This case study is about Siemens Energy and how they should engineer a green future. Siemens is trying to innovate in existing technologies and new advance approaches to energy generation and distribution that are necessary in the United States, China, Russia and European Union in order to meet their respective energy targets over the next few years. Siemens wants to be in a leadership position in the new energy economy.
There is opportunities and challenges to accomplishing this.Siemens is a leading global supplier of environmental technologies and the second largest employer in Germany. Many of their products help customers lower their energy costs and protect the environment while helping to fight climate change. This benefits the environment and customers but is also very successful business for Siemens. Siemens Energy is a integrated technology company that continually utilities their global existence, financial influence, brand power, diversity, innovation and expertise to sustain their position.External Environment The external organizational environment affecting Siemens performance in the energy enterprises is best captured through the use of the PESTLE Analysis model as illustrated below: l.
Political The political issues impinging on the performance of Siemens, specifically in Germany involve the hostility of the German government to nuclear generated energy. This is characterized by the government failure to license or initiate new nuclear power plants in Germany for a considerable period of time.The current case on the government stance against nuclear power is forecasted as temporary and uncertain due to the volatility of political elections. Siemens Energy Company is reluctant to commit its corporate capital towards development and enhancement of clear technology due to the uncertainty surrounding nuclear power policies in Germany (Griffin, 2011). International investment in nuclear power plant construction is seemingly hindered by political concerns such as home security concerns, which give monopolistic competitive advantage to domestic energy multinationals in the award of nuclear power plant contracts.This home security political concern gives General Electric Company as the main competitor with Siemens in the United States nuclear energy market a monopolistic competitive advantage.
II. Economic Various carbon based and renewable source of energy have differential economic efficiencies in terms of the cost of installation of energy power plant and the benefits received in terms of the amount of electric power generated by the specific power generation technology.Also article Purely Monopolistic Seller,The cost of a specific power generation technology also goes beyond the cost of power generation, storage and distribution infrastructure to the environmental and social impact of designated power generation technology. Siemens company investment in the energy sector spans from carbon based energy sources to renewable energy sources such as wind energy, solar energy, hydro energy and nuclear energy.
The company has specifically pioneered in the wind energy investment and is the first to introduce the offshore wind power generation turbine technology.Siemens heavy investment in the wind energy sector is also reflected by its ranking as the fifth largest installer of wind power generation turbine (Earthmover F. H. , 2012). The company also at the forefront of the Deserted environmental initiative, which aims at substituting carbon fossils energy backlog in Europe with green solar energy trapped from the African Sahara desert. All these investments expedite a great deal of Siemens revenues capital in regard to the poor energy conversion efficiency of wind and solar energy.
Wind energy conversion ratio is estimated at only 45%, whereas solar energy conversion ratio is even lower with a power conversion ratio of only 20%. The economic efficiency of wind and solar power generation techniques is further weakened by the immobility of the natural power source, which adds on the cost of the energy dependability in terms of the pronounced cost of power storage and distribution. Wind and solar energy generated power is also the lowest demented form of energy source with merely 1% total consumption rate.Siemens heavy investment in wind and solar energy sector is economically intelligible since the two sources of energy occupies the question mark position in the BCC matrix. This fact is supported by the high growth in solar and wind energy source demand, which is not supported by a large market share. Heavy investment in wind and solar energy diminishes Siemens economic capital at a faster rate than the revenue generated by the sale of wind and solar generated power.
Ill. Solicitude This is a global awakening towards environmental consciousness on the negative impact of carbon based source of energy.This awareness is reflected by a multilateral trade agreement that explores substitution of carbon based energy source with renewable sources of energy as witnessed in the 2008 climate policy recommendation to the 68 leaders by multinational moguls as solution to the sass oil crisis. Renewable sources of energy are viewed as an alternative to oil driven economy and its subsequent inflation implication.
