIAL EXPANSION
• Foundation 1st. October 1847, Berlin , by W. Von Siemens
• Production and long distance telegraph networks in Europe and Asia
• 1865-1890: HEAVY CURRENT ENGINEERING AND INTERNATIONALIZATION• Electric trains and light bulbs
• 1890-1918: GROWTH THROUGH CONSOLIDATION AND PARTNERSHIPS • 1903 Siemens & Halske merged with Schuckert & Co —>
SIEMENS-SCHUCKERT
3
History• 1918-1933: RETURN TO THE WORLD MARKET AND UNITY WITHIN THE
“HOUSE OF SIEMENS”• 1930 Started manufacturing radios, television sets and electron
microscopes
• 1945-1966: RECONSTRUCTION AND EMERGENCE AS A GLOBAL PLAYER• Computers, semiconductor devices, washing machines and pace makers
• 1966-1989: NEW MARKET AREAS OF BUSINESS• 1987 Overseeing nuclear power business
• 1989-2011: DEREGULATION AND GLOBALIZATION• 2000 Development of Siemens Medical solutions • 2004 Siemens wind power division
4
Siemens Today• Siemens is global powerhouse positioned along the electrification
value chain, as well as in the areas of medical imaging and in-vitro diagnostics.
• Siemens is one of the world’s largest technology companies. • Our name stands for: engineering excellence, innovation and good
corporate citizenship.
5
Vision 2020Electrification, Automation and Digitalization are the long-term growth fields of Siemens.
6
Businesses• From Four Industries:
1. Energy (35%)2. Industry (24%)3. Infrastructure and Cities (23%)4. Healthcare (18%)
(% of total revenues)
• To Nine-plus-one Divisions: 1. Power and Gas2. Wind Power and Renewables3. Power Generation Services4. Energy Management 5. Building Technologies6. Mobility7. Digital Factory8. Process Industries and Drives9. Financial Services*10.Healthcare**
7
vRevenues by Business
Total Revenues € 71,920 million (+1% FY 2013)
8
Global PositioningGermany: the main technology partner for the country.
China: a local partner.
Middle East:technology partner.
Africa: Siemens is helping upgrade Africa’s rail infrastructure.
India: Siemens offers integrated solutions for a sustainable progress.
Russia: modern technologies for the world’s largest country.US: sustainable
solutions for the world’s largest economy.
Brazil: Reliable infrastructure partner.
Europe: Siemens automation systems improve efficiency at factories throughout the Old Continent.
9
Revenues by Area
Total Revenues of € 71,920 million (+1% FY 2013)
10
Siemens MissionWe make real what matters, by setting the benchmark in the way we electrify, automate and digitalize the world around us. Ingenuity drives us and what we create is yours. Together we deliver engineering excellence, taking personal ownership until we jointly succeed.
11
Siemens VisionWe have a clear vision of what we stand for and what our goals are. Answering the world’s toughest questions helped us become a pioneer in energy efficiency, industrial productivity, affordable and personalized healthcare and intelligent infrastructure solutions. This success story would not have been possible without our firm believe in our core values. This is what Siemens is all about.
12
ValuesRESPONSIBILITYOur responsibility is to conduct all businesses according to the highest professional and ethical standards and practices: there must be no tolerance for non-compliant behaviours.
EXCELLENCEExcellence means attracting the best talents in the marketplace and giving them the skills and opportunities they need to become high-achievers.
INNOVATIONOur goal is to be a trendsetter in all of our businesses. We unlock the energy and creativity of our employees, embracing the new and different.
13
StrategyOur positioning and our strategic direction are closely linked to define milestones. We have to take all the right steps to create value.
Drive Performance: boost our performance. Make all our businesses reach their full potential.
Strengthen core: focus on the things that make you strong and put other things aside.
Scale up: we will intensify our efforts to seize further growth opportunities and tap new fields.
