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Global Environments Affecting Siemens Research Paper

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Updated: Jan 28th, 2022

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). . New York Times. Retrieved from

Watson, B. (2013). . The Guardian. Web.

Wayne, L. (2012). . The New York Times. Web.

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