Siemens is a Munich; Germany based customary electrical engineering company. Siemens is a diverse and enormous group, with commercial activity in communications and information, mechanization and control, transportation, power, health care, financial service and lighting. The company is around for 150 years and has branches throughout the world. (Siemens.com Global Website, 2019)
Mission and Vision
Superior performances with maximum morals are the standards demanded by Siemens’ present president and CEO Peter Löscher at corporate level. The company cherishes three fundamental standards. Responsibility, Excellence: and innovation, they work together to attain the objective of insuring the sustainability of Siemens.
Porters Five Forces for Siemen’s High Standards in Performances
How to carry out operations with the energy-efficiency standards is the question to be addressed through porter’s model. The continually shifting policies and market of energy supply can be perplexing, and to encounter the striving policy objectives, it is essential to conform to most binding morals and regulations. Ethics conversely are considered as “state-of-the-art” and exceptionally substantial for answering many economic and technological encounters. Looking for those standard that are energy-efficiency is vital as changing needs requires change in the supply and form of energy most significant matter is to decide the ways in which standards and policies can be implemented. (Kim, Eun and Yang, 2017)
Degree of Competition
Giants of the industry are major competitors of Siemens such as ABB of Switzerland, General Electric (GE) of Fairfield and Alstom. GE has a sturdy place in this business, while ABB has unlimited benefits in generation and transmission of power. As we can see the competition is high in the industry with large number of giants from many countries. Siemens have a history of acquisitions; they have worked with many competitors and collaborated in different fields with them. (Scholz and Vohwinkel, 2017)
Negotiating Authority of Customers
Generally companies can reduce prices to attract customers when they compete for same transactions; this practice is not very popular and rarely happens in this sector. The goods of industrial electrical equipment belong to extremely specialized and skilled technologies, so it is very challenging for clients to obtain goods of similar value who have same or low prices. Therefore it is easy for the company to bargain with the customers on their own terms.
Negotiating Authority of Suppliers
Due to large number of suppliers in the industry where Siemens operates, this one of the reasons that the suppliers who provide raw materials and equipment’s parts to Siemens permanently have slight bargaining power. These parts are easily purchasable from open market; therefore it is easy to change the suppliers. This shows less control of suppliers on prices and therefore they survive as a feeble force.
Threat of New Entrants
Siemens and some other giants have subjugated the industry for many years. The entry in the system is not easy as it requires major investments and expertise to compete with huge performers. The fresh entrant thus has to develop respectable reliability and networking with all other players of the trade especially with the reputable firms and government agencies. There are many legal and technological factors involve in the entry therefore providing high barrier for this trade.
Threat of substitutes: technology keeps on advancing and changing its face, it is frequent that a smaller firms introduces some novel technologies, which emphasize on better know how or skills, or improved systems for example green energy, such revolutions do intimidate to the giants as they have to turn around the whole system to adopt such changes and sometimes they have to compromise on efficiencies which makes them deficient to compete with new product. In solar energy equipment, for instance, certain small scale firms are becoming more feasible as equipment they are using is inexpensive, although solar firms may in a little while have the power to contest with customary source of power on performance and price, the danger from of substitution is a threat for Siemens. (Olsson, 2012)
Conclusion
The five forces suggest that ferocious competition is present in the industry, but doe to high entry barriers, and limited powers of both supplier and customer. The burdens from small firms which emphasize on green energy can increase but still the company has an edge on cost and price.
References:
• Siemens.com Global Website. (2019). Siemens Website. Accessed 18 Mar. 2019 http://www.siemens.com
• Kim, G., Eun, E. and Yang, J. (2017). Siemens AG and philanthropy –focused on the Siemens Stiftung. THE DAEGU HISTORICAL REVIEW, 129, pp.461-483.
• Scholz, U. and Vohwinkel, T. (2017). The Application of EU Competition Law in the Energy Sector. Journal of European Competition Law & Practice, pp.1-15.
• Olsson, G. (2012). Water and Energy: Threats and Opportunities. Water Intelligence Online, 11.