Siemens AG Global Development Strategy

sulphur AG Global victimisation St trampgyIn redact to go steady reciprocal ohm International RD current situation and thoroughly come up with alternatives and recommendations to solve possible issues that may arise, it is first crucial to analyze the follows outline and rationale for International RD. There be several factors and reasons that led entropy to pursue and International RD strategy, opposed to a domestic whiz.The first genius is the obvious dig shortages that would take place was Siemens to perform its investigate and development in its Munich headquarters. It is kind of obvious that centralizing in all RD activities in Munich would result in a critical shortage of the ICNs 1500 employees allocated to the headquarters.Secondly, customers in the tele talks diligence usually require extremely customized solutions for their businesses. Thus, it is of the utmost importance that harvesting customization is performed with the quickest response to customer nee ds possible. Thus, the regional allocation of engineers, technicians, etc., into Regional Development Centers (RDCs) plays a crucial role in the fulfillment of this task.Finally, the spheric extend of RD units would theoretically provide the company the possibility of taking advantage of exploiting duration zone differences, and thus perform an around-the-clock development strategy. However, this concept has turn up to be utopian cod the interdependence amid afield counterparts subsequent of the extremely extravagantly coordination needed for the development of this type of leading shore technologies.1.2. STRUCTURE OF RDCsAt the date of the case, Siemens ICN had 6 major overseas RDCs in the following countries Austria, India, USA, Belgium, Slovenia and Portugal. These centers are related to the Munich headquarters through a HUB-Model, in which RD activities are mostly concentrated in and controlled by the military headquarters, whereas product customization takes place i n RDCs.Firstly, the payoff of person- days and capital invested are two rigorously correlated varicapables in the companys development effort. This is trivial since the amount cash dog-tired in a certain views is an increasing function of the functionals years invested by the employees in the development of these projects ( lucre vs. pop off).Secondly, labor apostrophize advantage is alike a crucial matter in any business. Thus, as tail end be seen in the table above, the U.S. employees take the first place as most expensive wage earners, whereas the Indian take the place as the cheapest. In this specific case, India presents a great advantage for Siemens ICN or any some other technology development company, since in that location is a right tradeoff amidst low cost and spirited expertise in this field.Thirdly, employee employee turnover is an issue the company nearly eons has to discern with. The ambition (and some dates greed combined with low company allegiance) of employees makes them practically migrate to other companies where better salary conditions are offered. This results in a rattling high employee turnover and difficult allocation of litigateers to medium/ enormous-term projects.Finally, coordination costs between the Headquarters and RDCs are similarly of the highest relevance. Since we are talking about countries umpteen times geographically separated by dozens of special Ks of kilometers, it becomes extremely heavy to articulate and coordinate work between the counterparts. However, non only the geographic and time zone distance influence step-up these costs, only as wellhead the heathenish distance between them, since this implies to a greater extent time and money fagged in trying to reduce it through frequent trips, workshops, etc.1.3. BOCA RATON RDCIn Boca Raton, Florida, U.S.A., is located Siemens second largest overseas RDC. This facility is majorly centered in the development of the Electronic break Sy ba se of operations Digital (EWSD), and functions as many of the companys other RDCs Munich Headquarters provide the project-base for each EWSD wall plug to Boca Raton, which customizes it to the U.S. markets unique industry standards. Moreover, this RDC benefitted from the accumulation of enough knowledge to acquire the increasing independency from the Headquarters to manage more complex system projects the development of the U.S. customer-required Remote Switching Unit (RSU) is a good example of this.However, despite strong bonds and correlative admiration were developed amidst the counterparts during the development of the RSU, still some critical issues concerning working finis arose the German culture of building road maps to guide the project development ( phone first, act later) was completely the opposite of what Ameri kittys used to do (act first, think later). Despite at that place is the rationale of feteing up to competitor technical developments and customer need a daptation for the Ameri female genitalss to perform their work in much(prenominal) a way which would denote a certain degree of home-base augmentation thither is an obvious lack of home-base exploitation from the company, since the Germans are not effectively embedding their working culture in their Ameri hobo subsidiary.1.4. INDIA RDCOne of the major problems prevailing in Siemenss remote RD process is the different working styles and culture showdownes between its local anesthetic anesthetic and overseas developers. The contrast is most evident in Bangalore RD center where the Indians are working with their senior partners from Germany. While the Germans expect the Indians in Bangalore to show more interest in working with vast machines rather than to pursue entrepreneurial jobs during the process, the Indians hope the Germans could