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 - – increasing transportation and logistics costs, increasing commodity prices, central banks are concerned over increasing inflation, increasing energy prices, geopolitical disruptions, increasing inequality as vast percentage of new income is going to the top 1%, technology disruption,
there is backlash against globalization, cloud computing is disrupting traditional business models, 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 -
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.
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.
Learning organization
- Siemens Turnaround is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Siemens Turnaround is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Siemens Medical Solutions: Strategic Turnaround Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
Operational resilience
– The operational resilience strategy in the Siemens Medical Solutions: Strategic Turnaround Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
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.
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.
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.
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.
High brand equity
– Siemens Turnaround has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Siemens Turnaround to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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 -
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.
Products dominated business model
– Even though Siemens Turnaround has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Siemens Medical Solutions: Strategic Turnaround should strive to include more intangible value offerings along with its core products and services.
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.
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.
Slow to strategic competitive environment developments
– As Siemens Medical Solutions: Strategic Turnaround HBR case study mentions - Siemens Turnaround takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Siemens Turnaround is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Siemens Medical Solutions: Strategic Turnaround can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Siemens Medical Solutions: Strategic Turnaround, in the dynamic environment Siemens Turnaround has struggled to respond to the nimble upstart competition. Siemens Turnaround has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Siemens Turnaround supply chain. Even after few cautionary changes mentioned in the HBR case study - Siemens Medical Solutions: Strategic Turnaround, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Siemens Turnaround vulnerable to further global disruptions in South East Asia.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Siemens Medical Solutions: Strategic Turnaround HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Siemens Turnaround has relatively successful track record of launching new products.
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 -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Siemens Turnaround can use these opportunities to build new business models that can help the communities that Siemens Turnaround operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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.
Developing new processes and practices
– Siemens Turnaround can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
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.
Leveraging digital technologies
– Siemens Turnaround can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
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.
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.
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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Siemens Turnaround can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Siemens Turnaround can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
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.
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.
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.
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 -
High dependence on third party suppliers
– Siemens Turnaround high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Technology acceleration in Forth Industrial Revolution
– Siemens Turnaround has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Siemens Turnaround needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Siemens Turnaround in the Strategy & Execution sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Siemens Turnaround can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Siemens Medical Solutions: Strategic Turnaround .
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.
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.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Siemens Turnaround business can come under increasing regulations regarding data privacy, data security, etc.
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.
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.
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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Siemens Turnaround in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
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.
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.
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.
