Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
iemens AG:
AG: Global
Global Development
Development Strategy
Strategy
1/29
By:
(Group 1)
Ankur Jha
(60010)
Garima Gupta
(60014)
Himani Singhal
Protagonists
Horst
Horst Eberl,
Eberl, Division
Division Head
Head (( Career
Career Switching
Switching
Networks)
Networks)
Karl-Friedrich
Karl-Friedrich Hunke,
Hunke, Sub
Sub Divisional
Divisional Head
Head
2/29
KEY FACTS
3/29
See
SeeExhibit
Exhibit11for
forbackground
backgroundon
onearly
earlyhistory
historyof
oftelecommunications.
telecommunications.
Large
Largetelecommunications
telecommunicationssystems
systemsoperated
operatedsmoothly
smoothlyby
bymultinational
multinational
giants
such
as
Siemens,
Lucent,
Ericsson,
and
Alcatel.
giants such as Siemens, Lucent, Ericsson, and Alcatel.
For
Fordecades,
decades,providers
providersof
ofthese
theselarge
largesystems
systemsaround
aroundthe
theglobe
globe
enjoyed
enjoyedaacozy
cozyrelationship
relationshipwith
withtheir
theirtraditional
traditionalcustomers,
customers,up
upto
to30
30
year
yearlifespan
lifespanof
ofaatelephony
telephonysystem.
system.
In
Inthe
themid
mid1990s,
1990s,the
theinternet
internetnow
nowallowed
allowedfor
forthe
therevolutionary
revolutionary
possibility
of
cheap
transmission
of
voice
and
data
over
possibility of cheap transmission of voice and data overthe
thesame
same
broadband
lines
using
the
same
protocols
and
even
low
service
broadband lines using the same protocols and even low service
transaction
transactioncost.
cost.
Siemens
Siemensand
andothers
othersfeared
fearedthat
thatinternet
internetbased
basedvoice
voicetransmission
transmission
could
dominate
their
industry
if
it
could
solve
quality
and
could dominate their industry if it could solve quality andreliability
reliability
problems
problems
Strengths of Siemens
International
InternationalOrientation
Orientationsince
sinceits
itsinception
inception
Dominant
Dominant player
player in
in Telecommunication,
Telecommunication, medical
medical technology,
technology, data
data
processing
processing system,
system, manufacturing
manufacturing of
of heavy
heavy electrical
electrical equipment,
equipment,
nuclear
nuclearplant
plant&&rail
railroad
roadequipment
equipment
Expert
Expert in
in managing
managing large
large && complex
complex projects
projects && prided
prided itself
itself on
on
quality
and
durability
quality and durability
Siemens
Siemenshas
hashistorically
historicallyguarded
guardedits
itscredit
creditrating
rating
8/29
9/29
Change in Policies:
In
In1990s,
1990s,worldwide
worldwidewave
waveof
ofderegulation
deregulationaffected
affectedvarious
various
industries
industriesincluding
includingtelecommunications,
telecommunications,which
whichwas
waschanging
changing
rapidly
rapidly
1998
1998marked
markedaacrisis
crisispoint
pointwhen
whennet
netincome
incomeslumped
slumpedtwo
twothirds
thirds
from
fromaa1996
1996peak
peakof
of$1.36
$1.36billion
billion
Then,
Then,Siemens
SiemensCEO
CEOVon
VonPierer
Piererimplemented
implementedaapolicy
policychange
changedue
due
to
tovarious
variousreasons:
reasons:
--Siemens
SiemensProblems
Problemsare
areGermanys
GermanysProblem
Problem
--Deregulations
Deregulationsworld
worldwide
wide
--Rapidly
Rapidlyevolving
evolvingTelecommunication
TelecommunicationIndustry
Industry
--Iffy
IffyMarketing
Marketing
--High
HighLabour
LabourCosts
Costsand
andTaxes
Taxes
10/29
New Policies:
Adaptation
Adaptationof
ofUS-Style
US-Styleof
ofmanagement
management
10
10point
pointplan
plan::
Divesting
DivestingPoor
Poorperforming
performingunits
unitsin
inorder
orderto
tostrengthen
strengthenremaining
remaining
businesses
businesses
Setting
Settingtougher
tougherprofit
profittargets
targetsfor
formanagers
managers
60%
60%managers
managerspay
payto
toperformance
performance
Trimming
Trimmingthe
thehigh
highcost
costGerman
Germanworkforce
workforce&&management
managementby
byas
as
much
muchas
asaathird
third
Reducing
Reducingovertime
overtimepay
pay
Adopting
AdoptingUS
USaccounting
accountingprinciples
principles
Aggressively
Aggressivelyincorporating
incorporatingmarketing
marketinginto
intoits
itsProduct
ProductDevelopment
Development
processes
processes
Move
Movefrom
fromelectromechanical
electromechanicalsystem
systemto
todigital
digitalsystem
systemto
tobuilt
builtnext
next
generation
generationmobile
mobilenetworks
networks
By
Byearly
early2000,
2000,Von
VonPierers
Pierersstrategic
strategicshifts
shiftsappeared
appearedfruitful:
fruitful:
net
netincome
incomein
inthe
themobile
mobilephone
phonebusiness
businessdoubled
doubled
aaweak
weakEuro
Eurohelped
helpedby
bymaking
makingits
itsproducts
productscheaper
cheaperoverseas
overseas
In
InU.S.,
U.S.,Siemens
Siemensbecame
becamethe
thelargest
largestforeign
foreignemployer
employer
the
theICN
ICNdivisions
divisions10%
10%market
marketshare
sharewas
waswell
wellbelow
belowthe
thecompanys
companys
11/29
ICN
ICN
ICNrepresented
representedaanatural
naturaloutgrowth
outgrowthof
ofSiemens
Siemenswork
work
ICN
ICNcould
couldprovide
providetelecommunication
telecommunicationswitching
switchingsystem
systembased
based
around
aroundEWSD
EWSD
EWSD:
EWSD:Best
Bestselling
sellingand
andmost
mostreliable
reliableswitch
switchin
inworld
world
Evolved
Evolvedfrom
fromEWSA
EWSAas
asstrategic
strategicchange
changefrom
fromanalog
analogto
todigital
digital
platform.