14
Goals & ObjectivesGOALS OBJECTIVES
IMPLEMENT CORPORATE GOVERNANCE 2016 - Reduce costs by € 1 billion
CREATE VALUE SUSTAINABILITY Capital efficiency target: 15-20% of ROCE
EXPAND GLOBAL MANAGEMENT More than 30% of international (outside Germany) employees by 2020
BE A PARTNER OF CHOICE FOR OUR CUSTOMERS
Improve our Net Promoter Score by 20%
BE AN EMPLOYER OF CHOICE Approval rating over 75% on a sustainable basis
FOSTER AN OWNERSHIP CULTURE Increase by 50% the number of employee shareholders
15
ResourcesRESOURCE CHARACTERISTICS INDICATORS
TANGIBLE
FINANCIAL -INTERNAL FUNDS GENERATION
-Free Cash Flow 2014: € 1,72 billion-Debt/Equity Ratio 2014: 73.45 %
RESOURCES PHYSICAL -PLANT AND EQUIPMENT
-SIZE
-TECHNOLOGY FLEXIBILITY
-Market Value of Fixed Assets -Scale of Plants-Alternative Uses for Fixed Assets
16
ResourcesRESOURCE CHARACTERISTICS INDICATORS
INTANGIBLE RESOURCES
TECHNOLOGY -PATENTS
-KNOW HOW
-R&D FACILITIES
-TECHNICAL AND SCIENTIFIC EMPLOYEES
-56100 Patents -R&D Expenditures: € 4,1billion-R&D Staff: 28800 (17500 Software Developers there of about 4200 S.D. at Corporate Technology)
REPUTATION -BRAND
-COMPANY REPUTATION
-Brand Equity-Cooperations with Top Universities, Research Institutes, Industrial Partners
17
Resources
RESOURCE CHARACTERISTICS INDICATORS
HUMAN RESOURCES
-MECHANICAL, INDUSTRIAL, ENERGETIC, BIOMEDICAL ENGINEERS
-LOYALTY OF EMPLOYEES
-EMPLOYEES’ TRAINING AND SKILLS
-Number of Employees: 343,000
-Employees Turnover Rate: 9.1%
-Expenditures for continuing education: € 276 million
18
Functions & CapabilitiesFUNCTION CAPABILITIES EXAMPLESR&D -RESEARCH AND INNOVATIVE NEW
PRODUCTS DEVELOPMENT-20 Patents per day + 38 Inventions per day-Focus on creating next generation products
CORPORATE FUNCTION
-STRATEGIC INNOVATION -MULTIDIVISIONAL COORDINATION-ACQUISITION MANAGEMENT-INTERNATIONAL MANAGEMENT
-Last 4 years 9 acquisitions in different industries-Business Units autonomy + corporate management coordination
MANAGEMENT INFORMATION
-INTEGRATED MANAGEMENT: INFORMATION SYSTEM NETWORK SUPPORTING MANAGERIAL DECISION MAKING
-Corporate Technology: centralized corporate-based innovation organisation across BUs
OPERATIONS -CONTINUOUS IMPROVEMENT IN OPERATIONS
-Capacity to align the operations and processes with the new developed products
19
Adjacency Map
20
Horizontal Integration
INFRASTRUCTURES & CITIES:• Transportation & Logistic• Cities• Municipalities & DSOs
HEALTHCARE:• X-rays• Pacemakers• Dentists• Pharmaceuticals
ENERGY:• Electric streets lightining• Bulbs• Semi-conductors• Oil & Gas• Hydropower stations• Windpower• Solar pannels
INDUSTRY:• Automotive• Marine & Ship buildings • Mining & Cement• Paper machinaries• Food & Beverage Machinaries• Data Centers
ELECTRIFICATION AUTOMATION
DIGITALIZATION
21
Reasons of Diversification1. Enhance the profitability by becoming integrated in
new markets and gain market power
2. Exploit economies of scope which help to maintain adequate margins and set attractive prices
3. Minimize expenses by capitalizing on economies of scale
4. Full utilization of existing resources and capabilities
5. Ensure an efficient capital allocation
22
Matrix of Parenting Adv
Industry
Energy
Healthcare
Financial Services
Infrastructure& Cities
High
Low
Low HighFit between parenting characteristics and parenting opportunities
Fit between KDFs and parenting
characteristics
23
Vertical Integration
PowerGeneration
Imaging and in-vitro
diagnostics
PowerTransmission,
Power Distribution and Smart Grid
Energy Application
9.Healthcare 10.Financial Services
1.Power and Gas
2.Wind Power and Renewables
3.Power GenerationServices
4.EnergyManagement
5.Building Technologies
6.Mobility
7.Digital Factory
8.Process Industries and Drives
24
Reasons of V. Integration1. Achieve maximum value added along the
entire process chain
2. Support customers with its integrated approach through its communication-based, automation and drive systems
3. Lower costs of transaction by removing mark-ups
25
Organizational Structure
26
Parenting Style
27
How Parent Creates Value
CENTRAL FUNCTIONS & SERVICES • Incentive the sharing of both resources
and activities between the different business units.
• The only business unit that is managed separately is Healthcare.
