March 2015

Corporate Strategy and Proposed

Acquisition
Baessato L. , Cecchi L. , Colombo F. , Fumagalli F. , Granvillani M. , Iseppato B.
 History
• 1847-1865: BEGINNING AND INITIAL EXPANSION
• Foundation 1st. October 1847, Berlin , by W. Von
Siemens
• Production and long distance telegraph networks in
Europe and Asia

• 1865-1890: HEAVY CURRENT ENGINEERING AND

INTERNATIONALIZATION
• Electric trains and light bulbs

• 1890-1918: GROWTH THROUGH CONSOLIDATION AND

PARTNERSHIPS
• 1903 Siemens & Halske merged with Schuckert & Co —>
SIEMENS-SCHUCKERT

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 History
• 1918-1933: RETURN TO THE WORLD MARKET AND UNITY WITHIN THE
“HOUSE OF SIEMENS”
• 1930 Started manufacturing radios, television sets and electron
microscopes

• 1945-1966: RECONSTRUCTION AND EMERGENCE AS A GLOBAL PLAYER

• Computers, semiconductor devices, washing machines and pace makers

• 1966-1989: NEW MARKET AREAS OF BUSINESS

• 1987 Overseeing nuclear power business

• 1989-2011: DEREGULATION AND GLOBALIZATION

• 2000 Development of Siemens Medical solutions
• 2004 Siemens wind power division

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Siemens Today
• Siemens is global powerhouse positioned along the electrification
value chain, as well as in the areas of medical imaging and in-vitro
diagnostics.

• Siemens is one of the world’s largest technology companies.

• Our name stands for: engineering excellence, innovation and good
corporate citizenship.

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 Vision 2020
Electrification,
Automation and
Digitalization are
the long-term
growth fields of
Siemens.

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 Businesses
• From Four Industries:
1. Energy (35%)
2. Industry (24%)
3. Infrastructure and Cities (23%)
4. Healthcare (18%)
(% of total revenues)
• To Nine-plus-one Divisions:
1. Power and Gas
2. Wind Power and Renewables
3. Power Generation Services
4. Energy Management
5. Building Technologies
6. Mobility
7. Digital Factory
8. Process Industries and Drives
9. Financial Services*
10.Healthcare**
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Revenues byvBusiness

Total Revenues € 71,920 million (+1% FY 2013) 6

 Global Positioning
Germany: the main Europe: Siemens automation systems
technology partner improve efficiency at factories
for the country. throughout the Old Continent.
Russia: modern
technologies for the
world’s largest
US: sustainable country.
solutions for
the world’s
largest
economy. China: a local partner.

Brazil: Reliable India: Siemens offers

infrastructure integrated solutions for a
partner. Africa: Siemens is Middle East:
sustainable progress.
helping upgrade Africa’s technology partner.
rail infrastructure. 7
Revenues by Area

Total Revenues of € 71,920 million (+1% FY 2013) 8

 Siemens Mission
We make real what matters, by
setting the benchmark in the way we
electrify, automate and digitalize the
world around us. Ingenuity drives us
and what we create is yours.
Together we deliver engineering
excellence, taking personal ownership
until we jointly succeed.

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Siemens Vision
We have a clear vision of what we
stand for and what our goals are.
Answering the world’s toughest
questions helped us become a
pioneer in energy efficiency,
industrial productivity, affordable
and personalized healthcare and
intelligent infrastructure solutions.
This success story would not have
been possible without our firm
believe in our core values. This is
what Siemens is all about.
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 Values
RESPONSIBILITY
Our responsibility is to conduct all
businesses according to the highest
professional and ethical standards and
practices: there must be no tolerance
for non-compliant behaviours.

INNOVATION
Our goal is to be a trendsetter in all
of our businesses. We unlock the
energy and creativity of our
employees, embracing the new and
different.
EXCELLENCE
Excellence means attracting
the best talents in the
marketplace and giving them
the skills and opportunities
they need to become high-
achievers.
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 Strategy
Our positioning and our strategic direction are closely linked to define milestones. We have to
take all the right steps to create value.

Drive Performance: boost Strengthen core: focus Scale up: we will

our performance. Make all on the things that intensify our efforts to
our businesses reach their make you strong and seize further growth
full potential. put other things aside. opportunities and tap
new fields. 12
Goals & Objectives
GOALS
IMPLEMENT CORPORATE GOVERNANCE
CREATE VALUE SUSTAINABILITY
EXPAND GLOBAL MANAGEMENT
BE A PARTNER OF CHOICE FOR OUR
CUSTOMERS
BE AN EMPLOYER OF CHOICE
FOSTER AN OWNERSHIP CULTURE
OBJECTIVES
2016 - Reduce costs by € 1 billion
Capital efficiency target: 15-20% of ROCE
More than 30% of international (outside
Germany) employees by 2020
Improve our Net Promoter Score by 20%
Approval rating over 75% on a sustainable
basis
Increase by 50% the number of employee
shareholders
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Resources
RESOURCE CHARACTERISTICS INDICATORS

