Category: Siemens

Introduction

Siemens is an engineering company that deals with industrial, manufacturing and construction of electrical equipment. It is the worlds number one largest electrical company with its International headquarters in Munich and Berlin, Germany. Siemens Company was founded in the year 1847 by Warner von Siemens in Berlin, Prussia, under industrial conglomerates. Their products vary from communication systems, medical equipment, industrial automation, building technologies, fire alarms, power generation, and home appliances to mention but a few. Siemens service provision is categorized under three main sections namely:  Construction, Business, and Financing services.

For the period spanning more than one-and-half centuries, siemens has spread its branches to well over 190 countries all over the world with an employee base of 0.4 million (www.siemens.com). Their business slogan states their aim of being the best in customer service&had they not suffered the setbacks by the numerous cases of mismanagement, corruption, and bribery cases, they would have lived true to that dream. Numerous reports have been released on their involvement in corruption cases which has tainted their reputation. A private committee appointed to investigate the extent of these illicit deals revealed that about US$2 million (1.3 billion euros) in slush funds have been used in various illegal projects to buy favor to Siemens Company. The criminal activities cut across several countries in the world where Siemens has branches and where it does not.

Activities to the Society

During these hard economic times, when every person is struggling to make ends meet and save as many finances as possible, Siemens has not been left behind in the struggle to help society in this fight. They have come up with a lot of projects to help their customers enjoy a decent and affordable living by reducing fuel and energy use. Some of the reported activities include:  establishing programs that are geared to make chemicals and fuel from Second Generation Biofuel.

Through the Siemens Foundation, the Siemens Company has devised a way to help society. The foundation is aimed at rewarding students and AP teachers who have shown exemplary performance and excellence. One of the foundations pilot projects is the Siemens Westinghouse Competition in mathematics, science, and technology. Through the project, individuals, as well as corporate entrants, can win scholarships up to a tune of US$ 100,000. The total expenditure of the Siemens Company on their award projects is estimated to be about US$ 2 million annually (www.siemens.com).

Problems and Challenges

Just like other major companies in the world, Siemens has not escaped the wrath of accusations on its dealing by the top managers. It has been dodged with many controversies and wrongdoings in the past and even to date. For instance, the year 2007 was no good one for the company at all; it was tainted with unfriendly occurrences touching on the evils committed by the Siemens top brass management. Just at the beginning of the year in January, the European Commission fined Siemens a total of 396 Euros for rigging electricity markets for a period of sixteen years (1988-2004). Siemens Company together with eleven other companies like Alstom, AE Power Systems, Schneider, Toshiba, ABB, VA Tech, Fuji, Hitachi Japan, Mitsubishi Electric Corp, and Areva were involved in the cartel. Siemens was accused to be the master minder behind the cartel that was involved in rigging bids for contracts procurement, allocating projects to only within members within their groups, fixing prices, sharing confidential information of commercial importance, and lastly sharing market opportunities. By the virtue of playing a leading role in the criminal act, Siemens earned itself the highest fine.

In March 2007, one of Siemens significant board members, Mr. Johannes Feldmayer, was accused and arrested because of financing a labor association, rival to the Union IG Metall (Industrial Union of Metal workers-Representing both blue and white-collar job employees in the industry), and this further lead to the investigation of all the other board members who denied to have committed any wrong. Feldmayer was accused of tipping a former Workers Union boss (the Association of Independent Employees-AUB), Mr. Schelsky. The money was to reduce IG Metalls influence by buying AUBs loyalty through Schelsky. The Bavarian (Nuremberg) court handed heavy penalties on both the accused persons; Mr. Feldmayer was fined 28,000 euros while Mr. Schelsky received a sentence of four-and-a-half years for receiving a bribe and on tax evasion. The court prosecutors are further seeking to add on top of the sentence a threeandhalfyear imprisonment on Feldmayer and six years to Schelsky.

The financial reports taken on the latest financial year indicate that as the sales rose by an average of 11.9 % score, the net profits declined by 9.6%. This was the scenario both at the parent Siemens Company as well as all their branches. No one had ever anticipated such dismal performance and decline within a year. The management reasoned that the reason for such a scenario where profits fell like that was due to the new large projects that had been initiated and inquired the company some costs to overrun (Mobis Philipose, 2008). The losses are also attributed to the increment of taxes on their engineering products. The management reported delays in both execution and orders hence leading to the fall in revenue. Siemenss tight credit conditions are also to blame for the crisis; the customers are forced to delay their plans for expansion in the service delivery and product provision due to the conditions set by the credit system.

The Siemens Bribing Scandal

In April of the same year (2007) that a senior Siemens board member was arrested on accusation of bribery. A Mobile Company, Nokia which was to merge with Siemens to form a 50/50 joint venture delayed the deal for some time, thanks to the ongoing bribery allegations on Siemens (Herald Tribune Report, 2007). Six months later, a Munich court found Siemens company guilty of paying bribes as kickbacks to ministers and other public officials in Nigeria, Russia, and Libya so that they could be awarded government contracts. They admitted the charge and were in turn fined a total of 201 million euros, and the contracts were also counseled. Mr. Ernst Keil-von Jagemann and his counterpart Mr. Wolfgang Rudolph nodded to the accusations that tied them to corruption and misappropriation of funds. Jagemann was found guilty of 75 charges and was fined 12,000 and two years behind bars. Rudolph was directed to pay 20,000 to charity and given a nine-month sentence after being charged on two accounts.

As if that was not enough, in May 2007 two more members of the executive office of the Siemens Company were found guilty of paying a bribe of 6 million euros to help Siemens win contracts to supply natural gas turbines with an Italian energy company, Enel. The German court established that the offense was committed from the year1999 up to 2002 valuing the total cost of the contract at 450 million euros (The New York Times, 2007). A fine of 38 million euros was imposed on the charge.

Currently, the company is again under scrutiny and investigation on suspicion that from 2002-2006, a former member of Siemenss management board Mr. Johannes Feldmayer together with Mr. Karl-Hermann Baumann and Mr. Heinz-Joachim Neuburger (ex-chief financial officer ) got involved in bribery cases. Unclear payments amounting to over US$1.9million and 1.3 million euros to officials in different countries including the United States and Germany is what triggered the inquiry.

Controversies were not just about to end with the year 2007 as thought by some hopefuls. Just before the corruption dust settled, another blow came crumbling Siemens to the ground. On Tuesday of July 2008 in Greece, it was revealed that a number of politicians in the country had received money from Siemens slush funds to help it secure a contract through its main telecommunications operator OTE to create a lucrative security system for the 2004 Athens Olympics. The investigations that had been ongoing for two years came to an end with the prosecutor filing charges of money laundering and corruption between the Siemens Engineering company, OTE, and the Greek State.

Even though no particular individual has been charged, reports indicate that more than 100 individuals have already testified to the prosecutor at Athens Panayiotis Athanassiou over the period during the investigation to help shade more light on the saga. Those that had appeared on the stand before the investigating committee include former executive officials of Siemens AG Greek unit and OTE, a number of stockbrokers, and businessmen who participated in one way or another to bridge the deal. The Greek media reports have it that, the revelations have caused major splits and waves in the political arena of the country (Greece). The major political parties (the Ruling New Democracy Conservatives and Opposition Pasok Socialists) have different opinions on the matter&further revelations disclose that leaders from both sides received some payments from the slush funds. [But of cause none of them owned up to having received any gifts or perks from Siemens].

From the time reports were published by Greeks most respected daily (Kathimerini) that the Siemens Company might have used the money to the tune of 12 million euros for the main political party in Greece in 1998 and 2005, pressure has been mounting on the Greek Prime Minister Karamanlis to open a parliamentary investigation on the matter and stop covering up. [But this will only take place after the judicial investigations are completed].

To add more salt to the Siemens wound, the Norway police on the same date, July 1^st, 2008 slapped a fine on the German Engineering Giant-Siemens for the allegation of corruption reported in defense contracts. The fine amounted to US$400,000. That fine marked the second one that Siemens was suffering in the hands of the Norwegian government on similar accusations. Siemens Company has decided to contest the decision that had been made on both the charges. The bribery and corruption cases involving Siemens Company are widespread just like its branches, and since the year 2006, it has been in court battling against one case after the other.

Needs and Requirements

There was the need for the giant company Siemens to put the matter to complete rest and forge a way forward by clearing the names of the innocent individuals who were falsely accused, and at the same time charge the guilty ones. This is the reason which made the company jointly sue its ex-officials, i.e. two CEO and other nine members for bribery charges. The CEOs were accused of failing to act within the stipulated code of ethics that requires them to act without negligence; they had neglected their supervisory duties in the periods when they were in office (2003-2006). Instead of acting as per the regulations, they got involved in illegal business deals as well as massive bribery and corruption.

In most cases, the money that was being used to found these illegal deals were the company money stashed in private Siemens accounts strictly to be used as a conduit for bribery. Mr. Reinhard, a former executive of Siemens in the ICN Division, admitted in court to having helped the creation of slush fund accounts and front officers to aid the illegal payment of consultancy fees which had the major objective of corrupting officials outside Germany. Such officials will eventually act in favor of Siemens [this clearly shows that there was no consultation involved-but pure corruption]. Reinhard was fined 108,000 euros after being found guilty of 49 counts on misappropriation of corporate funds.

Possible Solutions to the Problems

The bribery case led to a management shuffle, where the then chairman of the Supervisory board of Siemens AG Dr. Heinrich von Pierer got replaced by Mr. Gerhard Cromme and Peter Loscher replaced Dr. Klaus Kleinfeld as the president. The management has since then embarked on ways to stiffen regulations and tighten all internal operations to avert such corrupt acts. The penalties that have been imposed on the accused are believed to be able to go a long way to curb further malpractices.

