{draw:rect} {draw:rect} {draw:rect} {draw:rect} SIEMENS IN SOUTH KOREA International Management and Organizational Behavior {draw:frame} Zainy Alvarez Alejandro Padilla Julio Gómez Rodrigo Solares l. ENVIRONMENT ANALYSIS Following are South Korea’s country analysis information: {draw:frame} II. ANALYSIS OF MCN Innovation has always been one of the most important elements in Siemens' business strategy. Innovations help the cut costs, increase sales and achieve higher earnings. Nowadays, those who fail to launch the right new product on the market at the right time will be punished more severely than ever before. According to Siemens there are 3 innovation strategies when relating to time: First movers – These are highly innovative firms that rapidly react and are the first to market a new technology, application or business model. Fast followers – These are the companies that avoid risky starts and high R&D costs, but win market share by improvements in price, quality or service from the first mover companies. Trendsetter – These are the companies that succeed in establishing a new technology and disruptive technologies that can revolutionize the market in the future. This is where companies aiming to obtain high profits should be putting their efforts just like Siemens is. There are many other strategies that Siemens is pursuing in order to improve quality of life for their customers and provide higher profit margins for the corporation. Exploiting synergies: Increase the efficiency and effectiveness of R&D activities as well as exploiting synergy potential more consistently. These include intelligent sensors, new types of displays, piezo-controlled valves, turbine coatings, and miniaturized laboratories on a chip. Strategic patent management: Siemens is currently focusing more strongly on the quality and value of its patents, as these represent corporate assets that must be used extensively in the competitive field. Patents are considered to be particularly valuable if, for example, they define in whole or in part an international standard, or if it is difficult to conduct a certain type of activity without having to use the related product or procedure. Global networks: A further advantage enjoyed by Siemens is that many future challenges require interdisciplinary solutions and employees who can think in an interdisciplinary manner. The best strategy and the method that provides the roadmap to what Siemens will become in the long term is “Picture of the Future”. It provides the vision of how the world will be in 10, 20 and 30 years so the company can focus their efforts an innovation into turning the vision of the future world into a reality The goal is to identify promising technologies and future consumer wishes and to discover new business possibilities. The result is a coherent vision of tomorrow's world. Here are the important future trends: Energy: The challenge is to provide eight billion people with heating and electricity and, at the same time, protect the resources and environment. Automation & Control: Increasingly, development and tests will be conducted virtually on the computer and often with the clients from around the world. Automation, robots and intelligent labels will determine the manufacturing and logistics processes. Health: The life expectancy of man is increasing and, unfortunately, so are the health care costs. The current motto is: increase quality and reduce costs. Digitally networked clinics, telemedicine and computer assistance help save money and improve patient treatment. New techniques - such as molecular imaging - recognize diseases early. A whole diagnostics laboratory will fit onto a tiny biochip. II.2 ORGANIZATION Siemens is an integrated technology company with a clear focus on three Sectors {draw:frame} Supervisory Board Managing Board {text:list-item} {text:list-item} {text:list-item} {text:list-item} {text:list-item} {text:list-item} CEO {text:list-item} {text:list-item} {text:list-item} {text:list-item} {text:list-item} II.3 HUMAN CAPITAL Siemens also has a strong outcome orientation and task focus. The company takes a lot of time creating a detailed plan which is practically “engraved in stone” and managers and employees are expected to complete this plan regardless of any changes. We consider Siemens to be an ethnocentric company. Siemens is proud to be German and wants to take their Siemens way to all the other parts of the world that they have operations in. As an ethnocentric company all major decisions and strategies are made in the German head quarters, and when going into different countries they send people of their own to do the top management job, and hire local people for lower management positions. Because of this, country managers are often viewed as sales managers who have to implement the strategies defined in Germany. Siemens top management team is another way of showing how proud Siemens of its own people and culture. All of Siemens management board is composed by people born in German speaking countries, except for Peter Solmssen, head of the Corporate and Legal Compliance Department who was born in Philadelphia, USA. Because of being an ethnocentric company Siemens has been criticized several times of acquiring good companies and then neutralizing them by enforcing culture that works well only in Germany, because of this Siemens decided to build an organizational structure that was more organic, in which information would flow horizontally