Building the Digital Manufacturing Enterprise of the Future at Siemens SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Building the Digital Manufacturing Enterprise of the Future at Siemens
This case describes the motivation for and the development of Siemens' digital manufacturing enterprise vision, which became the foundation for its implementation of Industrie 4.0. While the effort started with a purely defensive move by Anton Huber, head of the Digital Factory Division, to protect his core programmable logic controller business from the migration of value to software from hardware, the scope expanded radically as the company completed the acquisition of UGS. It was then able to articulate a complete roadmap from computer-aided product inception and design through simulation and automation system design all the way to the factory floor. The initial implementation at the Electronics Works Amberg became widely cited as the prototype for Industrie 4.0. The central question of the case is the importance of vertical integration to the delivery of the vision, in the face of pressure for open standards that will expose large parts of the system to competition and price pressure. How will Siemens earn a reasonable rate of return?
Swot Analysis of "Building the Digital Manufacturing Enterprise of the Future at Siemens" written by Willy Shih includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Siemens Industrie facing as an external strategic factors. Some of the topics covered in Building the Digital Manufacturing Enterprise of the Future at Siemens case study are - Strategic Management Strategies, Innovation, Internet, IT, Manufacturing and Technology & Operations.
Some of the macro environment factors that can be used to understand the Building the Digital Manufacturing Enterprise of the Future at Siemens casestudy better are - – increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, there is increasing trade war between United States & China, talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing inequality as vast percentage of new income is going to the top 1%,
increasing transportation and logistics costs, technology disruption, etc
Introduction to SWOT Analysis of Building the Digital Manufacturing Enterprise of the Future at Siemens
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Building the Digital Manufacturing Enterprise of the Future at Siemens case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Siemens Industrie, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Siemens Industrie 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 Building the Digital Manufacturing Enterprise of the Future at Siemens can be done for the following purposes –
1. Strategic planning using facts provided in Building the Digital Manufacturing Enterprise of the Future at Siemens case study
2. Improving business portfolio management of Siemens Industrie
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Siemens Industrie
Strengths Building the Digital Manufacturing Enterprise of the Future at Siemens | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Siemens Industrie in Building the Digital Manufacturing Enterprise of the Future at Siemens Harvard Business Review case study are -
Successful track record of launching new products
– Siemens Industrie has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Siemens Industrie 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 switching costs
– The high switching costs that Siemens Industrie 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 Industrie is one of the leading recruiters in the industry. Managers in the Building the Digital Manufacturing Enterprise of the Future at Siemens are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Siemens Industrie is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– Siemens Industrie 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 Building the Digital Manufacturing Enterprise of the Future at Siemens HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Siemens Industrie 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 Building the Digital Manufacturing Enterprise of the Future at Siemens - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Siemens Industrie 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 Industrie is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Building the Digital Manufacturing Enterprise of the Future at Siemens Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Siemens Industrie has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Building the Digital Manufacturing Enterprise of the Future at Siemens Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Superior customer experience
– The customer experience strategy of Siemens Industrie in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Siemens Industrie in the sector have low bargaining power. Building the Digital Manufacturing Enterprise of the Future at Siemens has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Siemens Industrie to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Siemens Industrie is present in almost all the verticals within the industry. This has provided firm in Building the Digital Manufacturing Enterprise of the Future at Siemens 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 Technology & Operations field
– Siemens Industrie 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 Industrie in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Building the Digital Manufacturing Enterprise of the Future at Siemens | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Building the Digital Manufacturing Enterprise of the Future at Siemens are -
Low market penetration in new markets
– Outside its home market of Siemens Industrie, firm in the HBR case study Building the Digital Manufacturing Enterprise of the Future at Siemens needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Siemens Industrie has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High cash cycle compare to competitors
Siemens Industrie has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Building the Digital Manufacturing Enterprise of the Future at Siemens, it seems that the employees of Siemens Industrie 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.
Need for greater diversity
– Siemens Industrie has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Workers concerns about automation
– As automation is fast increasing in the segment, Siemens Industrie needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
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 Industrie supply chain. Even after few cautionary changes mentioned in the HBR case study - Building the Digital Manufacturing Enterprise of the Future at Siemens, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Siemens Industrie vulnerable to further global disruptions in South East Asia.
Capital Spending Reduction
– Even during the low interest decade, Siemens Industrie 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.
Aligning sales with marketing
– It come across in the case study Building the Digital Manufacturing Enterprise of the Future at Siemens 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 Building the Digital Manufacturing Enterprise of the Future at Siemens can leverage the sales team experience to cultivate customer relationships as Siemens Industrie is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Building the Digital Manufacturing Enterprise of the Future at Siemens, in the dynamic environment Siemens Industrie has struggled to respond to the nimble upstart competition. Siemens Industrie has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Siemens Industrie is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Siemens Industrie needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Siemens Industrie to focus more on services rather than just following the product oriented approach.
Opportunities Building the Digital Manufacturing Enterprise of the Future at Siemens | 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 Building the Digital Manufacturing Enterprise of the Future at Siemens are -
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 Industrie 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.
Better consumer reach
– The expansion of the 5G network will help Siemens Industrie to increase its market reach. Siemens Industrie 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Siemens Industrie can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Building the Digital Manufacturing Enterprise of the Future at Siemens, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Siemens Industrie can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Learning at scale
– Online learning technologies has now opened space for Siemens Industrie 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.
Buying journey improvements
– Siemens Industrie can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Building the Digital Manufacturing Enterprise of the Future at Siemens suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Loyalty marketing
– Siemens Industrie 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.
Developing new processes and practices
– Siemens Industrie can develop new processes and procedures in Technology & Operations 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.
Manufacturing automation
– Siemens Industrie can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
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 Industrie can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Siemens Industrie 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Siemens Industrie can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Siemens Industrie 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 Technology & Operations segment.
Threats Building the Digital Manufacturing Enterprise of the Future at Siemens External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Building the Digital Manufacturing Enterprise of the Future at Siemens are -
Increasing wage structure of Siemens Industrie
– 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 Industrie.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Building the Digital Manufacturing Enterprise of the Future at Siemens, Siemens Industrie may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
High dependence on third party suppliers
– Siemens Industrie 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.
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 Industrie business can come under increasing regulations regarding data privacy, data security, etc.
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.
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 Industrie needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Siemens Industrie is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Industrie in the Technology & Operations sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Siemens Industrie 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 Building the Digital Manufacturing Enterprise of the Future at Siemens .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Siemens Industrie in the Technology & Operations industry. The Technology & Operations 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.
Technology acceleration in Forth Industrial Revolution
– Siemens Industrie has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Siemens Industrie needs to keep up with the evolution of technology in the Technology & Operations 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.
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 Industrie.
Environmental challenges
– Siemens Industrie 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 Industrie can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Weighted SWOT Analysis of Building the Digital Manufacturing Enterprise of the Future at Siemens 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 Building the Digital Manufacturing Enterprise of the Future at Siemens 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 Building the Digital Manufacturing Enterprise of the Future at Siemens 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 Building the Digital Manufacturing Enterprise of the Future at Siemens 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 Building the Digital Manufacturing Enterprise of the Future at Siemens 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 Industrie needs to make to build a sustainable competitive advantage.