Some other steps that Siemens took on the guilty officials include cutting all ties with them in terms of; office space, all consultant contracts as well as any other business deal, this is then crowned by charging them in the court of law, as the laws of the land dictate. Even though things are not looking that pretty for the company, all is not lost. With the input prices coming off, and through tight regulations set to guide the managers operations and administrative costs, the financial year 2008-2009 could witness an improvement in Siemens profit margin. Also on the brighter side, the Siemens Company has got plans to keep low their capital expenditure and if in case they have to use more, then they will put into use their cash reserve of about Rs 980 to avoid any form of borrowing (Shobhana & Varum).

To boost the investigation and dig out the truth on the secret dealings, the investigating committee has resorted to an unfamiliar strategy where the small fish have been granted amnesty so that they can reveal the evils done by the senior executives. The recommendations of some of the findings of the investigation suggest that further changes should be carried out to make Siemenss corporate structure more transparent and leaner.

In the last report of Transparency International, it is revealed that Germany moved two steps high in the corruption list to number 14 out of the180 countries investigated. This, therefore, calls for something to be done to reverse the trend. The country is not willing to apply the UN initiatives and strategies meant to tackle corruption. To prevent further damage and loss of face value, the German government needs to view the issue with strong oversight and put all the regulations in place to control overseas bribery.

The independent media, law enforcers, the parliament as well as civil society have to take it upon themselves to see that the fight against corruption is revived to stem out the vice. Failure of these groups of individuals to act, coupled with weak institutions will result in surging cases of corruption in the society. If corruption moves out of control, then the consequences on the ordinary people with low earnings will be disastrous.

There has to be a global initiative to help address corruption. Corruption is of global concern, particularly the major multinationals that operate across the borders. The rate by which corruption has been increasing only indicates that there has been laxity or failure by the well-developed and rich nations to live up to their promise and unanimously join in the fight against corruption. If such countries still want to remain credible in the eyes of the low-income countries, then they have to adhere to the rule of law and gain public confidence by stepping up the campaign&but first, they have to set a good example to the developing countries.

Further Solutions (Recommendations)

Under the leadership of Mr. Peter Loescher, a big forward leap has been made in a very short time. The entire team of the Siemens current board of directors has embarked on a process to prosecute all the former top management and try to find out what happened and who did what in every case. All the culprits will be held liable jointly if they are found to have neglected their duties as stated in the stock corporation law. In Germany and all her corporate activities abroad, it is an illegal offense to give or receive bribes and the law applies to everyone indiscriminately. Therefore, for whoever is found guilty of condoning such corrupt acts, the same law will apply to him/her. So, even if the said executives were not directly involved in the dubious acts, they will still be charged with negligence of duty and for not doing everything within their power to nip the slush fund project

Conclusion

A company that was once the most adored has undergone what can be referred to as baptism with fire and is now struggling to re-establish itself to represent a graft-free figure after being shaken to its core [a toll order indeed]. The corruption cases have caused a lot of distrust among the management staff leading to several resignations from the company. The company is now struggling to at least save its face from the public and try to waver away from the perception that it can never be of any match to more than thirty potential competitors.

The steps taken by the Siemens Company under the leadership of Mr. Peter Loescher are costing the company more money which they could have on the other hand saved or used for expansion. Reports have it that they have set aside more than 510 million euros on the fees and fines for lawyers and management consultations to help with the internal investigations of their members on the reported allegations.

We can also conclude by saying that, though the courts are trying to bring the individual perpetrators to book, a grave challenge lies with the organizational structure of Siemens Company which has been put under strict observation by the same courts on their perceived irresponsibility. But the courts have never had an easy ride on this as it is an uphill task to determine which of the specific numerous bosses of the company were intertwined in the corrupt affairs and more so it is hard determining where the money was taken to.

In a bid to rectify the issue and in whatever is being done, the main aim and mission of the new board members should be to unearth the secrets and call all the officials responsible for creating the slush fund to account&the steps should include an explicit decree or simply by tacit agreement with the practice. But there is one thing that everyone will agree with, that the top brass management was well aware of the dealings, for it would be unimaginable to say that all the handouts, gifts, payments, and kickbacks were approved without their knowledge.

Finally, this research found out that Siemens managed to acquire a great number of contracts in many countries in the world-this raised eyebrows, and to add to that it is known to everyone that such is not possible to be awarded such many contracts without the involvement of tips/kickbacks. In any dealing involving kickbacks, there is a possibility of tax evasion, especially in the developing countries [which of cause is corruption]. In the 1990s, the industrialized nations unanimously agreed to root out corruption and create a corruption-free world and promote democracy. They therefore completely banned all illegal practices and established democracy as a law&this law applies even to Siemens.

Works Cited

1. Bloomberg.com. 2008.
2. Siemens AG  Annual Report (HTML). (2008).
3. Siemens history. 2008.
4. The New York Times. 2008.
5. International Herald Tribune: Bribery trial deepens Siemens woes, 2007.
6. Mobis Philipose Money Matters: Siemens hit by cost overruns 2008.
7. Shobhana Subramanian & Varum Sharma: Siemens: Growth trips: Mumbai 2008, 0:12 IST

Introduction

The case offers insight into the legal issues Siemens AG and three subsidiaries experienced in the late 2000s. Siemens AG is among the biggest and most popular electrical engineering firms in the world. The firm was established in 1847 in Berlin, and its headquarters are in Munich, Germany. The essay aims at providing a summary of the case and outlining the basic terms and the steps that senior management must take to prevent an incident like this from occurring again.

Case Summary

Cases of tax evasion, bribery, and money laundering have been laid against Siemens AG by authorities globally. It was noted that Siemens AG had paid approximately $1.9 billion in improper disbursements to outsiders from 2001 through 2007 using various mechanisms (Berghoff, 2017). The company and its three subsidiaries had pleaded guilty to breach of charges associated with the Foreign Corrupt Practices Act (FCPA) as the U.S. Securities and Exchange Commission, and the Department of Justice stated (Washington, 2008). The firm pleaded guilty to a two-count information charging criminal violations of the FCPA’s internal controls and records and books provisions.

Further, Siemens Argentina pleaded guilty to a single account of information charging conspiracy to breach the records and books provisions of the FCPA. Siemens Venezuela and Siemens Bangladesh each pleaded guilty to different single-count information charging conspiracy to breach the FCPA’s anti-bribery, records, and books provisions. Siemens AG decided to pay $448.5 million as a fine while Siemens Bangladesh, Venezuela, and Argentina each approved to pay a $500,000 fine, all amounting to $450 million as a total criminal fine (Washington, 2008). Therefore, it is most likely to offer brides by MNCs to establish relationships and obtain contracts in global business transactions.

Furthermore, based on the court documents, starting from the mid-1990s, the corporation was involved in organized efforts to fabricate its company records and books and knowingly failed to execute and circumvent current internal controls. The knowing failures in and circumvention of internal controls of Siemens AG from the time of its listing on the New York Stock Exchange (NYSE) on March 12, 2001, to 2007, the company had disbursed a total of close to $1.36 billion using different mechanisms. Close to $554.5 million was remitted for unknown purposes comprising an estimated $341 million in direct payments to business consultants for unknown purposes (Washington, 2008). The company used the remaining $805.5 as corrupt payments to foreign officials using mechanisms such as slush funds and cash desks.

Moreover, the company management made another lucrative business from contracts overseas through bribery. The four Siemens AG subsidiaries from 2000 to 2002 were awarded 42 contracts that amounted to a combined value of over $80 million with Iraq’s government under the United Nations Oil for Food Program (Berghoff, 2017). The company had to pay kickbacks to the government of Iraq amounting to $1,736,076 and they attained profits of over $38 million on the 42 contracts (Washington, 2008). Siemens AG subsidiaries inflated the contract price by approximately 10% before submitting it to the United Nations for consent and improperly channeled payments to alleged business consultants.

Consequently, as the plea and charging documents reveal, from September 1998 to 2007, Siemens Argentina made substantial payments to different Argentine officials. This was paid directly and indirectly in exchange for favorable business considerations concerning the $1 billion national identity card project (Howard, 2017). In this case, it was discovered that Siemens Argentina remitted close to $31,263,000 to different Argentine officials as corrupt payments using different payment mechanisms. All of these were included in Siemens AG’s books and records containing the falsified corrupt payments. Based on the court documents, from November 2001 through May 2007, Siemens Venezuela admitted to having paid $18,782,965 as corrupt payments to different Venezuelan officials. Siemens Bangladesh in the plea and charging documents admitted from May 2001 to August 2006 paid $5,319,839 in bribery (Washington, 2008). It was purported as payments for business consultants to different Bangladeshi officials to obtain favoritism in the bidding process.

The Siemens AG bribery scandals were key events that had a substantial effect on the operations of the company and its reputation. The scandals led to key ethical issues for the corporation. Being engaged in corruption dealings was a bad image for the firm and affected the confidence of stakeholders. It was discovered that corrupt deals in Siemens AG went beyond what the managers were doing and bribery was an entrenched aspect of the company. Bribery the company becomes a normal way of conducting their business (Howard, 2017). This implies that corruption goes deeper than the management level and may become part of the organizational culture.

However, with bribery being entrenched in the organizational culture, it shows the ethical issues that the corporation violated because corruption was present at all organizational levels. The company had to remit more than $1.6 billion in fines, disgorgement, and penalties for profits comprising $800 million to US authorities. The case was successful by the utilization of the mutual legal help provisions of 1997 under the Organization for Economic Cooperation and Development Convention on Combating Bribery of Foreign Public Officials in Global Business Transactions which was enacted on February 15, 1999. The significant amount needed to pay stresses the level of bribery and corruption that was happening at the company (Washington, 2008). The effect of these bribery activities was conducted was felt across the world because it has been going on in several markets.

The Steps Senior Management Should Take to Prevent Such an Incident

The senior management of Siemens AG due to the bribery scandal that surrounded the company, they are required to change the organizational culture. The corporation had to restrict the influence of the co-determination law of Mitbestimmung on the board of management. Many years after the Siemens AG system of cross-shareholding aimed to protect companies post-war from complete capitalism, the pressure wave was broken up because finance groups resold their shares mostly to foreign investors. Further, the company’s senior management needs to group the country’s operations into clusters and establish a managerial team to oversee the whole (Orlitzky & Monga, 2017). Some of the subsidiaries need to operate as discrete companies, with the regional teams acting virtually independently.