and vertically. Siemens is still working on implementing this structure, but the head quarters still has the major concentration of information and decisions. *II.4 GENERAL ASSES*SMENT Siemens has a Global Product Division structure that has a tendency towards becoming a Matrix structure. This Global Product Division structure consists of a CEO who is in charge of three sectors: energy, industry and health care. Each sector has its own CEO and each division has a “Division Director” (see Apendix 4). On the first levels of its structure Siemens has a clear Product Division structure, but on the following levels we can see that a Matrix structure has been implemented recently. We can see that the information flows both horizontal and vertically, since Siemens has both regional and sector managers. Siemens Korea is run by a non local CEO, but the rest of the positions are held mainly by local people. The non local CEO is the one in charge of taking the decisions and reporting to Global Siemens. III. POTENTIAL MANAGERIAL AND ORGANIZATIONAL CHALLENGES One of main South Korean flaws is bureaucracy and the lack of transparency on government policy making. Korea ranks 85 out of 133 according to the GCI on the amount of procedures it takes to start a business which makes a burden when trying to market a new product or expanding the business. This high level of bureaucracy gives people in South Korea a perception of corruption which could lead to big companies to do corrupt actions to gain a piece of the market. Siemens has been involved in corruption scandals for the last decade specifically on bribing high government officials and suppliers/vendors to get business deals. This was a policy that was not only not penalized but also encouraged as tax deductible in the past due to the German Policies. As of 1999 a new regulation took place that changed the way that German companies had to do business when having new business opportunities. As International managers we would suggest to make out of South Korea an example of an ethical and transparent way of doing business, not only for other Siemens subsidiaries but for Multinational companies in South Korea as well. We think this could be an opportunity to clean Siemens bad reputation as an enterprise which has corruption as part of its business culture. One last problem that we have to deal with that involves local government is the favoritism for local companies. Managers need to address this issue by talking to local officials and pointing out the company’s strategy which is to innovate before all. South Korea plays a key role in Siemens innovation strategy due its high-educated labor and the will of South Korea as a country to innovate. This will offer South Korea an opportunity to compete with India and China not through price wars but through technology and innovation, which is harder to achieve but has a higher profit margin and added value for companies, employees and society. The GCI considers Labor Market efficiency to be South Korea’s major weakness, specially the cooperation in labor-employer relations. Managers need to address this issue by improving communication systems between management and subordinates. One of the tools could be to develop workshops to take advantage of ideas and encourage employees ideas, innovation should come from all levels of the company. Continuous training should be consistently delivered in technical skills as well as leadership to increase employee’s trust in top management. The following challenges that may arise for a manager relate to the cultural differences between the culture of the German Parent company and the Korean subsidiary. BIBLIOGRAPHY https://www.cia.gov/library/publications/the-world-factbook/ http://www.culture-at-work.com/highlow.html http://en.wikipedia.org/wiki/High_context_culture www.clearlycultural.com www.germanculture.com.ua/ www.mapsofworld.com/*south*-*korea/culture*/ Siemens Official Board. http://www.theofficialboard.com/org-chart/siemens www.siemens.com http://w1.siemens.com/innovation/en/about_fande/strategie/index.htm http://w1.siemens.com/annual/08/en/key_figures.htm APENDIX Apendix 1: Geert-Hofstede Study South Korea {draw:frame} Apendix 2: Geert-Hofstede Study Germany {draw:frame} Apendix 3: Annual Report Key Figures for 2008 {draw:frame} Apendix 4: Official Board {draw:frame} Apendix 5: Mission Statement Mission:
It is our mission, within the scope of Siemens' core activities, to find the best way of combining and developing our know-how and expertise, so that we can profitably channel them into outstanding value for customers. Vision: Our aspirations for the future
A world of proven talent delivering breakthrough innovations giving our customers a unique competitive edge enabling societies to master their most vital challenges and creating sustainable value. Values: Highest performance with the highest ethics
Responsible: Committed to ethical and responsible actions
Excellent: Achieving high performance and excellent results
Innovative: Being innovative to create sustainable value *Apendix 6*: General Competitiveness Index {draw:frame} General Competitiveness Index by Subindexes {draw:frame} {draw:frame} {draw:frame} {draw:frame} {draw:frame} {draw:frame} {draw:frame} {draw:frame} {draw:frame} *Apendix 8*: Most problematic factors for doing business in South Korea {draw:frame} {draw:frame} {draw:frame} {draw:frame} {draw:frame} {draw:frame} {draw:frame} {draw:frame} {draw:frame}