Group-03

SIEMENS: Building a structure to drive Performance and

Responsibility
PGEMP71/A/03 Gurpreet Bhatia
PGEMP71/A/14 Adamya Kadamne
PGEMP71/A/17 Rohit Kalia
PGEMP71/A/23 Sumit Kumar
PGEMP71/A/33 Aditi Rajbansh
 Q1. Analyze the organizational architecture of Siemens, tracing the rationale for its
evolution, and critically assessing the organizational structure.

The evolution of Siemens organization structure started in 1969 under Siemens AG umbrella which in 1989 transitioned
from functional reporting to divisional structure. The rationale for this change was role clarity, decentralization, local
responsiveness, stability and adaptability.
Kleinfield made further changes fit4more and Siemens one to simplify large scale projects
• The organization structure of Siemens was very complex in 2007 which hindered the inter-department collaboration.
There was two tier board system, one corporate executive committee (CEC), 12 operating groups involving 70 divisions
and sub-divisions. The operating groups had 6 business areas which needed some level of consolidation
• Four eyes principle was irrelevant and it made the decision making slower
• There was autonomy in operating groups which plays the greater responsibilities on local responsiveness which
substantiated their customer focus
• The earlier structure lacked the role of any general counsel to meet the need of legal compliance.
Q2. How effective do you think the structure which emerged under CEO Peter Loscher
in the current time (the time the case was written), was?
• The new structure was much simpler with clear delegation of authority (CEO principle as against the four eyes
principle). The managing board was the sole governing body.
• It became more customer focused as they changed their stance from development of market/division to customer
development
• With integrated cluster formation, the regional managers could focus more on the customers by minimizing the
administration activities with the countries
• The new system was consolidated into three sectors which catered to the overall business (energy, industry, health)
• Right of way approach encouraged regional management to customize the specifications in order to increase
profitability
Q3. What do you see as the organization's strengths and possible weaknesses?
Strengths
• Innovation led company which expanded from a telegraph business to multi sector corporate giant.
• Siemens exceled in providing integrated solutions to its diverse customer base
• Collaboration between different divisions by rotation of employees with operating groups
• They had concept of managers for local responsiveness and would serve local customers through integration of product
• The competency of Siemens could be leveraged into building a competitive advantage
Weakness
• The company faced challenges in their management & leadership skills
• There was lack of coordination and conflict between their global and regional business
• There was a lack of role clarity and accountability between the business groups.
• Unavailability of lateral thinking made the organization unidirectional
• Uncertainty in the business because of bribe cases and lack of trust in the organization because of new leadership of
CEO.
Q4. How well do you think is it equipped as an organization to face its challenges?

• The lack of trust in the organization existed because of the cases of bribery. However, the structural reforms taken
by Loschner were in right direction and has enabled Siemens to future challenges
• The diverse technological and geographical advantages laid a platform for future growth
• The competency centers established by the company within the clusters could effectively manage the resources
• The clusters can also support customers of smaller markets in countries
• Company’s vision to support green technology will cater to generation of future business
• Market Development Boards (MDBs) were developed under Siemens One to address cross sector projects
• The legal department introduction will help in compliance and manage its challenge of getting involved in bribery
cases
• Being a large sized organization, Siemens focuses on the competencies which would provide all kinds of
technological solutions for big companies and the government
Q5. Does Mr. Loschner’s organization design facilitate the development of new
strategies and provide the flexibility required to adapt to change?
• Yes Mr. Loschner developed market development boards for cross sector projects to support “Siemens one” efforts
• Divided business into 2 dimensions – first for global business and second dimension for the regional units
• More focus on local customization
• Loschner’s organization has added the climate change and the globalization to megatrends (demographic change)
Q6. Does Mr. Loschner’s organization design help the corporate office to add value to
the organization
• Corporate office under Loschner’s organization had wide competencies, they exercised coordination tasks and
undertook supervisory duties. These units were corporate finance, control, human resources and corporate legal
compliance. Loscher had hired a general counsel for future programs which emphasized on transparency in the
system