FINANCIAL -INTERNAL FUNDS -Free Cash Flow 2014: € 1,72

GENERATION billion
-Debt/Equity Ratio 2014: 73.45
%

TANGIBLE
RESOURCES PHYSICAL -PLANT AND -Market Value of Fixed Assets
EQUIPMENT -Scale of Plants
-Alternative Uses for Fixed Assets
-SIZE

-TECHNOLOGY
FLEXIBILITY

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Resources
RESOURCE CHARACTERISTICS INDICATORS

TECHNOLOGY -PATENTS -56100 Patents

-R&D Expenditures: € 4,1billion
-KNOW HOW -R&D Staff: 28800 (17500
Software Developers there of
-R&D FACILITIES about 4200 S.D. at Corporate
Technology)
INTANGIBLE -TECHNICAL AND
RESOURCES SCIENTIFIC EMPLOYEES
REPUTATION -BRAND -Brand Equity
-Cooperations with Top
-COMPANY REPUTATION Universities, Research
Institutes, Industrial Partners

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Resources

RESOURCE CHARACTERISTICS INDICATORS

-MECHANICAL, INDUSTRIAL, -Number of Employees: 343,000

ENERGETIC, BIOMEDICAL
ENGINEERS -Employees Turnover Rate: 9.1%

-LOYALTY OF EMPLOYEES -Expenditures for continuing education:

HUMAN € 276 million
RESOURCES -EMPLOYEES’ TRAINING AND
SKILLS

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Functions & Capabilities
FUNCTION CAPABILITIES
R&D -RESEARCH AND INNOVATIVE NEW
PRODUCTS DEVELOPMENT
CORPORATE -STRATEGIC INNOVATION
FUNCTION -MULTIDIVISIONAL COORDINATION
-ACQUISITION MANAGEMENT
-INTERNATIONAL MANAGEMENT
MANAGEMENT -INTEGRATED MANAGEMENT:
INFORMATION INFORMATION SYSTEM NETWORK
SUPPORTING MANAGERIAL DECISION
MAKING
OPERATIONS -CONTINUOUS IMPROVEMENT IN
OPERATIONS
EXAMPLES
-20 Patents per day + 38 Inventions
per day
-Focus on creating next generation
products
-Last 4 years 9 acquisitions in
different industries
-Business Units autonomy +
corporate management coordination
-Corporate Technology: centralized
corporate-based innovation
organisation across BUs
-Capacity to align the operations and
processes with the new developed
products
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Adjacency Map

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Horizontal Integration
ENERGY: INDUSTRY:
• Electric streets lightining • Automotive
• Bulbs • Marine & Ship buildings
• Semi-conductors • Mining & Cement
• Oil & Gas • Paper machinaries
• Hydropower stations • Food & Beverage Machinaries
• Windpower • Data Centers
• Solar pannels ELECTRIFICATION
AUTOMATION
DIGITALIZATION
INFRASTRUCTURES & CITIES: HEALTHCARE:
• Transportation & Logistic • X-rays
• Cities • Pacemakers
• Municipalities & DSOs • Dentists
• Pharmaceuticals

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 Reasons of Diversification
1. Enhance the profitability by becoming integrated in
new markets and gain market power

2. Exploit economies of scope which help to maintain

adequate margins and set attractive prices

3. Minimize expenses by capitalizing on economies of

scale

4. Full utilization of existing resources and capabilities

5. Ensure an efficient capital allocation

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Matrix of Parenting Adv
High
Industry

Infrastructure
& Cities
Energy
Fit between
KDFs and
parenting
characteristics

Healthcare

Financial
Low Services

Low Fit between parenting characteristics and parenting High

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opportunities
 Vertical Integration

Power
Transmission, Energy Imaging and
Power
Power Distribution Application in-vitro
Generation
and Smart Grid diagnostics

1.Power and Gas 4.Energy 5.Building 9.Healthcare 10.Financial

Management Technologies Services
2.Wind Power
and Renewables 6.Mobility

3.Power 7.Digital Factory

Generation
Services 8.Process
Industries and 22
Drives
 Reasons of V. Integration
1. Achieve maximum value added along the
entire process chain

2. Support customers with its integrated

approach through its communication-based,
automation and drive systems

3. Lower costs of transaction by removing mark-

ups

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Organizational Structure

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Parenting Style

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 How Parent Creates Value

CENTRAL FUNCTIONS & SERVICES

• Incentive the sharing of both resources
and activities between the different
business units.

• The only business unit that is managed

separately is Healthcare.