cancel some of their pre-arranged vacations and give them a hand in some critical points of time.Moreover, as with the Germans feeling uncomfor table about questioning issue issues in public, which is often the conversational topic of the Indian employees, the Indians regard it as being impolite to under(a)stand No or speak up ones mind in a big take oning, which is required by the German seniors to necessitate the decision making process. This fact is stern in a aesthesis that the Germans do not really know whether the Indians developers would be able to perform a specific task as they never say No to the Germans request.In the end, the Indians may end up wasting their time and resources as the tasks are beyond their capabilities. More adversely, miscommunication between Munich and Bangalore and between Germans and Indians, in a smaller scale, often occurs due to the Indian personnel offices avoidance of impolite request for further clarification in the first place. As a result, the Germans always find it necessary to mother face-to-face interaction with Indian engineers in order to re-confirm everything is on the right track.Overall, most of the issues mentioned above stem from the difference in personalities of people from different nationalities. If no action is do to alleviate much(prenominal) discrepancy and to seek the most basic brain ground among cross-cultural employees, Siemens would continue to incur unnecessary counselling costs.With this remaining cultural and communicational problems, headquarter in Munich played mainly an judicature role. As the customers of Siemens ICN are most of the time Germans or to the lowest degree westerner, RDC in India had a position as an RDC for exporting, which means they follow the directions what is disposed(p) from headquarter. RDC in India had limited chances to communicate with their customer directly. On Munich side, they had to explain, and had to give the specification to Bangalore. However, they couldnt form enough communication for subtle changes from customers or organization matters such as bud feature cuts, changes of manager s in Germany. Should some changes from Germany, the managers in Munich correspond between India and Germany. It increased the possibilities of missing out on some specifications or misunderstanding between customer and RDC. RD center in India had to sometimes postpone their work due to those confusions.Although the actually RD site is in Bangalore, Munich took the role to blend and examine the entire system which is based on the subprojects developed by Indians. They briefly faced difficulties to do that job because they didnt actually perform RD but the developers in Bangalore. Furthermore the subprojects are far more independent than they expected. It causes high inefficiency take aim that the RDC in India should work again and to find the problems for the system.As these RDC and headquarter are thousand kilometers far away to each other, they need additional care for cooperation and communication. As they should work together across Bangalore and Munich for After-divine ser vice of their products, the remaining inefficiency of headquarter and RDC in India need decent attention.In addition to, gradual mischief of cost advantages in external labor force was another problem and India was the standout country. Firstly, high turnover rate among Indian course of instructionmers caused high costs to Siemens. For instance, Bangalore programmers were even asking salary entropy of the German workers. Secondly, time to train a new recruit was wide firearm the employment turnover rate was increasing. One reason was that Indian programmers were trained on inexpensive personal computers so that they relied heavily on German guidance for working on large systems. Thirdly, other competitors were uphill as first choice for local labor force in India. Siemens was considered as one of the best employers to work for in Bangalore in the past but other competitors such as Cisco and luminous showed up and the competition to hire talented workers made Siemens to slippe d from favourite status to a middle-ranking. Lastly, wage increasing trend in Bangalore had undermined the cost advantage of this RD center to Siemens. The wage for developers in Bangalore increased roughly 25% every year.Siemens had lack of separate squad to overlay customers mixed technique request. Hard problems were often had to be referred to major RD centers, by which the personnel would be pulled from the RD team and away from their current projects just to solve the problem lead to delay in product release and inefficiency.In addition, there was a strong threat by internet industry. By the mid-1990s, interpretive program transmission via Internet is faster and cheaper. If the internet companies can improve its dependableness and quality for phone making, they would dominate the entire communication industry.Furthermore, Siemens had some difficulties in maintaining quality and workforce motivation at its American RDC as the company had experimented with the use of stron gly defined project teams for each release of a product.We did a personal analysis for Siemens comparing with competitors and make up out that Siemens was spending too little money for the RD during 1995 to 1999 match to major competitors and industry average which is TELEPHONE TELEGRAPH APPARATUS. As you can refer to the figure3, Siemens RD intensity was 0.0078 that was not only reduce than Nokia and Ericsson but also way below the industry average level which was 0.73.2. RECOMMENDATIONS2.1. subjoin OF AUTONOMYThe lack of autonomy haveed by Munich to overseas RD centers, in general, and Bangalore center, in particular, largely contributed to the inefficient coordination and worsened the existing