Based on some firms’ practices, which experienced corruption scandals like Siemens AG, it is important to create a person accountable for global performance in each business, place the national operations in clusters considering their location, and appoint the managers to oversee the whole. Lastly, the corporation should embrace diversity in its board of directors and top management. They need to change the “too male, too white, and too German” culture of the organization. The company had never placed a woman on its managing board even though the participation of women has a huge influence on its performance (Lagunes, 2021). In addition, a multinational corporation such as Siemens AG operating in over 190 nations has to permit overseas executives to be on the management board.

Conclusion

In conclusion, Siemens AG was seen as one of the most productive and powerful firms in the electronics field and those bribery scandals influenced its popularity and business in the world. The analysis reveals that corruption was entrenched company’s culture. However, some of the steps the company should take to avoid such cases are to embrace diversity in management and create a person accountable for global performance in each business.

References

Berghoff, H. (2017). “Organised irresponsibility”? The Siemens corruption scandal of the 1990s and 2000s. Business History, 60(3), 423-445.

Howard, R. (2017). Wells Fargo CEO, local and federal officials testify on banking scandal: September 20, 2016. Historic Documents of 2016, 1(5), 471-483.

Lagunes, P. (2021). Three corruption scandals, three Field experiments. The Eye and the Whip, 3(5), 1-15.

Orlitzky, M., & Monga, M. (2017). Integrity in business and management: Cases and theory (3rd ed.). Taylor & Francis.

Washington, D. C. (2008). Siemens AG and three subsidiaries plead guilty to Foreign Corrupt Practices Act violations and agree to pay $450 million in combined criminal fines. U.S. Department of Justice. Web.

Background

Siemens AG is a German company with a long history of success and a good reputation in the technology industry (Ma 2012). It is also one of Europe’s largest technology firms with a revenue base of over $77 billion according to Fernando, Purkayastha, and Bellamkonda (2010, p.2). In addition, the company has over 430,000 employees. However, the reputation that Siemens has built for several years was brought into question in 2006 after being caught engaged in a series of corruption scandals (Biegelman and Biegelman 2010, p.59). In the first incidence, Siemens was caught having bribed foreign officials in a bid to win contracts and create a slush fund (Ma 2012). In another case, Siemens was alleged to have bribed the officials of the labor representatives of the supervisory board in a bid to win their support over the policies that Siemens intended to implement (Brooks and Dunn 2009, p.15). Immediately after the whistle had been blown on the scandal, a team of investigators was appointed which immediately raided Siemens’ offices in Germany and other countries in the world, such as the U.S., Italy Greece, and Switzerland in a bid to unearth the alleged corruption scandal (Neelankavil and Rai 2009, p.56). The raid led to the arrest of five Siemens workers, who were then taken to custody for involving in corruption. The forensic audit conducted on Siemens financial statements found that about €420M payment could not be accounted for, which investigation later revealed that the money had been paid to foreign purchasing officials in different countries such as the U.S., Italy, Greece, and Puete Rico (Phillips and Gully 2011, p.32). It was at the time that Siemens acknowledged that some of its employees were indeed involved in the alleged fraud.

Twomey and Jennings (2010, p.16) reveal that the scandal led to the prosecution of Siemens’ chief executive Kutschenreuter after being found guilty of involvement in the corruption scandal. In this regard, “apart from being placed on probation for two years, he was also fined €160,000 for admitting to cover up the bribes and slush fund payments” (Fronz 2011, p.41). Other officials found guilty of the scandal included Hans-Werner Hartmann, the manager in charge of accounting of the telecommunication department of the company (Lawler 2012, p.92). Apart from being suspended for 18 months, Hartmann was also fined €40,000 according to Lawler (2012, p.92). The report indicates that Siemens used these funds to bribe government supervisory board officials in a bid to win lucrative contracts in Nigeria and Russia as noted by Hoskisson, Hitt, and Ireland (2008, p.17).

Impacts of the scandal

Mele (2009, p.34) reveals that German law prohibits any official or citizen in the country from engaging in a corruption scandal. This is the general law in most countries, Australia being not an exception, according to Schaffer, Agusti, and Earle (2008, p.44). Therefore, it was against the law for Siemens to engage in a corruption scandal a position, which was justified by the jury who handled the case. In this regard, the first immediate impact is that Siemens was fined €30 million for its engagement in the corruption scandal (Guffey and Loewy 2010, p.84). However, this fine can be considered a drop in the ocean because it only accounted for just 7% of the €420 that the company paid out in the form of a bribe (Lasher 2011, p.109). Nonetheless, when the bribe is combined with the fine it paid for the scandal, it totals €450 million, which is significant according to Newswatch Communications Limited (2007, p.15).

Siemens’ engagement in the corruption scandal also scared away investors from the company who were afraid of losing their money because of the scandal (Brand Support Services 2007, p.74). In this regard, Siemens is reported to have lost a majority of its market share in the international business in 2006. Jeffrey (2012, p.83) reveals that the operation of the business was also affected as managers, and some employees were engaged in a court tassel. Firestein (2009, p.65) also indicates that the company’s overall profits also declined significantly in the global market, something that the company attributed to the corruption scandal, which befell the company in 2006 and 2007.

As earlier indicated, Siemens has been one of the most respected technology in the world, the reputation which took it several years to build. However, the unethical behavior of involving in the corruption scandal did ruin this reputation, something that will take the company several years to rebuild, according to Nicholls, Nicholls, and Daniel (2011, p.41). This is because the scandal made customers, investors and other stakeholders lose faith in the company for fear of other unethical acts even if it is not corruption (Jennings 2010, p.56). Siemens has experienced a decline in customer base since the scandal was unearthed probably for fear of the same (OECD 2005, 87). In addition, the scandal has also brought into question the effectiveness of the German Co-determination law after failing to prevent the corruption scandal in Siemens.

Steps were taken by Siemens to prevent such incidents in future

After the discovery of the corruption scandal in Siemens, the company has employed a raft of programs and strategies aimed at preventing such unethical behavior from happening in the company in the future (Schorsch 2009, p.102). Most of these programs are geared towards strengthening compliance controls and its corporate governance structures (Hitt, Ireland, and Hoskisson 2010, p.19). In this regard, Siemens has established its business conduct principles, which states how its employees are supposed to deal with government officials in what it terms “Anti-public corruption compliance” (Loughman and Sibery, 2011, p.38). The company hopes that this guideline will help bar its employees from engaging in corruption in the future as the document defines the periphery of their conduct in dealing with government officials.

The company has also instituted a strong internal control system in which all government contracts are audited both by the internal and external auditors to ensure that no employee or company manager engages in another corruption scandal that might ruin the company’s corporate image (Griffin 2012, p.33). The strong internal controls have indeed proved effective since they have made employees fear when engaging in corruption knowing that their corrupt deals may be discovered by the audit team in a matter of hours or days (Deresky 2011, p.61).

As earlier stated, Siemens also promote good ethical behaviors within the company by teaching its employees and management team of the dangers of engaging in unethical behaviors, such as corruption (Zagaris 2010, p13). At the same time, the company has become very strict in the way it handles unethical behaviors in the company (Stachowicz-Stanusch 2010, p.75). Unlike before when employees could be pardoned for misconduct, the company now punishes any person found engaged in unethical behavior through service termination, to prevent employees and managers from engaging in such acts while still working for the company.

The role of the co-determination law in the bribery scandals

Michel (2007, p.19) argues that the German Codetermination law confers upon workers the right to participate in management decision-making. The law also gives employees the right to be represented on the board of directors (Tarun 2010, p.26). This implies that any supervisory board must have a labor representative. However, following the scandals that have been witnessed in Germany over the past few years, Jennings notes that questions have been raised as to the effectiveness of the Codetermination law (2011, p.9). is so whereas it is meant to protect scandals from happening, it has only been promoting scandals in different companies. This has particularly been witnessed in Siemens and Volkswagen have been faced by a corruption scandal according to De Mestral, Lévesque, and Vesque (2013, p.94).

For instance, in the corruption scandal at Siemens, investigations revealed that the company bribes the labor representatives on the company supervisory board to gain their support in regards to the policies the company wanted to pursue (Twomey and Jennings 2010, p.94). As a result, instead of the labor representatives blowing the whistle over the scandal, they went ahead and concealed the scandal, which was only unearthed after investigation and audit. A similar scenario was also witnessed in Volkswagen when the labor representatives to the supervisory board accepted bribes to allow the company to pursue its policies as noted by Gorton and Schmid (2000, p17). These incidences point at a complete failure of the Codetermination law to fulfill its mandates.

Conclusion

As a result, an international governing body must be formed to regulate the behaviors of global corporations. As for Siemens, the company needs to eradicate corruption and any form of unethical behavior by instituting strong control measures capable of preventing such behaviors in the company, as this is the only way it will win back the confidence of its stakeholders in the market.

References

Biegelman, M.T., & Biegelman, D.R 2010, Foreign corrupt practices act compliance guidebook: Protecting your organization from bribery and corruption. John Wiley & Sons, Hoboken, NJ, USA.

Brand Support Services 2007, Brandfaces, Issue 42. Brand Support Services, Oxford.

Brooks, L.J., & Dunn, P 2009, Business & professional ethics: for directors, executives & accountants. Cengage Learning, Marson, OH.

De Mestral, A., Lévesque, C., Vesque, C.L.L. 2013, Improving international investment agreements. Routledge, London.

Deming, S.H 2010, The foreign corrupt practices act and the new international norms. American Bar Association, New York, NY.

Deresky, H 2011, International management: Managing across borders and cultures (7thEdition ed.). Prentice-Hall, Upper Saddle River, NJ.