This shift in the social trend from oil driven economy to sustainable economic lifestyle affects the energy consumer market as the government limits its social welfare remittances to oil driven economic sector.Siemens Research and Development robust research in renewable sources of energy is in line with the anticipated social welfare pattern of major energy target market. The social trend in the energy target market exacerbated by the green revolution indicates a shift from carbon based energy market to renewable energy market (Griffin, 2011). 'V. Technological There are major milestones in both the substitution of carbon base energy sources with renewable energy and in the improvement of economic efficiency of power energy distribution.These changes include the improvement of wind power enervation through use of more refined materials such as glass and carbon fiber base materials and reinforced spun concrete.
All these materials coupled with their intensive and specialized labor demands places overly capital burden in its wind energy investment and research. Localization of wind to immobile and engineering challenging environment such as corners also improves on the cost of wind power generation. Siemens is also reluctant to commit its revenue capital to introduce a new innovative energy product in the market and relies heavily on outsourcing itsR projects to established innovative players in the energy sector. This innovative cowardly management of Siemens R department limits its competitive advantage in aggressive energy business investment (Earthmover F.
H. , 2012). V. Ecological Carbon based energy sources, which contributes more than half of Siemens gross revenue invites criticism and outcry from both the global community and their elite societal class of rulers. This criticism and outcry is precipitated by both environmental sustainability concern and by the oil induced inflation of consumer products.
Environmental sustainability concern against an economy driven by carbon based energy sources is witnessed in the global campaign against global warming contributed by accelerated demand of carbon based energy. Siemens Company headquarters location in the third largest CO emission block in COED European countries makes it a major target of environmental criticism against global warming. The government of Germany is also forced to honor its ratification of environmental treaties such as the Kyoto protocol through enforcing CO cuts on its domestic and multinational companies including Siemens (Griffin, 2011).This environmental pollution cuts is implemented as externally tax charges to Siemens Company, which increases its operational cost subsequently limiting the company's competitive advantage against energy companies outside the COED European block. VI.
Legal Home security legislations reduce competitive advantage of Siemens in bidding for nuclear power construction contracts in foreign markets. Domestic energy supply companies are legislatively at a monopolistic competitive advantage than Siemens in bidding for nuclear power plant contract.The German parliament has also enacted arioso legislations against construction of more nuclear power plant in the country. This reduces Siemens investment in nuclear energy sector (Griffin, 2011). Various externally taxes against CO emissions add to the operational cost of Siemens in its energy generation business, which increases its operational costs.
Porter's Five Forces l. Threat of Entry Siemens face competition in the non-carbon based energy sources especially from motor vehicle industries (Griffin, 2011). II.Power of Buyers The almost perfectly competitive solar power market contributed by the low priced Chinese solar power products, threatens the cost leadership competitive advantage of Siemens in the supply of solar energy. Ill. Powering of Suppliers Siemens sources it energy production infrastructure and resources from a number of sources.
Its carbon based energy sources are reliant on the policies of oil and fossil energy exporter agencies such as OPEC. 'V. Threat of Substitutes Other energy enterprises duplicate products and services as to continuously find ways to lower costs and be innovative.This reduces Siemens product demand, which causes them to invest money into R&D to find more advanced technology and uniqueness to their products. V.
Rivalry Among Existing Competitors Siemens main competitor is General Electric Company based in the United States and has a monopoly competitive advantage in nuclear energy market due to the home security legislation that selectively award nuclear power plant construction contracts to a home based energy company (Earthmover F. H. , 2012). Internal Analysis The internal environment of Siemens Energy is best explored through SOOT analysis as outlined below: l.
Strength Siemens Energy is the second largest after General Electrics in the global as a purely energy specialty enterprise in terms of both market share and revenue generation. This position gives the company a competitive advantage from the reduced operation cost realized through massive volume of production that is spread over a finite production capital. Siemens Energy is able to offer competitive prices for its energy products compared to other energy enterprises (Griffin, 2011). Siemens is the first and only energy enterprise to commission the offshore wind power generation turbine in Europe.
II. Opportunities The political changes in Germany with the election of a nuclear energy homeopathic parliament indicates possibility of future opportunities to Siemens Company in the construction of more nuclear power generation plants in Germany as the domestic market for the company. Multilateral recommendations by the 68 countries towards a shift from oil driven to green economy also offer opportunities for the renewable energy research by Siemens Company in R&D projects such as the Deserted project and offshore wind power generation (Griffin, 2011). Ill.