culture clash in Siemens. To make corrective actions, Munich should give more empowerment to their international RD centers in regard to such downstream activities as interaction with customers. In specific, by directly talking to customers, the Indian team would devote a better unde rstanding of customers specification requirement and expectation as wholesome as an increased sense of be to the job they are performing. It is prudential enough if small customers are first assigned to Bangalore center in order to test and evaluate its ability to simultaneously produce and handle with customers. This is also opportunities for Indian developers to accumulate their sleep together so that they can mete out with bigger projects on their own in the future without much of Munichs scrutiny. For instance, Siemens could consider developing RDC in India as their Asian RD center, so that the Indian developers can read the Asian customers needs with their geographical advantages to Asia and at the selfsame(prenominal) time, they can perform their requirements independently from headquarter in Germany.In addition, it is advisable for Munich to integrate and test the system in the place the subsystems are originally generated. For example, German supervisor from Munich sho uld travel to Bangalore to conduct the desegregation and testing rather than brand the sub-products back to and fly Indian developers to Munich. The reason is that in Bangalore, German managers can easily get their needed information from the Indian staffs, who directly participated in the task performance, in case there are any problems during the desegregation and test process. This practice helps eliminate the need for and cost of long-distance communication, let alone miscommunication which may arise due to language differences. More importantly, by conducting the product integration and testing in Bangalore, the Indian staff would have a feeling that their contribution is worthwhile as they can backup track of their spiritual product until it is completed and delivered to customers flawlessly. As a result, it would not hurt the Indians self-esteem while improving their sense of responsibility and belonging toward the company as they take control of what they produce.Moreove r, adoption of Delphi approach in important board meetings among multicultural staffs would preclude their shyness and encourage all people to speak up their minds in an acceptable way to all the cultures. Even though the Delphi approach is time consuming and require everyone to meet face-to-face, it proves as the good solution in short term while Indian heads felt it wrong to reject other peoples ideas in a big meeting.In the long run, so as to bridge the cultural gap, Siemens should take on more approaches. In terms of communication matter, if the managers from Germany are qualified as international experts especially for Indian culture, they could deeply understand Indians communicational way. This can efficiently deliver customers need to Bangalore and also maximize the performance in India. Such an international cross over can also implemented other way around. For instance, Indians who have experience with Germans or least Westerner could understand their supervisors and custo mers need more exactly. These Indian international experts could bring also the ideas and project status in sense what their western-customers and co-worker need.This autonomy grant to Siemens Bangalore RD unit or, if necessary and be to be a successful measure, to other units would possibly result, in the long-term, in a change of the companys structure from a HUB Model to a internet Model, in which the international control of RD activities would be split between the companys global competence centers, both at home and host countries, with a bi-directional technological knowledge flow.2.2. IMPLEMENTATION TO REDUCE CULTURAL DISTANCEIn order to improve their cross cultural understanding, here are some recommendations to get them having the idea of how their counterpart functions. Firstly, to have cultural workshops by international experts or even their co-workers from India, so that they can understand and know each others culture better, leads to lower possibility of occurr ence of misunderstanding and miscommunication between Indian and German workers.Secondly, Siemens could provide Global sporting activities or family gathering in different countries. By having gathering events, employees can easily develop team spirits and become friends, reduce their cultural distance to each other after all. For instance, Hyundai Motor Company first had difficulties with managing and controlling the multicultural employees within the company because there was huge cultural distance between them. To deal with this problem, for instance, they started a global 33 basketball tournament across their local offices and it increases their profitability by having good relationship with each other (Korean and foreign counterparts) beyond the cultural backgrounds. During the matches, employees could feel that they share the same goal and they can well co-operate each other, regardless of their different nationality.2.4. REDUCTION OF EMPLOYEE TURNOVER enumerateEven though I ndia had one of the worlds three largest engineering workforces, companies still pursue in a fight for talent. It was so, because the labor market is a global one, so a lot of companies would recruit software engineers to both work in their Indian units, but also to work elsewhere, as Indian talent was highly regarded in this field. Also, both national and international companies had cheering operations in Bangalore, Indias computational technology center, to benefit from the talent consortium and the low cost labor, so companies often adopted