Fernando, R., Purkayastha, D., & Bellamkonda, B. 2010. The bribery scandal at Siemens AG. IBS Center for Management Research, London.

Firestein, P 2009, The crisis of character: building corporate reputation in the age of skepticism. Sterling Publishing Company, Inc., New York, NY.

Fronz, C. 2011. Strategic management in crisis communication – a multinational approach. Diplomica Verlag, London.

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Multiple Cause Diagram Showing Factors Creating a High Performance Culture

The main issues that come out as the central drivers of the high performance culture at Siemens are the setting of team and individual targets, promotion of people excellence, talent management, and performance management.

The main issues arising from the diagram reveal the centrality of the company’s operational philosophy in regards to their employees. In essence, the issues that lead to a high performance culture at Siemens stem from a central philosophy. This example shows that the philosophical model chosen by an organization plays a major role in the programs developed by the organization.

The second set of issues that arise from the diagram is that Siemens promotes measures that increase employee productivity at a personal level. This is the basis for high performance in the organization. The best measures that an organization can put in place to measure its performance must include the measurement of individual performance.

The third element that arises from the diagram is that the organization uses many measures to promote high performance. It does not limit itself to a single measure. It runs several programs concurrently that meet the motivational needs and the aspirations of the employees.

Closed-Loop Control Model

Figure 1: Control System for performance analysis

The main components of the control system for performance analysis are system goals, the inputs, the outputs, the feedback path, and the sensor. The system goals in the context of an organization include having highly skilled employees. Other goals may be highly motivated employees or high performing employees. There are two inputs in the performance analysis system.

Employees are one of the inputs. They are the ones that the system tries to improve. The other inputs include training programs and mentorship programs. Inputs are the commitments the organization makes to ensure that the employees have the best environment for personal and professional development.Figure 1: Control System for performance analysis

The main output from this system is employees with better skills. It can also be employees with better attitudes or increased motivation. In a system, all inputs must form part of the outputs. Information is a special kind of input that may change. In this sense, it is not necessary to account for all information inputs because it ends up in some other form in the outputs.

The final part of this system is the feedback path. Performance appraisals are the feedback mechanism that helps the organization to measure the change in the skill level of employees. Performance appraisals mean all the activities the organization may undertake to measure an employee’s performance and not just a quarterly meeting.

Organizational Goals and the Role of Goal Unity in Siemens

Organizational goals are high-level aspirations set to guide the development programs of a business. Organizational goals also refer to the low-level goals within departments and at personal level set across the business towards the achievement of the organizational goals. Therefore, organizational goals refer to the sum total of the goals an organization sets to achieve its objectives.

Goal unity is very vital in organizations. It refers to the ability to align all goals set in the organization to overarching aims. Goal unity makes the organization function like an organism. All the efforts that the members of the organization make contribute towards the achievement of the goals of the organization.

The role of goal unity in an organization is that it enables all the members of the organization to align their abilities and resources towards the achievement of the main goals of the organization. This is the basic ingredient in the success of businesses. When an organization achieves goal unity, it experiences three distinct advantages.

First, it experiences synergy. Synergy is the tendency of people working as a team to achieve more than the sum total of their individual performance. The achievements that an organization makes because of goal unity give it a unique advantage in productive terms compared to similar organizations that have no goal unity. Secondly, goal unity leads to better resource allocation and prioritization.

An organization with goal unity will receive better returns for a given amount of resource outlay. Such an organization is also less likely to waste its resources. Thirdly, goal unity is the basis for the development of certain strategic advantages.

The possession of goal unity by an organization shows that the organization has a focused approach to dealing with issues. In this sense, the organization is able to adapt to change. It is also able to align its resources to take advantage of any opportunities.

In the case of Siemens, the company achieves goal unity by developing its overall goals from the individual goals of each employee. The elaborate components of the high performance culture ensure that there are multiple channels of attaining goal unity.

Long Term Impact of Performance Related Pay on Organizational Effectiveness

Performance related pay refers to financial considerations or special rewards offered to an employee based on their output. It differs from the normal pay because it arises from the performance of an employee. Its role is to motivate employees to perform better.

For instance, a sales representative may get performance related pay associated with the amount of sales. Performance related pay rewards results and not effort. It is possible to find a correlation between performance and results, yet it is also possible to put much effort in a job without producing measurable results.

The first advantage of performance related pay is that it insulates the organization from payments not associated with results. In a sense, it ensures that the organization gets value for its money. Secondly, it serves to motivate high achievers in the organization.

It shows that an organization values those that bring in the best results. Thirdly, performance related pay makes sales planning very easy. It is easy for it to know how much money it will make out of a given business deal since the only costs the organization incurs are costs associated with successful sales.

The disadvantage of performance related pay is that if an organization relies on performance alone as the basis of pay, some employees suffer. For instance, a receptionist cannot do anything to increase the number of people served at the reception. The only way to determine whether a receptionist qualifies for performance related pay is by taking qualitative measurements.

Such measurements are very difficult to quantify in monetary terms. The second disadvantage is that beyond a certain point, money loses its motivational power. Employees look for elements such as job satisfaction, opportunities to grow, and increasing responsibilities. Failure to recognize these changing needs make performance pay ineffective.

The third problem with performance pay is the measurement of performance. In some jobs, it is very difficult to know how to assign a performance value to the nature of work.

For instance, is there a straightforward way of measuring the performance of a delivery truck driver? Is it the number of kilometers covered, or is it the hours spent at work? Which of these two options generates value for the organization, and makes sense to a truck driver?

Performance related pay, unlike scientific management does not require elaborate measurements. Scientific management gives an organization more work in terms of the identification of parameters to use in the planning and management of work.

Performance related pay simply finds a parameter that meets the objectives of the organization and usually leaves the details of the work to the specific employees. This flexibility gives independent minded employees a very good working environment. It is however very stressful for employees who would otherwise thrive in a closely controlled environment.

In Siemens, the organization seems to employ scientific management adapted to its needs. The management philosophy at Siemens is adapted to reduce the impact of scientific management, when applied in its pure form.

The organization takes great care to ensure that they provide the best environment for employee to excel in their work. One of the main criticisms against scientific management is that it tends to ignore the interest of the workers in favor of the interests of the organization.

It looks at employees as machines that produce a uniform output. In reality, each employee is unique. Siemens recognizes this fundamental weakness of the scientific management system. The application of scientific management principles in the company adjusts the method to eliminate its weaknesses. Siemens focuses on the individual strengths and the interests of the employees.

This ensures that the employees are able to concentrate on what they do best. The performance management systems at Siemens all aim at the individual worker. Each worker has a unique performance profile developed by a wide range of performance measures that constitute the high performance culture at Siemens.

The Role of the Organizational Structure on Effectiveness and Performance

The Roman Catholic Church (RCC) is an outstanding organization because of the effectiveness of its organizational structure. The administrative distance between a pope and a local priest is only four levels. These levels consist of the pope, an archbishop, a bishop, and the parish priest. The church illustrates that the strength of an organization can be its administrative structure.

Good structures encourage high performers to take charge of their work because the structures ensure that these high performers receive all the support they need for their work. Organizations with good structures also make it easy for information to reach decision makers, and for decisions to flow to the rest of the members of the organization.

If the RCC adopted a different structure, it would have created bottlenecks in its structure. The first casualty of a poor organizational structure is communication. Once the communication lines of an organization clog, the organization loses its capacity to grow. Organizations with poor structures also tend to lack proper authority and responsibility structures.

As soon as employees realize that they are not answerable for their actions, systems fail. Similarly, a high performing organization needs clear structures that allow rewards to flow to employees. Similarly, clear responsibility lines make it easier for the organization to find ways of motivating demoralized employees.

As an organization, one of the strong points noted in the Siemens organizational structure is that it promotes individual responsibility while it emphasizes teamwork. Teams in the organization are not amorphous groups.

They are actually a collection of individuals, each with clear roles and responsibilities, working towards a joint goal. The company takes great care to ensure that all the employees have a clear role to play in the organization. The employees answer as individuals but their performance counts towards the contribution of their teams in achieving organizational goals.

The Role of Organizational Culture

An organization that fails to develop an enduring culture soon loses its identity. An organization’s culture defines it in many ways. It gives an organization a basis for making decisions. Culture establishes the working relations within the organization. It is the source of a unified approach to issues. For instance, there may be changes in policy regarding hiring.

However, the speed with which a hiring decision takes effect may be a factor of organizational culture. If the culture is such that everyone in the organization communicates rapidly, a hiring decision will move up and down the leadership ladder on the strength of the organization’s culture.

This example illustrates the impact of organizational culture to communication. Culture is the total expression of the values, norms, and processes of an organization. Each organization has its unique culture. High performing organizations such as Siemens tend to adopt cultural elements that support the organization’s overall goal rather cultural elements that lead to wastage.

Siemens’ organizational culture promotes individual development, the establishment of organizational goals derived from individual targets, and a commitment to the management of talent in the organization. Each of the activities Siemens promotes in relation to goal setting and performance reviews aim at developing careers of individual employees.

The organization seeks to ensure that all employees are on track towards their career goals. The organization is reinforcing a goal setting culture built on strong goal setting practices by the development of organizational goals derived from individual goals. It is an interesting approach to planning because in many organizations, plans move from the top levels of management to the lower levels.

The result of such systems is that the organization fails to take advantage of the innovative resources available in the lower levels. The final element in the organizational culture of Siemens is the commitment to the management of culture in the institution.

Organizational culture requires careful management to endure change and to deliver needed change. Culture can change for the worse if not one keeps an eye on how it is developing. Siemens uses multiple systems to ensure that all its employees have sufficient drive and motivation to achieve their best.

Importance of Investing in People for Organizational Effectiveness

The first reason that demonstrates the importance of investing in people for organizational effectiveness is that investing in people within the organization leads to distinct competitive advantages for the organization.

An organization that invests in its people ends up with a unique workforce with high job-related skills. This can give the organization an edge in the marketplace because of its capacity to react to market forces quickly using its human resource.