28
International StrategiesAutomation
Electrification
Digitalization
Healthcare
TRANSNATIONAL STRATEGY• Achieve both Global Efficiency and Local
Responsiveness
GLOBALLY MANAGED• Products are standardized across
national markets
29
Corporate Social Responsibility“For us, sustainability means acting in the best interest of coming generations with respect to the economy, the environment and the society”
TRIPLE BOTTOM LINE1. PROFIT
• Offering distinctive products • Providing our customers a competitive advantage • Strengthening our profitability over the long-term
2. PLANET• Using responsibly our planet limited resources
3. PEOPLE• Increase our employees’ sense of responsibilty in executing their
activities• Contribute to the sustainable development of society
30
Mirvis & Googins’s Framework
Elementary IntegratedEngaged Innovative Transforming
• Citizenship concept: Sustainability (People, Profit, Planet)
• Strategic intent: Value Proposition ( Renewable energy)
• Structure: Organizational Alignment (Sustainability Board)
• Issue management: EHS Program
• Transparency: Public Reporting (Vision 2020)
31
Key Sustainability Indicators • Economic
• Revenue generated by the environmental portfolio: € 33.2 billion• 42% of total revenues
• Environmental performance improvement• CO2 emissions relative to FY 2010: -12%• Number of suppliers that are part of our energy efficiency program: 916• Energy efficiency relative to FY 2010: +8%
• Employees• Expenditure on continuing education € 283 million• Proportion of women in management positions 15.3 %
• Rankings• Points in Dow Jones Sustainability Index: 92/100
These data belongs to FY 2012
32
Concrete Projects1. “ COLLECTIVE ACTION “
• Against corruption• Interest groups, working together• Create fair market conditions • Promote innovation (on the basis of
price, quality and capacity to innovate)
2. CORPORATE CITIZENSHIP PROJECTS AROUND THE GLOBE• Electricity for a better quality of life (India
rural village)• Education as Key Resource: Mandela
School of Science & Technology
3. INNOVATIONS AND PIONEERING TECHNOLOGIES• Vegetable oil transformer for ultra-high
voltages
33
Proposed Acquisition:KiteGen
KiteGen KiteGen focus on searching an alternative and more effective way to produce electricity through the exploitation of an untouched, huge and powerful renewable energy source: the High Altitude Wind Energy (HAWE).
Two high-strength cables transmit the traction of the wing and control its direction and orientation through the automatic kite flight control system that maximizes the production of energy.
Relying on 40 mother patents registered worldwide (over 3.500 total patents in the world).
KiteGen
33
35
KiteGen Vision
VISION: KiteGen’s vision is a new type of electric generation plant, based on a renewable source, suitable for any territory, in direct competition with today’s conventional production (coal, oil or nuclear), in the GigaWatt class.
VALUES:• Encourage the production of eco-
sustainable energy• Respect for the environment
KiteGen Vision
KiteGen Advantages1. Financial resources: KiteGen needs a considerable amount of financial resources to
develop its ambitious project
2. Manufactoring capabilities: KiteGen could exploit Siemens capabilities in the manufacturing phase, EOS
3. Reputation: Siemens brand reputation is recognized all over world for the quality of its products
4. New customers: The possibility for KiteGen to have access to Siemens’ portfolio of customers
KiteGen Advantages
35
Siemens Advantages1. Innovation: KiteGen can exploit an unexploited, virtually
endless and almost universally available energy power, that is high altitude winds
2. Worldwide Trend: Google, China Vcs and several other companies around the world are investing in the exploitation of the high altitude wind energy
3. Competitive Advantage: The Energy business is considered an hauling sector for Siemens, acquiring KiteGen we may obtain a future competitive advantage over GE
4. Access to Complementary Assets: Relying on 40 mother patents registered worldwide (over 3.500 total patents in the world) which cannot be imitated
Siemens Advantages
36
Bid Price
• Due to the fact that the company patrimonial value is mostly determined by the MARKET VALUE OF KITEGEN’S PATENTS , we have based our proposed bid price on this value
• MARCO CICCOLINI, the business plan developer of KiteGen, has provided us this value :
€ 260 million
Bid Price
37
Bid Price ATTRACTIVENESS TEST:
• Unexploited, virtually endless and almost universally available energy power
• Coherent with Siemens’ tendency to be a pioneer in new technology development
• A considerable number of companies are investing in this technology
ENTRY COST < EXPECTED PROFITS:• According to our financial statement our Operating Cash
Flow of € 7,670 million allows us to buy it for € 260 million• Kite energy cost, for their last station project named
Carousel, is less 10 €/MWh
BETTER-OFF TEST:• Siemens managing KiteGen could create additional value
In Conclusion
38
40
Bibliographyhttp://www.siemens.com/entry/cc/en/
http://www.siemens.com/annual/14/en/download/pdf/Siemens_AR2014_Vision2020.pdf
http://www.siemens.com/about/en/history.htm
http://www.siemens.com/jobs/en/ataglance/
http://www.siemens.com/about/en/businesses/
https://www.swe.siemens.com/greece/internet/en/Documents/Siemens-company-presentation.pdf
http://www.siemens.com/annual/14/en/company-report/our-path/
http://www.siemens.com/jobs/en/ataglance/values_vision.htm
http://www.siemens.com/about/pool/strategy/siemens-strategy-overview-path.pdf
http://www.siemens.com/about/sustainability/en/index.php
http://www.kitegen.com/en/kiteblog-2/
http://kitegen.com/wp-content/uploads/2010/07/PEN-KGR2010.pdf
http://www.forbes.com/companies/siemens/
Bibliography
41
Personal Contacts*Siemens: Conte Elisabetta Corporate Account Manager
*KiteGen: Ciccolini Marco Business Development Manager
Personal Contacts