platform.
ICN+EWSD
ICN+EWSDwas
wasresult
resultof
ofstrategic
strategicdecision
decisionto
toturn
turndigital,
digital,itittook
took
30000
30000staff
staffyear
year
The
Thedecision
decisionpaid
paidoff
off2000
2000as
asthe
thetechnology
technologyrouted
routed11in
in55phone
phone
across
acrossworld
world
Aimed
Aimedat
atachieving
achieving99.999%
99.999%reliability
reliabilitywith
withdowntime
downtimeof
ofunder
under
five
fiveminute
minuteper
perswitch
switchper
peryear
year
270
270million
millionEuros
Eurosper
peryear
yearon
onR&D
R&D
12/29
Almost
Almosthalf
halfof
ofR&D
R&Defforts
effortsat
at17
17RDCs
RDCsscattered
scatteredacross
acrossthe
theglobe
globe
due
dueto
totwo
tworeasons
reasons
1.Problem
1.Problemof
oflocal
locallabour
labourshortage
shortageat
atMunich
Munichwas
wassolved
solved
2.Customization
2.Customizationof
ofproduct
productas
asper
percountry
countryneed
needthrough
throughRDCs
RDCs
Out
Outof
ofaatotal
totalof
of60-70
60-70customization
customizationproject
projectalmost
almost20
20were
wereself
self
financed,
financed,mostly
mostlythrough
throughcustomer
customerwish
wishlist
list
Customised
Customisedproject
projectdevelopment
developmentalso
alsogive
givechance
chanceto
totest
testvarious
various
new
newtechnologies
technologies
Great
GreatVariance
Varianceexisted
existedbetween
betweendifferent
differentRDCs
RDCs
Germans
Germansuse
useto
tocontrol
controlRDCs
RDCsin
ininitial
initialyears
yearsbut
butslowly
slowlylocal
local
managers
managerswere
weregiven
givencontrol
control
A
Afalse
falsesense
senseof
ofsecurity
securitycan
canbe
becreated
createdfrom
fromspecifying
specifying
everything
everything
Munich
Munichcoordinated
coordinatedcooperation
cooperationbetween
betweenRDCs
RDCsthrough
throughformal
formal
channel
channel annual
annualconferences
conferenceswith
withRDCS
RDCS representative
representative
14/29
Centre of Competence
Munich
Munichcoordinated
coordinatedthrough
throughMatrix
Matrixstructure
structure
CoC
CoCwere
weredivided
dividedon
ontechnical
technicallines
lines
Each
EachCoC
CoCcontrolled
controlledbudget
budget&&milestones
milestonesfor
forprojects
projects
CoC
CoCstructure
structureallowed
allowedgroups
groupsto
towork
workon
onnew
newproduct
product
development
developmentalong
alongwith
withtrouble
troubleshooting
shootingold
oldproduct
product
90
90project
projectmangers
mangerswere
wereresponsible
responsiblefor
forbringing
bringingsubprojects
subprojects
output
outputin
inline
linewith
withmilestone
milestone
More
Morethan
than40
40among
amongthese
thesewere
werewith
withmultiple
multipleproject
project
responsibilities
responsibilitiesand
and20
20were
wereinvolve
involvewith
withcustomization
customizationproject
project
Every
EveryMonday
MondayCoC
CoCheads
headsmeet
meetwith
withsenior
seniorproject
projectmanagement
management
Bi
Biweekly
weeklyDevelopment
DevelopmentBoard
Boardfor
forHigher
Higherlevel
levelproblems
problemssolving
solving
15/29
16/29
Bangalore
Bangalore(NEW)
(NEW)
--Est.