The second reason is that investing in people gives an organization the ability to retain its best people. Talent is one of the main factors defining competition in many organizations today. The organization with the best talent wins. As such, investing in employees makes them feel valued and it enables them to decide proactively to remain with the organization for the long haul.

Investing in people leads to organizational growth. As the Siemens case demonstrates, investing in people gives the organization the required capacity to pursue growth in various regions. Siemens develops the talent of its employees in a way that insulates the company from talent shortfalls.

More importantly, investing in people makes Siemens capable of rapid growth whenever opportunities present themselves. This strategy allows companies with stronger policies regarding investment in employees to take advantage of new opportunities more effectively, in comparison to companies that recruit to pursue growth opportunities.

One of the strong positive results of investing in people within an organization is that it makes the organization a learning organization. When an organization promotes learning, it makes its growth potential to increase. Investing in people inculcates a learning culture in the organization that in turn contributes towards a strong learning culture in the organization.

Finally, developing an organization with a strong attitude towards learning puts it on the path to profitability. Improved profits in an organization result from better execution of strategy.

This is a product of investing in people. Within an organization, it is possible to invest in people in specific aspects of business performance to encourage people to improve their performance in the selected areas. In this sense, one of the most effective ways of ensuring an organization produces the best results is by investing in its people.

Reference List

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Siemens approach to people management is very effective and facilitates achievement of great results. The approach to people management is one of a kind and its components, which include encouragement of talent optimization, teamwork, and performance management, substantiate its importance.

Rainey explains that with a good people management approach also known as ‘People Excellence Program ’, Siemens Company is in a good position to achieve its goals and outsmart its competitors (235).

Consequently, the plans that Siemens has put in place make the sustainability of adopting the approach easy and efficient. Since the approach improves the level of motivation, the performance achieved is sustainable. By using people management approach in management of its employees, Siemens can successfully sustain the adopted approach.

Some of the factors that can influence the effectiveness of teams in Siemens include appraisals, goal setting, talent management, and creation of an innovative environment. By appraising employees and setting goals, Siemens can easily promote the level of performance that individuals undertake themselves as well as in teams. Evans and Evans note that for teamwork to thrive and produce the expected results, employees need personalized motivation (28).

Moreover, a shift from individual to team focus is paramount in advancing the performance required in the contemporary market characterized by the ever changing and trendy consumers.

With the understanding on the essence of shifting from individuals to team focus, the company undertakes effective talent management programs and creates a culture that encourages its employees to optimize their talents. When the company sets goals and gives each individual responsibility within the team, the individuals strive to achieve their goals, while meeting the collective goals incorporated in the team.

Appraisals are very important in helping create shared understanding about organization and employee objectives. Practically, genuine motivation that fosters success and excellent performance emanates from the heart of an individual after an appraisal (Vance and Paik 332; Johnson 207). The motivation transpires because appraisals recognize and appreciate the efforts that an individual undertakes to propel the organization towards success.

When employees working in Siemens receive the recognition from the company, a feeling of respect and value develops within them and the willingness to deliver the best for the company increases. As such, the individuals can successfully meet their personal objectives, while meeting the objectives of the team.

On the other hand, Siemens provides an innovative environment and uses it as part of an overall focus to motivate its people. The environment created by the company facilitates innovation and development of new ideas that are useful in achievement of company’s progress. Notably, because the management of the company understands the essence of innovation and creativity, they skillfully develop an innovative environment and use it to foster the level of motivation amongst its human resources.

The appropriateness of the innovative methods used by Siemens is considerable. Berger and Berger state that innovative methods, which include talent, people, and performance management, are very important and are core ingredients that help organizations win the market share and optimize their human resources (25).

In effect, the methods of innovation that Siemens employs not only promote its success in the short run, but also facilitate long term and sustained development. Therefore, these methods are important and the roles that they play in effecting the company’s success are integral.

Principally, the innovative solution that can foster the working environment of Siemens has its basis on the Behavioral Management Theory, which explains that employee motivation is primary in achievement of company success. Therefore, it is important for Siemens to continue engaging in plans that enhance people management program.

According to Benowitz, the Behavioral Management Theory outlines that human resources are very important and their management determines the growth of a company (17). Therefore, for Siemens to continue enjoying the current market share and sustain the adopted programs, people management needs to employ advanced initiatives that transpire from extensive research of the working environments practiced by various successful organizations.

Works Cited

Benowitz, Ellen. Cliffsquickreview Principles of Management. Hoboken: Wiley Pub, 2014. Print.

Berger, Lance, and Dorothy Berger. The Talent Management Handbook: Creating Organizational Excellence by Identifying, Developing, and Promoting Your Best People. New York: McGraw-Hill, 2004.Print.

Evans, James, and James Evans. Quality and Performance Excellence: Management, Organization, and Strategy. Mason: Cengage Learning, 2011. Print.

Johnson, Richard. Effective Performance Management. Victoria: Trafford, 2006. Print.

Rainey, David. Enterprise-wide Strategic Management: Achieving Sustainable Success through Leadership, Strategies, and Value Creation. Cambridge: Cambridge University Press, 2010. Print.

Vance, Charles, and Yongsun Paik. Managing a Global Workforce. New York: Routledge, 2015. Print.

Introduction

Several essential factors require careful considerations to ensure the success of business for companies that wish to explore a new territory, which creates the necessity of a good marketing plan. The plan entails studying the territory, exploring its possibilities, and developing or modifying products appropriately to suit the market’s needs. Siemens, an American company, wishes to explore the Saudi Arabian market and the following are some of the essentials aspects the company needs to evaluate carefully.

Effect on marketing activities

For any company that plans to venture into a new territory, it is vital to consider some important elements including the marketing strategy and the receptiveness of the environment to new products or services. Marketing can sometimes be a complex affair as various variables come into play, most of the time simultaneously.

One of the main environmental variables that would affect marketing of goods and services for Siemens in Saudi Arabia would be culture. The official religion in Saudi Arabia is Islam and as such, it naturally dictates the cultural practices for most of the population in the region. Some aspects of Islamic culture are worth considering when developing the marketing strategy.

For instance, Islamic culture requires that men provide for the women financially while the women reciprocate by taking care of the household (Long 67). The result is that men form the majority of business owners in the region. Therefore, it would be wise for the company to consider advertising that mostly appeals to the male population concerning products and services as they dictate most of the businesses in the region.

The company may also want to develop products and services for women that allow them access from the comfort of their homes. A good example is the use of Siemens’ investment services and financial solutions (Siemens Para.7). Such services allow women to involve themselves with income generating activities without breaching their culture to the benefit of the corporation.

Islamic culture also limits women from engaging in the acquisition of property. However, by using investment vehicles such as mutual funds, it is possible for the company to enable the women in the country to benefit from investment activities involving property, without having them directly involved in the transactions.

This move would be both empowering and economically sound as it generates income for a large percentage of the population without breaching the cultural dynamics and causing a hostile environment for the company. Another variable that the company ought to consider is the economic environment of the region. Saudi Arabia has a 10.9% unemployment rate according to a survey by Heritage Foundation in 2013.

The survey also reveals that foreign direct investments stand at $ 16.4 billion and that the total population in the country is twenty eight billion (Heritage Foundation Para.13). Based on these findings, Siemens has a good chance of productivity as the population provides a ready market that is large enough to produce substantial gain. The foreign direct investment statistics also provide a good marker for success in the region.

The unemployment percentage means that the company has a vacuum to fill in the economy, which depends on how good the company’s management is on market research. Providing employment opportunities through the establishment of business in the country would be a welcome move for the government, assuming that it is currently working on reducing the unemployment level in the region.

Although there are many attractive facts about the country, there are also some facts that form a negative opinion of the place, thus it is important for the company to balance the merits and demerits before forming a conclusive opinion about setting up business in the country.

For instance, the survey by Heritage Foundation indicates that the government has had a bad record regarding transparency of its operations, especially in relation to property ownership. The survey rates property rights at 40% with a similar percentage in investment freedom.

The fact that the region has been under a ruling class of elite individuals since the inception of the state makes legal and political functions to overlap, thus creating a good environment for corruption. The ruling elite control policies on investment and property ownership, hence making it difficult to predict the outcome of investments in the region.

Strategic planning

In a bid to obtain actionable information, the management of the company needs to apply the use of specialists in conducting extensive surveys of the region. This move is essential for the formulation of concrete strategies that are productive for the company in the end. For instance, with regard to the company’s positioning strategy, the company should conduct surveys to get clear numbers on the products and services the region needs and the actual amount that it needs thus enabling the company calculate input costs and possible output gains.

One of the most cost effective ways for conducting surveys is through the application of online tools such as social media. According to a report by the European Travel Commission on 29 June 2013, various surveys by the Arab Advisor Group between 2010 and 2012 indicate that there are thirteen million Internet users in Saudi Arabia out of the total twenty eight million and that 54.6% of all mobile handsets consist of smart phones.

The report further indicates that 39% of Internet users bought and paid for products online in 2010 and that 58% of all goods bought online in 2011 consisted of electronic products followed closely by software at 50% (European Travel Commission Para.8).

These statistics show that using the Internet to conduct surveys for the company is a viable option; especially considering the number of Internet users in the country and the percentage also includes women, who would ordinarily be difficult to reach by most other personal means due to cultural restrictions. The Internet application for surveys is also cost-effective as opposed to face-to-face interviews, and is seemingly less intrusive in nature.

However, it would also be advisable to conduct fieldwork for comparison between online results and groundwork surveys. The essence is to provide objectivity to information regarding market accessibility and need for products and services for the users. Siemens possesses a competitive advantage over other foreign companies in the region and ought to apply the same to its advantage.

Years of experience have enabled the company to develop links worldwide and make the name a reliable brand thus increasing chances of acceptability of its products in new markets. Most consumers prefer goods and services from companies they are familiar with as opposed to startup corporations due to trust issues.