aggressive strategies to depict the best and the brightest.Siemens had long established in India and was had a impressive reputation, being regarded as one the best employers to work for by early days Indians. However, this was changing with the increasing competition for engineers by companies such as lambent and Cisco, and as Siemens provide a great experience and tuition curve, recruiters would often go after the companys engineers, and would pay a premium to have them switch companies, making the annual turnover rate in India, 35%, the highest in the company. Also, there was culture clash between the Germans and the Indians in Siemens, as Indians showed to be somewhat impatient and looking to move projects more often than what was planned by the German management. Also, Indians preferred leading-edge projects in the fields of supple telecommunications and internet protocols, rather than what was being assigned to them, which was quality testing and integration tasks, which were more repetitive and less stimulating. The Germans also showed lack of knowledge with regards to the Indian way of working, because the Indian output was not always reliable, as they unplowed changing approaches and they would rather fix problems right on the spot and not document them for future knowledge and improvement, and this was against the German mindset. All these issues helped keep the turnover rate high, and Siemens had to l ook for solutions to this problem.It seems that, to keep engineers happy, and as they were to open to discuss wages everywhere, Siemens would have to offer better wages, at least to their most talented employees. Perhaps the best way to do so, and to keep the incentive of increasing performance whenever possible, would be to keep the base salary where it is and offer performance based bonuses and also, stock options plans. There could be a 2 tier performance based bonus scheme, with both a short term component to it, and a longer term one that would only be awarded if the employee stayed in the company for a certain number of years and kept his/her performance level, to ensure that the motivation was always high and that the proper incentive mechanisms were in place. Regarding the stock options, this would also ensure the long term loyalty to the company and the incentive to adopt both a short and long term approach on a insouciant basis. These suggestions bring up the need to have measure of performance, as target area as possible. Working hours are not the best measure of productiveness as anyone can stay longer and that could promote inefficiency, poor time management and a decrease in output. Criteria such as on time delivery of projects, inexistence of errors, reliability and integration of systems, after sales service and overall customer satisfaction (measured by both formal and unaffixed feedback on all levels of interaction) could provide better ways to reward performance. Also, employees with out-of-the-box thinking, extraordinaire(postnominal) contribution to projects, engineers that developed innovative systems and ways to overcome issues and provide a better and more efficient services to the customer, could be rewarded, both financially and non-financially. To boost motivation, and in lign with the previous recommendation, top performers could be given a certain amount of time on a daily or weekly basis to develop side projects for the compan y on their initiative, in order to feel more stimulated and really adding value to the company and the clients. Also, besides the health, housing and vehicle benefits already in place, there could be an effort to transform the offices into more friendly working environments, in an move to adopt some of Googles employee motivation strategies, so that employees feel more motivation, loyalty and corporate citizenship that will ultimately lead to better output and satisfactory clients.3. FURTHER MANAGERIAL ISSUESDespite we hope and expect the recommendations given to have a positive impact in the Siemens International RD operations, there are some issues that may arise from these measures, though.If we think about the increase in autonomy granted to the Indian RDC, for instance, there is a dangerous threat in which the company may incur, is this measure to be taken. It is quite obvious that the more autonomous a person or an entity becomes from an upper berth body, the more tendency it has to deal with any different situation in its own way, either it is solving organizational problems, negotiating with suppliers or dealing with customers. Thus, due to the cultural differences that are felt between Indians and Germans, this is a situation very likely to happen.Consequently, and without wanting to state this is what would eventually happen for sure, this autonomy grant might result in a deviation from the companys way of operational from the Indians. The final outcome of such a deviation could be blasting for Siemens, since it could jeopardize a whole corporate culture and way of doing business, blurring the companys visit to stakeholders eyes. Thus, as it was stated before, this process should be gradual and always under headquarters supervision.Finally, another issue that might arise from our recommendations is the loss of labor cost-advantage in India. Even though we are perfectly aware that, in one way or another, wage levels will necessarily increase in I ndia in the next years especially in the technological field, due to the increasing demand for expertise in this area, as well as for the countrys overall economic development it is undeniable that this incentive program would increase Siemens expenditure in workforce and, consequently, mean the loss of the cost-advantage the company had by employing experts in the field at a lower price.