Threats The domestic security legislations threaten Siemens competitiveness in international nuclear energy market. Siemens faces major threats from established domestic energy enterprise such as GE in the United States. Emerging energy multinationals specializing in novel competitive advantage also threatens the R&D timid innovative approach of Siemens Company that exclusively relies on outsourcing for its R&D advances. Such threats are manifested by Toyota, Immunities and other motor vehicle companies investment in solar power driven cars, which outsmarts the conservative research of Siemens in solar energy market (Griffin, 2011).
SSP Model The structure of Siemens Energy market is characterized by a conservative R&D approach that heavily relies on outsourcing its innovative advances in the energy development, distribution and supply while consolidating its research and marketing in established energy market (Earthmover F. H. , 2012). Siemens Energy Company offers a diverse number of energy products including carbon based energy, nuclear energy, solar energy and hydro energy.
The high barrier to entry associated with the high cost of installing a hydroelectric power station provides Siemens with the competitive advantage in regard to its large revenue base.BRIO Analysis l. Value Siemens is the second largest global energy multinational in terms of revenue earnings puts it in a position to merge and acquire newly innovative energy technology from small, medium and large business players in the energy industry. II. Rare Siemens has pioneered some of the recent alternative energy sources such as offshore wind power generation. Ill.
Imitate The intensity and specialty of alternative energy generation technology such as wind power generation creates a barrier to entry in the wind power consumer market. 'V.Organize Siemens Energy is poorly organized in its R depending largely on outsourced revise. Value Chain Analysis Inbound Logistics Siemens Energy natural resources inputs include oil and fossils fuel for its carbon based energy sector together with other natural resources such as uranium 235 for its nuclear energy projects. The company relies on rare resources such as fiber glass and spun concrete for its wind power generation projects.
Solar power generation requires rare resources such as semiconductors for the construction of solar panels.Siemens utilizes hyperbolic mirrors for the same generation of solar power using the concentrated solar power technology. Operations Operations at Siemens Energy involve the manufacture of the various power generation gadgets or their installation for power generation at various locations as contracted by consumers, private or government development agency. Outbound Logistics Siemens operations outside its call center involve generation, storage, distribution and supply of electric power using various energy sources to consumers around the globe (Griffin, 2011).
Marketing and Services Siemens conducts its marketing promotion through biding for tenders in the installation of various power plants around the world. The company retails various power generation products directly to consumers such as solar panels (Earthmover F. H. , 2012). Services Siemens provides power generation, storage, distribution and supply services to consumers directly or indirectly through private or government developer. The company is involved in the maintenance of power generation plants after their installation.
Infrastructure Siemens is a multinational company with various power plants manufacturing firms around the world.Its headquarter is in Germany but its production activities are centralized around the world (Griffin, 2011). Human Resources The human resource capital is sourced globally in various multinational plant locations around the world. Technology Siemens owns a great deal of energy production technology as an independent entity with other energy production enterprises. This technology ranges from carbon based energy technology, wind power generation technology, solar energy technology, nuclear energy technology and hydro energy technology (Griffin, 2011).
Procurement Siemens procure its resources from local or international suppliers.Its carbon based energy power plants procure oil and fossil fuel locally or internationally from the European Union, United States or from the Middle Eastern countries. Uranium resources for its nuclear power plants come from countries such as South Africa. Diagnosis and Recommendation Siemens Energy is an established and sustainable energy multinational company with firms almost in every nation.
The company is the forefront of the green revolution in searching for alternative sources of energy to substitute the pollutant and economically inflating oil and fossil fuel energy sources.Siemens demonstrates menservants and reluctance in shifting from a predominant carbon based energy investment to a green energy investment. This fact is reflected by its exclusive outsourcing of all its R advances in the solar power and wind power generation technology (Griffin, 2011). A recommendation is made for Siemens to be bold in shifting its carbon based energy investment to a green energy revolution through exclusive independent R campaigns.