Considering the current state of the economy in most countries, consumers prefer options that are less likely to result in a waste of money unless such options are substantially cheap, to the disadvantage of the production company.

The size of the company is another advantage as it enables the company to obtain substantial investments and produce goods at a scale that matches the populations need with little need for help from others in the industry. The quality of products and services is also better if such goods and services come from a company that can afford to produce them without a need for shortcut options.

Apart from being beneficial for production costs, the size of the company will also benefit the company with regard to mitigating tax charges. By supplying a large amount of goods and services, the company is in a position to make enough profits to cover its expenses including taxes and leave enough for other projects the company may have such as expansion.

Taxation is usually a tricky issue for smaller companies as it necessitates the hiking of prices of goods and services so that the entire cost shifts to the consumers. The result is that the goods and services become unaffordable for consumers or unattractive in comparison to similar goods in the market.

The variety of products and services would allow Siemens to shift the taxation costs to consumers without placing the weight of the entire cost on one specific product or service. For instance, the company produces electronic goods while providing infrastructural services and engineering labor. The division of the tax charges amongst the three options reduces the tax burden on each of the products and services, thus enabling the company to provide the same at affordable prices for consumers.

Timing and mode of entry

In order to ensure favorable reception for products and services, it is important for any company to consider the timing of the launch and the mode of entry into the new market. For instance, had Siemens tried to penetrate the Saudi Arabian market in 2001 or 2002 after the September 11 bombings and subsequent deployment of the U.S army to Iraq, its chances of success would have been dismal.

The fact that the company had nothing to do with any of these events and that its products and services had no connection to the events would have been irrelevant as the situation would have depended largely on the relationship between the two countries and the perception the Saudi Arabian citizens had of the United States.

However, as most of the countries in the world are trying to mitigate the residual effects of the 2007-2009 global financial crisis, most governments, including that of Saudi Arabia, have resulted to attracting foreign investment to improve revenue and cater for growing populations.

Having the United States as one of the biggest consumers of oil and gas in the world, which mainly comes from Saudi Arabia, trade relations between American companies and the Saudi Arabian government are likely to be civil. The Saudi Arabian government and the American government have also been partners in eliminating the terrorism menace for their mutual benefit, an element that could be advantageous for the company in terms of trade relations.

The company also needs to take advantage of the fact that the country currently has a high unemployment rate and the population growth strains its facilities. Considering the fact that Siemens is a leading supplier of infrastructural solutions, the company’s services and products related to infrastructure development are likely to gain acceptance from the government and private investors in the country.

A comparison between the current population, its growth rate, and the land area gives clear indications that there is a vacuum in the infrastructure market and Siemens would be wise to take advantage of the opportunity by being proactive in providing a solution to the government. Although the country has oil and natural gases, electricity production is a task for other players in the energy field.

Siemens stands a good chance at selling sustainable electricity generation and maintenance solutions that cater for the current population as well as future growth as through the construction of functional, energy sufficient buildings. A good example of such a building is The Crystal project in London, a building that is functional and energy sufficient without compromising on the esthetic quality that ensures the area maintains its beauty.

The company’s mode of entry has to be effective and cost effective to ensure that the company does not lose resources that it would otherwise apply in other areas. A progressive entry strategy is the surest way of attaining the best results while maintaining a failsafe incase the venture proves not viable.

The use of the Internet for the introduction of some of the products after surveys is a good way to test the market’s receptiveness without having to incur tax costs and other costs that come with the establishment of a subsidiary. Once the company’s management is convinced that the country holds great potential for productivity, it would be wise to form affiliations with companies dealing in similar goods and services for distribution.

The benefit of this strategy is that it enables the market to test the products that the company offers while keeping the company’s costs low. A rise in demand would then be an indicator the company should open a subsidiary or subsidiaries, which depends on the goods and services the market demands.

Marketing mix

A marketing mix is essential in securing the success of a business in a new market. The basic concept is the application of 4 Ps, which include price, place, product and promotion (Keegan and Green 62). When introducing its products and services to Saudi Arabia, Siemens has to ensure that the geographical location or place suits the needs of the company.

For instance, when opening a subsidiary of services involving oil related solutions, it would be prudent to ensure that the service station is within close proximity of the oil station. This aspect is important for efficiency purposes for the client and the company alike. It ensures that service delivery is efficient and effective while maintaining good prices and high quality.

The price the company sets for goods and services determines the consumption trends for the market (Keegan and Green 80). Setting prices that are higher than the competition causes the products to be unattractive to consumers while settling for a price much lower than the competition reduces the company’s potential for making profits.

The company has to strike a balance between the two considerations by incorporating its expenses and the profit margin into calculations on expected output in profits. Depending on the climate of the market, the company may also offer attractive packages such as discounts, on various products as incentives for consumers to buy more of those products.

This strategy is mainly effective for products that have less demand than others do and those whose profits largely depend on the quantity bought. Another way that the company can improve sales through pricing is by integrating several products and services to create packages that seem attractive and affordable.

For instance, the company may consider integrating the sale of electrical appliances with services for their maintenance, thus ensuring their engineers get work and the product sales remain high. In promoting the company’s products, Siemens should consider methods that are attractive to consumers, are cost effective, and are innovative and different from other producers of similar products in the market.

For instance, considering the culture in the country, it would be inappropriate to apply the use of sexually provocative advertisements, even though in most cases sex sells. Using an advertisement method that bears many similarities with a competitor in the same field dulls the perception of the audience and reduces the attention they pay to the company’s products.

Therefore, it essential to maintain innovation coupled with ensuring that the company curves a niche for its products in a new market with similar products. Lastly, the company has to ensure that its products stand out from the competition through branding and packaging. Using brand names that are hard to remember makes it difficult to sell such products.

On the other hand, using names that seem boring makes the products easily forgettable. The company has to ensure that its products have names that are catchy and appropriate for the consumers. Attractive packaging in unique ways ensures the products stand out at their points of sale, and thus create an advantage over similar products from competitors.

Conclusion

The above considerations will enable the company make the right marketing decisions for the benefits of the company and consumers in the target market while maintaining productivity. The company should also explore other options in terms of geographical locations for new markets to ensure that the end market is the most productive one for the company’s sake.

Works Cited

European Travel Commission: Saudi Arabia-New Media Trend Watch Long Haul 2013. Web.

Heritage Foundation: 2013 Index of Economic Freedom 2013. Web.

Keegan, Warren, and Mark Green. Global Marketing, New Jersey: Prentice Hall, 2011. Print.

Long, David. Culture and Customs of Saudi Arabia (Culture and Customs of the Middle East), Connecticut: Greenwood Publishing, 2005. Print.

Siemens: Siemens Saudi Arabia 2013. Web.

Introduction

Siemens is a conglomerate that has made it in the electronics industry. As a giant company that has been on the ground for many years, Siemens has made significant progress in building itself into a strong brand. However, the company has not gone without challenges (Perera, Putt & Oliveira, 2013). This report seeks to explore the global environments affecting the company, including political, legal, competitive and environmental environments.

Primary Global Environments Affecting the Company

Legal Environment

The U.S and other major areas have in place laws that have had a sweeping impact on the operations of Siemens. For example, since the enactment of Foreign Corrupt Practices Act in 1977, the law has been amended to include foreign companies as “American” so long as they are listed on the U.S stock exchanges, operate its business in America or trade securities in the country. Siemens is one of the companies that have fallen prey of the Act (Wayne, 2012).

The company has been accused of malpractices because of differences in interpretation of business culture (Watson, 2013). The company has been affected by the failure to comprehend the breadth of foreign laws and the implications these laws can impact its operations (Wayne, 2012). For Siemens, the rate at which the company has adopted the culture of compliance has been slower to accommodate foreign markets, and many companies are yet to understand the scope of the law.

Siemens paid $800 million and another $800 million to U.S and Germany respectively, being financial settlements for corruption and bribery investigations that found the top executives culpable of financial malpractices (Watson, 2013). Even though Siemens’ corruption cases were unraveled in 2008, the company continues to feel the impact to date. Siemens continue to grapple with reputational issues and as the media put it, bribery is Siemens’ business culture and model (Wayne, 2012). Siemens believes that sustainability is about survival, and that it extends beyond environmental sustainability –it includes the ability to fight illegal dealings and uphold accountability (Perera, Putt & Oliveira, 2013).

Political Environment

As an international giant company, Siemens will remain to be a subject of regional and foreign legislations and political factors in countries they operate. With their headquarters in Germany, Siemens must comply with the Germany legislations as well as European corporate law. Similarly, Siemens is subject to English laws such as the Trades Description Act, which is sophisticated and difficult to comply with. Additionally, Siemens has and will continue to be affected by fiscal policies adopted by countries within which it operates. Import and export controls imposed by governments on whose markets Siemens depend continue to affect the way Siemens do its business (Reed, 2014). The global political landscape and the scope of policies derived by key target markets are likely to redefine the company’s future business model.

A good example is the Sale of Goods and the Consumer Protection Acts that are a hallmark of consumer rights have had a significant impact on the Siemens.

Issues of environmental sustainability

Issues of environmental sustainability remain on top of the global agenda on addressing climate change and effects on humanity. Large companies, especially those that use enormous amounts of energy or release considerable amount of green gas have been the primary targets of local and international legislation (Ewing, 2013). Siemens has allocated enormous amounts of money on addressing environmental sustainability issues in its company. For instance, in 2014, the company is set to invest $26 million in renewable energy technologies and energy efficiency solutions such as wind turbines, drive systems, as well as cycle power plants (Reed, 2014).

Siemens environmental portfolio at Siemens accounted for over 42% of its total revenues by the end of 2012. The company is operating under the pressure from environmentalist and declarations that require companies in this category to achieve at least 20 percent in energy savings or cut its environmental footprint by at least 100,000 metric tons of carbon dioxide (Reed, 2014).

