Case Study Description of Siemens Medical Solutions: Strategic Turnaround
Describes how Siemens Medical Solutions (MED) accomplished a remarkable turnaround from a money-losing operation to one of Siemens' most profitable divisions. By late 1996, a challenging market environment in the health care industry as well as inefficiencies in the company's manufacturing, logistics, and sales/service processes had a negative impact on MED's profitability. Reacting to these challenges, CEO Reinhardt defined and implemented a comprehensive turnaround program centered around people, processes, and products. The case highlights the most important aspects of the company's turnaround and later expansion and provides an outlook for the company's future challenges and opportunities.
Swot Analysis of "Siemens Medical Solutions: Strategic Turnaround" written by D. Quinn Mills, Julian Kurz includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Siemens Turnaround facing as an external strategic factors. Some of the topics covered in Siemens Medical Solutions: Strategic Turnaround case study are - Strategic Management Strategies, Change management, Developing employees, Growth strategy, International business, Manufacturing, Product development, Sales and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Siemens Medical Solutions: Strategic Turnaround casestudy better are - – there is increasing trade war between United States & China, wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, challanges to central banks by blockchain based private currencies,
there is backlash against globalization, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Siemens Medical Solutions: Strategic Turnaround
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Siemens Medical Solutions: Strategic Turnaround case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Siemens Turnaround, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Siemens Turnaround operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Siemens Medical Solutions: Strategic Turnaround can be done for the following purposes –
1. Strategic planning using facts provided in Siemens Medical Solutions: Strategic Turnaround case study
2. Improving business portfolio management of Siemens Turnaround
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Siemens Turnaround
Strengths Siemens Medical Solutions: Strategic Turnaround | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Siemens Turnaround in Siemens Medical Solutions: Strategic Turnaround Harvard Business Review case study are -
Ability to recruit top talent
– Siemens Turnaround is one of the leading recruiters in the industry. Managers in the Siemens Medical Solutions: Strategic Turnaround are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– Siemens Turnaround has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Siemens Medical Solutions: Strategic Turnaround HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Siemens Turnaround has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Effective Research and Development (R&D)
– Siemens Turnaround has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Siemens Medical Solutions: Strategic Turnaround - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Siemens Turnaround is one of the most innovative firm in sector. Manager in Siemens Medical Solutions: Strategic Turnaround Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Siemens Turnaround has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Siemens Turnaround has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Diverse revenue streams
– Siemens Turnaround is present in almost all the verticals within the industry. This has provided firm in Siemens Medical Solutions: Strategic Turnaround case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Ability to lead change in Strategy & Execution field
– Siemens Turnaround is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Siemens Turnaround in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Strategy & Execution industry
– Siemens Medical Solutions: Strategic Turnaround firm has clearly differentiated products in the market place. This has enabled Siemens Turnaround to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Siemens Turnaround to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Siemens Turnaround in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Siemens Turnaround digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Siemens Turnaround has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Organizational Resilience of Siemens Turnaround
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Siemens Turnaround does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Siemens Medical Solutions: Strategic Turnaround | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Siemens Medical Solutions: Strategic Turnaround are -
Capital Spending Reduction
– Even during the low interest decade, Siemens Turnaround has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Siemens Medical Solutions: Strategic Turnaround, it seems that the employees of Siemens Turnaround don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Aligning sales with marketing
– It come across in the case study Siemens Medical Solutions: Strategic Turnaround that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Siemens Medical Solutions: Strategic Turnaround can leverage the sales team experience to cultivate customer relationships as Siemens Turnaround is planning to shift buying processes online.
Low market penetration in new markets
– Outside its home market of Siemens Turnaround, firm in the HBR case study Siemens Medical Solutions: Strategic Turnaround needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
No frontier risks strategy
– After analyzing the HBR case study Siemens Medical Solutions: Strategic Turnaround, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Lack of clear differentiation of Siemens Turnaround products
– To increase the profitability and margins on the products, Siemens Turnaround needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, firm in the HBR case study Siemens Medical Solutions: Strategic Turnaround has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Siemens Turnaround 's lucrative customers.
Increasing silos among functional specialists
– The organizational structure of Siemens Turnaround is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Siemens Turnaround needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Siemens Turnaround to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Siemens Turnaround has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Siemens Turnaround even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Skills based hiring
– The stress on hiring functional specialists at Siemens Turnaround has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, D. Quinn Mills, Julian Kurz suggests that, Siemens Turnaround is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Opportunities Siemens Medical Solutions: Strategic Turnaround | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Siemens Medical Solutions: Strategic Turnaround are -
Building a culture of innovation
– managers at Siemens Turnaround can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Siemens Turnaround is facing challenges because of the dominance of functional experts in the organization. Siemens Medical Solutions: Strategic Turnaround case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Siemens Turnaround can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Siemens Turnaround can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Siemens Turnaround has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Siemens Medical Solutions: Strategic Turnaround - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Siemens Turnaround to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Siemens Turnaround has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Siemens Turnaround can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Learning at scale
– Online learning technologies has now opened space for Siemens Turnaround to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Better consumer reach
– The expansion of the 5G network will help Siemens Turnaround to increase its market reach. Siemens Turnaround will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Siemens Turnaround to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Creating value in data economy
– The success of analytics program of Siemens Turnaround has opened avenues for new revenue streams for the organization in the industry. This can help Siemens Turnaround to build a more holistic ecosystem as suggested in the Siemens Medical Solutions: Strategic Turnaround case study. Siemens Turnaround can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Siemens Turnaround can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Siemens Turnaround in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Threats Siemens Medical Solutions: Strategic Turnaround External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Siemens Medical Solutions: Strategic Turnaround are -
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Siemens Turnaround needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Siemens Medical Solutions: Strategic Turnaround, Siemens Turnaround may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Siemens Turnaround.
Shortening product life cycle
– it is one of the major threat that Siemens Turnaround is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Siemens Turnaround with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Siemens Turnaround can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Consumer confidence and its impact on Siemens Turnaround demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Regulatory challenges
– Siemens Turnaround needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Increasing wage structure of Siemens Turnaround
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Siemens Turnaround.
Environmental challenges
– Siemens Turnaround needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Siemens Turnaround can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Siemens Turnaround can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Siemens Medical Solutions: Strategic Turnaround Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Siemens Medical Solutions: Strategic Turnaround needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Siemens Medical Solutions: Strategic Turnaround is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Siemens Medical Solutions: Strategic Turnaround is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Siemens Medical Solutions: Strategic Turnaround is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Siemens Turnaround needs to make to build a sustainable competitive advantage.