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International Strategies
Automation
TRANSNATIONAL STRATEGY
• Achieve both Global Efficiency and Local
Electrification Responsiveness

Digitalization

Healthcare GLOBALLY MANAGED

• Products are standardized across
national markets

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 Corporate Social Responsibility
“For us, sustainability means acting in the best interest of coming
generations with respect to the economy, the environment and the
society”

TRIPLE BOTTOM LINE

1. PROFIT
• Offering distinctive products
• Providing our customers a competitive advantage
• Strengthening our profitability over the long-term

2. PLANET
• Using responsibly our planet limited resources

3. PEOPLE
• Increase our employees’ sense of responsibilty in executing their activities
• Contribute to the sustainable development of society

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 Mirvis & Googins’s Framework

Elementary Engaged Innovative Integrated Transforming

• Citizenship concept: Sustainability (People, Profit, Planet)

• Strategic intent: Value Proposition ( Renewable energy)

• Structure: Organizational Alignment (Sustainability Board)

• Issue management: EHS Program

• Transparency: Public Reporting (Vision 2020)

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 Key Sustainability Indicators
• Economic
• Revenue generated by the environmental portfolio: € 33.2 billion
• 42% of total revenues

• Environmental performance improvement

• CO2 emissions relative to FY 2010: -12%
• Number of suppliers that are part of our energy efficiency program: 916
• Energy efficiency relative to FY 2010: +8%

• Employees
• Expenditure on continuing education € 283 million
• Proportion of women in management positions 15.3 %

• Rankings
• Points in Dow Jones Sustainability Index: 92/100

These data belongs to FY 2012 30

 Concrete Projects
1. “ COLLECTIVE ACTION “
• Against corruption
• Interest groups, working together
• Create fair market conditions
• Promote innovation (on the basis of
price, quality and capacity to innovate)
1. CORPORATE CITIZENSHIP PROJECTS AROUND
THE GLOBE
• Electricity for a better quality of life
(India rural village)
• Education as Key Resource: Mandela
School of Science & Technology

2. INNOVATIONS AND PIONEERING

TECHNOLOGIES
• Vegetable oil transformer for ultra-high
voltages
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Proposed Acquisition:KiteGen

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 KiteGen
KiteGen
KiteGen focus on searching an alternative
and more effective way to produce
electricity through the exploitation of an
untouched, huge and powerful renewable
energy source: the High Altitude Wind
Energy (HAWE).

Two high-strength cables transmit the

traction of the wing and control its
direction and orientation through the
automatic kite flight control system that
maximizes the production of energy.

Relying on 40 mother patents registered

worldwide (over 3.500 total patents in the
world).

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 KiteGenVision
KiteGen Vision
VISION:
KiteGen’s vision is a new type of electric
generation plant, based on a renewable
source, suitable for any territory, in direct
competition with today’s conventional
production (coal, oil or nuclear), in the
GigaWatt class.

VALUES:
• Encourage the production of eco-
sustainable energy
• Respect for the environment

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 KiteGen Advantages
KiteGen Advantages
1. Financial resources: KiteGen needs a considerable amount of financial resources to
develop its ambitious project

1. Manufactoring capabilities: KiteGen could exploit Siemens capabilities in the

manufacturing phase, EOS

1. Reputation: Siemens brand reputation is recognized all over world for the quality of
its products

1. New customers: The possibility for KiteGen to have access to Siemens’ portfolio of
customers

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Siemens Advantages
Siemens Advantages
1. Innovation: KiteGen can exploit an unexploited, virtually
endless and almost universally available energy power, that
is high altitude winds

2. Worldwide Trend: Google, China Vcs and several other

companies around the world are investing in the
exploitation of the high altitude wind energy

3. Competitive Advantage: The Energy business is considered

an hauling sector for Siemens, acquiring KiteGen we may
obtain a future competitive advantage over GE

4. Access to Complementary Assets: Relying on 40 mother

patents registered worldwide (over 3.500 total patents in
the world) which cannot be imitated

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Bid Price
• Due to the fact that the company patrimonial
value is mostly determined by the MARKET
VALUE OF KITEGEN’S PATENTS , we have based
our proposed bid price on this value

• MARCO CICCOLINI, the business plan developer

of KiteGen, has provided us this value :
€ 260 million

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 In
BidConclusion
Price
 ATTRACTIVENESS TEST:
• Unexploited, virtually endless and almost universally
available energy power
• Coherent with Siemens’ tendency to be a pioneer in new
technology development
• A considerable number of companies are investing in this
technology

 ENTRY COST < EXPECTED PROFITS:

• According to our financial statement our Operating Cash
Flow of € 7,670 million allows us to buy it for € 260 million
• Kite energy cost, for their last station project named
Carousel, is less 10 €/MWh

 BETTER-OFF TEST:
• Siemens managing KiteGen could create additional value

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Bibliography
http://www.siemens.com/entry/cc/en/

http://www.siemens.com/annual/14/en/download/pdf/Siemens_AR2014_Vision2020.pdf

http://www.siemens.com/about/en/history.htm

http://www.siemens.com/jobs/en/ataglance/

http://www.siemens.com/about/en/businesses/

https://www.swe.siemens.com/greece/internet/en/Documents/Siemens-company-presentation.pdf

http://www.siemens.com/annual/14/en/company-report/our-path/

http://www.siemens.com/jobs/en/ataglance/values_vision.htm

http://www.siemens.com/about/pool/strategy/siemens-strategy-overview-path.pdf

http://www.siemens.com/about/sustainability/en/index.php

http://www.kitegen.com/en/kiteblog-2/

http://kitegen.com/wp-content/uploads/2010/07/PEN-KGR2010.pdf

http://www.forbes.com/companies/siemens/

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Personal Contacts
*Siemens: Conte Elisabetta
Corporate Account Manager

*KiteGen: Ciccolini Marco

Business Development Manager

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