Source and effects of hypercompetition

Siemens is arguably the oldest company in the industry, but it is worth noting that Siemens is beginning to face competition from other players in the market. New technologies released by both large and small companies that emphasize green energy are posing serious threats to this electric giant (Ewing, 2013). A notable case is the solar equipment, which smaller companies are becoming an alternative technology that is cheaper and reliable. The threats of viable substitutes to Siemens’ high-end products present indisputable pressure.

Although Siemens has stepped up its efforts to build innovative and energy efficiency products, the fast rate of new entrants into the market and the low-cost technology are things that Siemens should be worried about going forward.

Siemens competes with the industry’s giant names such as Fairfield, Conn, General Electric (GE), and ABB of Switzerland, all of which control a fair share of the market. The number of players in the once “one-man-show” field means the company faces competition than never before.

Conclusion

Siemens continues to be one of the most successful companies in this category reporting incremental profits year after year. However, the analysis shows that Siemens has not be spared from the emerging legal, political, environmental factors not to mention the new found hypercompetition from old and newbies. On its part, Siemens say that these challenges have been fruitful in making it a more sustainable and stronger brand in the market, and that it continues to invest in new technologies and corporate policies to keep up with the emerging issues.

References

Ewing, J. (2013). Earnings at Siemens Dip. New York Times. Web.

Perera, A., Putt S. P., & Oliveira, B. (2013). Aligning Profit and Environmental Sustainability: Stories from Industry. World Resources Institute, 1-19.

Reed, S. (2014). Siemens to Invest $264 Million in British Wind Turbine Project. New York Times. Retrieved from

Watson, B. (2013). Siemens and the battle against bribery and corruption. The Guardian. Web.

Wayne, L. (2012). Foreign Firms Most Affected by a U.S. Law Barring Bribes. The New York Times. Web.

Siemens is a profitable company. The research focuses on the financial statement ratios of Siemens Company’s 2008 t0 2010 accounting period. The research includes comparing the financial statement ratios and financial data between Nokia Company and Siemens Company. Siemens Company is an excellent investment choice.

Table 1 (Income Statement) shows the financial performance of Siemens Company from 2008 to 2010. The above financial statement analysis shows that the 2008 Seimens Company revenue, amounting to € 77,327, had unfavourably declined to only € 76,651 during 2009. In the same manner, the 2009 Seimens revenue negatively declined to only € 75,978 during 2010. In addition, the company’s gross profit (profit margin) for 2008, amounting to € 21,043, had favourably declined € 20,710 during 2009. The 2009 amount had unfavourably increased to € 21,647. The company’s 2008 income from continuing operations amounting to € 1,859 had favorably increased to € 2,457 during the 2009 accounting period. The company’s 2009 figure had further increased € 4,112 during 2010. The Seimens Company’s net income amounted to € 5,886 during 2008. The amount had negatively dropped to only € 2,497 during 2009. The 2009 amount favourably rose to € 4,068 in 2010 (West 2003).

Table 1: Income Statement (In millions of European €)

In terms of the balance sheet accounts, Table 2 (Balance Sheet) Siemens Company did fairly well. According to Ronald Hilton (2007), the company’s 2008 current assets amount € 43,015 unfavorably decreased to € 42,634 during 2009. On the other hand, the Siemens Company’s 2008 current assets amount € 42,634 favorably increased to € 49,648 during 2010. Siemens Company’s 2008 current liabilities amount € 42,117 favorably decreased to € 36,486 during 2009. On the other hand, the Siemens Company’s 2009 current liabilities amount € 42,117 unfavorably increased to € 40,591 during 2010. Siemens Company’s 2008 equity portion of the balance sheet amount € 27,380 unfavorably decreased to € 27,387 during 2009. On the other hand, the Siemens Company’s 2008 equity amount € 27,287 favorably increased to € 29,096 during 2010. Siemens Company’s 2008 Total assets amount € 94,463 unfavorably decreased to € 94,926 during 2009. On the other hand, the Siemens Company’s 2008 total assets amount € 67,639 favorably increased to € 74,731 during 2010. Siemens Company’s 2008 current liabilities section amount € 67,083 unfavorably increased to € 67,639 during 2009. In the same manner, the Siemens Company’s 2009 total assets section amount € 67,639 unfavorably increased to € 74,731 during 2010.

Table 2: Balance sheet (In millions of European €)

Based on Table 3 (Financial Statement Ratios), Harold Sollenberger (2007) reiterated Siemens Company’s return in investment figure shows how much net income contributed to the early return of the investors’ asset inflows. The company’s 2008 return in investment ratio of 0.06 had unfavorably decreased to only 0.03 during 2009. On the other hand, the company’s 2009 return in investment ratio favorably increased to 0.04 during the 2010 accounting period. Also, the company’s Earnings before interest and taxes amount is better understood when compared to the company’s revenues. The company 2008 EBIT to Revenues ratio of 0.04 had unfavorably decreased to only 0.05 during 2009. On the other hand, the company’s 2009 profit margin favorably increased to 0.08 during the 2010 accounting period. The Siemens Company’s profit margin shows how much profit was generated from the actual revenues. The company 2008 profit margin of 0.06 had unfavorably decreased to only 0.05 during 2009. On the other hand, the company’s 2009 profit margin favourably increased to 0.05 during the 2010 accounting period. Also, the company’s cash flow ratio shows the availability of the Siemens Company’s operating cash needed to pay the company’s current liabilities. The company’s cash flow ratio shows that an increasing trend. The company’s 2008 ratio 0.22 unfavorably decreased to only 0.17 in 2009. The company’s 2009 ratio favorably increased to 0.23 in 2010. The ratio shows the availability of the company’s operating cash. Further, the company’s cash-to-current assets ratio shows the availability of company’s operating cash in relation to the current assets. The company’s cash flow ratio shows an increasing trend. The company’s 2008 ratio 0.60 increased to 0.62 in 2009. The company’s 2009 ratio increased to 0.64 in 2010. The cash to current ratio shows a favorable picture of the company from 2008 to 2010. The company’s quick ratio shows that the 2010 cash, receivables and financial assets amount € 31,935 is 0.79 lower than the company’s 2010 current liabilities amount € 49,648. The Siemens Company’s 2009 quick assets amount € 27,185 is 0.61 lower than the company’s 2009 current liabilities amount € 43,634. Similarly, the Siemens Company’s 2008 quick assets amount € 25,946 is 0.61 lower than the company’s 2008 current liabilities amount € 43,242. The quick ratio shows the availability of quick assets allocated for the payment of the company’s currently maturing current liabilities (Horngren, 2009). For the year 2010, the above financial statement analysis shows the company’s total debt to total equity ratio includes the Siemens Company’s total debt amounting to only € 73,731. The figure is 2.53 times the company’s total equity amounting to €29,096. The shows the company’s total debt figure is higher than the company’s total equity amount. For the year 2009, the same financial statement analysis shows the company’s total debt amounts to only €67,639. The figure is 2.48 times the company’s total equity amounting to €27,287. The ratio indicates the company’s total debt is higher than the company’s total equity. For the year 2008, the company’s total debt amounts to only 67,083. The figure is 2.45 times the company’s total equity amounting to €27,380. The ratio indicates the company’s total debt is higher than the company’s total equity. The best debt-to-equity ratio is defined as a one-to-one relationship. Thus, the company must generate loan amounts equal to the amount invested by the stockholders of Pfizer Company. Comparing the two accounting periods’ audited financial statements, the year 2009 debt-to-equity ratio of 2.48 is financially better because the 2010 financial statement liquidity performance ratio 2.53 is higher when compared to the prior year’s debt-to-equity ratio. Comparing Siemens Company’s 2009 and 2008 accounting periods’ audited financial statements, the year 2008 debt-to-equity ratio of 2.45 is financially better than the 2009 debt-to-equity ratio because it 2009 debt-to-equity ratio 2.48 is higher when compared to the prior year’s debt to equity ratio (Khan, 2006). In addition, the 2010 financial statement analysis’ current ratio shows the company’s current assets amount €49,648 is 1.22 times higher than the company’s current liabilities of €40,591. The ratio indicates the company has enough current assets to pay its currently maturing current liabilities during the year. For the year 2009, Pfizer Company’s current ratio analysis shows the company’s current assets portion amounting to €43,634 is 1.20 times higher than the company’s €36,486 current liabilities portion. The Siemens Company’s current ratio analysis shows the company’s 2008 current assets portion amounting to €43,242 is 1.02 times higher than the company’s €42,451 current liabilities portion (Brigham 2001). Further, the financial statement’s current ratio indicates the company has enough current assets available for the payment of its currently maturing current liabilities during the year. Comparing the two accounting audited financial statements’ accounting periods, the year 2010 current ratio of 1.22 shows a better financial statement liquidity performance compared to the lower 1.20 current ratio financial statement performance for the year 2009. Next, the year 2009 current ratio of 1.20 shows a better financial statement liquidity performance compared to the lower 1.02 current ratio financial statement performance for the prior year 2008.

Table 3: Financial Statement Ratios

In terms of clarification, the company’s current assets portion of the financial statements is composed of cash, cash equivalents, short-term investments, accounts receivable, short-term loans, inventories, taxes, other current assets and assets held for sale during 2010 and 2009. The company’s current liabilities portion of the financial statements include the company’s short-term borrowings, accounts payable, dividends payable, income taxes payable, accrued compensation, related items, and other current liabilities (Hansen, 2006).

Table 4 (Comparison Between Nokia and Siemens 2010 Financial Statements) shows that Siemens fared better than Nokia during the 2010 accounting period. Siemens Company’s 2.53 debt-to-equity ratio is higher than Nokia’s 1.41 debt-to-equity ratio. Siemens Company’s 0.79 quick ratio result is higher than Nokia’s 0.60 quick ratio result. Siemens Company’s 0.64 cash-to-current ratio is higher than Nokia’s 0.39 cash-to-current assets ratio. Siemens Company’s 0.23 cash flow ratio is higher than Nokia’s 0.19 cash flow ratio. Siemens Company’s 0.08 EBIT to Net Revenues ratio is higher than Nokia’s 0.06 EBIT to Net Revenues ratio.