Est.1994
1994
--Largest
LargestRDC
RDC
--City
Citydeveloped
developedas
asIndias
Indias
silicon
siliconvalley
valley
--Contrast
Contrastto
toculture
cultureof
of
Munich
Munich
head
headquarter
quarter
--Labour
Labourcost
costwas
was20%
20%
lower
lowerthan
thanMunich
Munich
--Often
Oftendrifted
driftedtechnology
technology
apart
apart
from
fromMunich
Munich
--Attrition
Attritionrate
ratewas
was
comparative
comparativehigh
high
--Communication
Communicationdifference
difference
--Act
ActFirst
Firstthen
theninform
inform
--Fourth
Fourthlargest
largestRDC
RDC
--NIH
NIHsyndrome
syndrome
--Working
Workingstyle
styleIssues
Issueswith
with
Munich
Munich
--Agree
Agreeto
toDisagree
Disagree
17/29
--Comfortable
Comfortablewith
withtop
top
Down
Downmanagement
management
approach
approach
19/29
--Lifelong
Lifelongengagement
engagement
--Salary
SalaryDiscussion
Discussionwere
were
common
common
--Directness
Directness&&Bluntness
Bluntnessin
in
communication
communication
--Too
TooPolite
Polite
--Sense
Senseof
ofDuty
Duty
--Not
Notwell
wellmotivated
motivated
--Well
WellDocument
Documentevery
everyfault
fault
in
inorder
orderto
tounderstand
understandthe
the
health
healthof
ofsystem
system
--Just
JustFault
Faultanalysis
analysis&&no
no
Documentation
Documentation
--Take
Takecustomization
customizationas
asaa
sense
senseof
ofduty
duty
--Cultural
Culturalbarrier
barrier
--Workers
Workersneed
needsense
senseof
of
belonging
belonging
20/29
22/29
23/29
Problem Statement
ICNs
ICNs largest
largest customer
customer was
was demanding
demanding the
the
product
product (Net
(Net Manager)
Manager) but
but also
also issued
issued aa warning
warning
that
that reliability
reliability problems
problems will
will not
not be
be acceptable.
acceptable.
How
How to
to come
come up
up with
with aa reliable
reliable and
and durable
durable
system,
system, once
once Siemens
Siemens hallmark?
hallmark?
24/29
Evaluation of Alternatives
Move
Moveout
outof
ofBangalore
Bangaloreto
toany
anyEuropean
EuropeanCountry
Country
Benefits
Benefits
--Proximity
Proximityto
toMunich
Munich
--Communication
Communication &&Coordination
Coordinationissue
issuewill
willbe
beresolve
resolve
--Cultural
Culturalbarriers
barrierswill
willbe
beresolved
resolved
--Low
Lowtravelling
travellingcost
cost
Cons
Cons
--50%
50%of
ofresources
resourcesfor
forNetManager,
NetManager,development
development&&project
project
management
management were
werebased
basedin
inBangalore
Bangalore
--Transferring
Transferringsystem
systemwill
willdelay
delaythe
theproject
projectby
byseveral
several
weeks
weeks
IfIfremain
remainin
inBangalore
Bangalore
Benefits
Benefits
--Staff
Staffisishaving
havingexpertise
expertisewith
withprogramming
programmingrequired
requiredfor
for
Net
NetManager
Manager
--Cost
CostAdvantage
Advantage
Cons
Cons
--Communication
Communication&&coordination
coordinationissue
issue
--High
Highattrition
attritionrate
rate
--Pollution
Pollution&&Traffic
Traffic
--High
Hightravelling
travellingcost
cost
25/29
Alternatives Contd
Relocating
Relocatingcore
coreNet
NetManager
Manageractivity
activityto
toMunich
Munichand
andleaving
leaving
development
developmentactivity
activityto
toBangalore
Bangalore
Benefits
Benefits
--Will
Willensure
ensurestrict
strictproject
projectmanagement
management
-- Quality
Qualitycontrol
controlalong
alongwith
withkeeping
keepingIndian
Indiandevelopers
developerson
on
board
board
Cons
Cons
--Same
Samecoordination
coordination&&communication
communicationissues
issuesas
asbefore
beforewill
will
exist
exist
26/29
Recommendations
Stick
Stickwith
withBangalore
BangaloreRDC
RDC
--The
Thealready
alreadyhave
havedone
donetwo
twoproject
projectso
sothey
theyhave
haveexperience
experience&&
learning
learningfrom
frompast
pastexperiences
experiences
--Expertise
Expertisein
indeveloping
developingdesktop
desktopbased
basedprogramming
programming
--The
Thecoordination
coordination&&communication
communicationcan
canbe
beresolved
resolvedwith
withmore
more
interaction
interactionwith
withMunich
Munich&&directly
directlywith
withend
enduser.
user.
--Better
Bettertesting
testingmechanism
mechanismififavailed
availedat
atRDC
RDCwill
willreduce
reducethe
the
fault
fault
27/29
Peripheral Issue
IfIf Bangalore
Bangalore want
want to
to grow
grow into
into aa world
world
stature
stature city,
city, itit would
would need
need to
to discipline
discipline
pollution
pollution and
and growing
growing traffic
traffic
28/29