Table 4: Comparison Between Nokia and Siemens 2010 Financial Statements

On the other hand, Nokia Company fared better than Siemens Company in two financial statement analysis areas during the same year. Nokia Company’s 1.55 current ratio is higher than Siemens Company’s 1.22 current ratio. Nokia Company’s 0.06 profit margin ratio is higher than Siemens Company’s 0.05 profit margin ratio (Helfert, 1997).

Table 5 (Comparison Between Siemens and Nokia 2010 Income Statement Amounts) shows that Siemens Company fared better Nokia. Siemens Company’s € 75,978 sales is higher than Nokia’s € 42,446 sales by as much as € 33,532. Siemens Company’s € 75,978 gross profit is higher than Nokia’s € 12,995 gross profit amount as much as € 8,652. Siemens Company’s € 4,068 net profit is higher than Nokia’s € 2,070 net profit by as much as € 1,998.

Table 5: Comparison Between Siemens and Nokia 2010 Income Statement Amounts

On the other hand, table 5 shows that Nokia fared better than Siemens Company in other financial statement ratio areas. Nokia Company’s 0.30 gross profit margin ratio is higher than Siemens Company’s 0.28 gross profit margin. Nokia Company’s 0.05 net profit margin is higher than Siemens Company’s 0.05 net profit margin ratio

Financial statement ratio analysis has its values. First, the financial statement ratios serve as additional scientific information to improve the decision-making activities of interested parties, including the investors. Second, it is easier to compare the financial statements of two companies of different sizes and amounts. Third, the ratios help simplify trend analysis. Fourth, the ratios help the readers focus on the more important aspects in a simpler manner. Fifth, the ratios aid management to compare financial data between two accounting periods. Last, the ratios help the busy reader by zeroing on fewer more significant financial data instead of reading the entire financial statements (Besley, 2008).

On the other hand, financial statement ratio analysis has its limitations. First, different companies operate on different market segments. The financial statement ratios give the false impression two different companies are engaging in the same financial environment. The financial statement ratios focus on the past events whereas readers of the financial statements are interested on what will happen financial occur in the current and future accounting periods. Third, erroneous financial data translates to misleading financial statement ratios. The application of different accounting concepts and principles by different companies will generate misleading financial statement ratios (Gibson, 2010).

There are other data that affirm or disprove the financial statement ratio results. For example, the industry’s average financial statement results will affirm or disprove the reliability of Siemens Company’s financial statement ratios. Information leaking to the public that the Siemens Company’s accountant does not comply with international accounting standards casts doubt on the reliability of the financial statements. Audit reports stating that the financial statements do not truly present the actual financial statement figures will cast doubt on the truthfulness of the financial statement ratios. The economic data, including GDP and average household consumption, will temper the favourable prediction of financial statement ratios (Drury, 2005).

The best recommendation is for Siemens Company will continue its current course. In terms of accounting issues, the company’s profitable financial performance persuades the company to go on with its current business programs. The financial statement ratios prove that the Siemens Company is doing better than Nokia Company in most financial aspects, under the going concern accounting concept. Trend analysis shows that the past profitable activities will continue its profitable course in 2011 and future years, in the absence of adverse indicators under the comparability accounting concept. The understandability concept shows that the financial statements indicate Siemens Company will continue its current profitable business venture in 2011 and beyond.

There is should be additional research in related areas to improve the quality of the recommendations. The research should focus on macroeconomic effects on the reliability of the recommendations. Additional research should include microeconomic factors that will influence the recommendations. Lastly, feasibility studies would affirm or discourage the recommendations.

Based on the above discussion, Siemens Company is a profitable business entity. Siemens Company’s financial statement ratios indicate the company did profitably well during the 2008 t0 2010 accounting period. The financial statement ratios and financial data show Siemens Company did financially better than Nokia Company during the 2010 accounting period. Indeed, the financial statement ratios show Siemens Company is an excellent investment preference.

References

Brigham, E. Fundamentals of Financial Management. Sydney, Harcourt 2001.

Drury, C. (2005) Management Accounting For Business. Sydney, Thompson Press.

Gibson, C. (2010) Financial Statement Analysis. New York, Cengage Press.

Hansen, D. (2006) Management Accounting. Sydney, Thomson Press.

Helfert, E. (1997) Techniques of Financial Analysis. Sydney, Irwin Press.

Hilton, R. (2007) Managerial Accounting. London, McGraw Hill Press.

Horngren, C. (2009) Accounting. London, Prentice Hall.

Khan, M. (2006) Management Accounting. New York, McGraw Hill Press.

Sollenberger, H. (2007) Managerial Accounting. London, Western Press.

West, B. (2003) Professionalism and Accounting Rules. London, Routledge Press.

Summary of the case

The Siemens bribery scandal presents one of the most indignities that a respected organization can get into in order to gain market competitiveness. Prior to 1999, the company got into a series of bribing to different countries around the world so that it could win contracts and establish its market. Some of the key nations that were bribed included China, which received a bribe of $14 million, Israel obtained $40 million, Argentina received $40 million, and Bangladesh got $5billion. The total bribe is believed to be over $1.4 billion.

The problem of bribery for Siemens can be blamed on various factors ranging from the law in Germany before 1999 to Siemen’s poor business culture. The former has to do with the law that did not restrict giving bribes to foreign nations. Siemens greatly utilized this practice to the extent that when the law was scrapped in 1999, the culture was already deeply embedded in its system. It persisted with this practice and could easily admit that the money was used to keep its business going in several countries.

The scandal has so landed the company into deep trouble as it has been forced to pay a fine of $1.6 billion and an extra $1 billion to repair its compliance with international business processes.

What explains the high level of corruption at Siemens?

The extraordinary corruption levels at Siemens can be traced to the laws adopted prior to 1999 that gave room for the practice to thrive. Besides, it is also a factor that contributes to poor business culture. Its managers thought that the practice could help keep the business alive.

What would have happened to a manager at Siemens if he or she had taken a stand against corrupt practices?

Any manager who could have taken a different stand against the business culture could have faced strong resistance from other executives.

How does the kind of corruption Siemens engaged in distort competition?

The corruption at Siemens impacts competition as it locks out competitors wishing to participate in the same trade or nation.

What is the impact of corrupt behavior by Siemens on the countries where it does business?

The impact that stands out to a nation receiving the bribe is that it jeopardizes local jobs and makes citizens pay high costs for goods.

What would have done a fair manager at Siemens?

As a manager, the first step is to institute management change that is in tandem with national laws and good business culture.

Introduction: A Short History of Siemens’s Success

The choice of the leadership strategy and the creation of organizational culture often define a company’s success. As long as employees feel valued and appreciated, they will be willing to contribute to a company. Unless Siemens conducted its policy of investing into the staff and encouraging their development, creating the atmosphere of mutual trust would have been impossible.

Company Analysis: Strengths, Weaknesses and the Key Concerns

A rather unusual and at the same time very efficient system of human resource management combined with a well thought out human resource development strategy seems to be the key strength of the Siemens Company. Indeed, the company leader has not only developed a unique method of hiring employees, therefore, assuring that only experts should provide their services to Siemens, but also come up an impressive strategy of staff’s professional and personal growth by introducing training courses and other methods of improving the staff’s skills (“Case 2: Creating a High-Performance Culture at Siemens 10”). The fact that the company has put its stake on its employees and invests in their personal and professional evolution shows that, having chosen the track of high performance culture, Siemens has created the environment in which the company’s staff will remain motivated enough to deliver top results and follow the company’s principles of organizational behavior.

It would be wrong to claim that Siemens’s framework for building employee-manager relationships is flawless. Quite on the contrary, it also has its problems, the key one being the fact that the company’s policy presupposes relying on the employees’ integrity completely. While putting trust in the staff is important to make the later feel valuable, it is also crucial to have control over the relationships between the staff and the managers. The Siemens leader, however, clearly ignores the necessity to control the employees, making it obvious that the latter is fully trusted. Such a strategy must be combined with a very efficient motivation technique; otherwise, the employees will start abusing the opportunities provided to them by the company.

Conjuring an Appropriate Conclusion: High-Performance Culture

The head of the Siemens Company has admittedly developed a very efficient leadership style, which allows for both motivating employees for achieving perfect results and at the same time investing into the employees mentioned above (Siemens AG para. 4), thus, making sure that the human resources are going to be qualified and trustworthy. However, the human factor, which does not seem to register on the Siemens’ leader’s radar, is the reason for major concern. To be more exact, information leakage can be expected unless proper measures are undertaken.

A high-performance culture is a breakthrough in leadership and organizational behavior. By encouraging people for further professional evolution and showing that the company is ready to invest into them as valuable members of the staff, a firm motivates its members for better performance. Also, the redistribution of roles, which occurred in the Siemens Company at some point, has shown that the firm is ready to accept its employees’ specifics and wants to help the staff use its assets.

Speaking of the issue regarding the unreasonable amount of trust given to the Siemens staff, it will be reasonable to conduct a better information management policy. Once employees’ data, as well as the company’s confidential data, is secured, Siemens may reinforce the concept of corporate values, therefore, reducing the possibility of information leakage to the minimum (Khosrowpour 480).

Conclusion: Sneaking a Peek at Siemens’s Future Progress

If it were not for Siemens’ policy of promoting employees’ professional growth, the idea of complete transparency would have never worked for the company’s benefit. The given an example shows that investing in employees is the first legitimate step that a company has to take. Even though the possibility of information leakage and dishonesty still exists even in Siemens, with the help of a flexible leadership style and a unique employee-manager relationships, this possibility has been driven to nil.

Works Cited

“Case 2: Creating a High Performance Culture at Siemens.” Exploring New Horizons (10–13). 2009. Web.

Khosrowpour, Mendi. Dictionary of Information Science and Technology. Hershey, PA: Idea Group, Inc., 2012. Print.

Siemens AG. Change of leadership in Siemens Managing Board. 2013. Web.