Operating as part of a global market

Using its worldwide presence, Siemens aims to meet the needs of a range of global markets. All its companies report to the German parent company. To deliver value to the overall group, each separate business must meet the needs of its own customers, wherever they are.

There are thirty businesses within Siemens in the UK. This figure is constantly rising as Siemens strengthens its UK portfolio as it acquires more businesses. Each operates to achieve targets for growth and profit. To do this best requires an understanding of local needs and culture. Its businesses in the UK have freedom to decide how best to meet local needs.

Siemens employees based in the UK share their customers' culture. Its group's focus is to 'think customer'. In delivering their services to consumers, its employees understand customers and the issues and problems they are working to solve. As a result, customers benefit from working with Siemens.

Within every global business there is competition between countries for investment. Siemens has established global 'centres of excellence' that can serve the specialist needs of the entire group. The Roke Manor Research facility in the UK serves the whole Siemens group. Any of its businesses, wherever in the world they may be, can call upon their expertise.

In the UK, Siemens works within a new global strategy, 'Siemens One'. In all its activities, customers can call upon the potential of other Siemens groups. If one does not possess a skill, another will. If a particular part of the business requires something offered by another elsewhere, then that product or service is supplied.

Working across ´sectors´ of an economy

An 'economy' refers to the way in which a group of people set about using scarce resources to produce the things they need or want. 'Scarce' resources are those that have limited supply. A way of understanding this is to think of a family. Just about every family has some scarce resources. They must 'economise' to do certain things, give up others to enjoy something else. Money, garden, rooms, space, are all scarce to most people.

In economic terms, we speak of an economy as consisting of 'sectors' of activity. Each sector adds something different. Primary activities produce the raw materials we need. This could be food from agriculture, fish from the sea, or stone dug out from the earth. Secondary activity makes and assembles physical products.

The 'tertiary sector' adds services that are helpful to the whole economy. Primary and secondary businesses use physical resources. The tertiary sector provides unseen things. Banking, insurance, retail, technical supports and leisure services are all tertiary.

People speak of world, national, regional or local economies. It is common to speak of 'economic blocs' such as Asia Pacific, the United States of America, Latin America, or the European Union. World movements of resources are a vital factor. There is a growing role of ever-bigger 'blocs' of economic power. It is at the level of the nation state that economic judgements tend to occur.

The United Kingdom is a wealthy economic power. We have many resources we can employ. We have skills and technical abilities. Within the UK, Siemens plays a significant role by working in both the manufacturing and the tertiary sectors. Turnover is derived from 48% manufactured products and 52% services.

In the UK, the trend at Siemens is towards providing more business services. Working in long-term relationships with both private and public sector bodies, it is a partner in success. In this way it is becoming an essential part of continued growth and service improvement.

Through buying other businesses, Siemens has grown to acquire different skills. Its presence within the UK now embraces several industrial sectors. This means it can specialise.

Siemens helps businesses concentrate on what they do best, e.g. in media and broadcasting, Siemens has a 10-year deal to provide broadcast and IT services to the BBC. They develop their 'core competency'.

Siemens in action

Siemens in the UK designs and makes super-conducting magnets for body scanners worldwide and more than a third of all MRI scanners in hospitals have a Siemens magnet at their heart. These are made in the UK.

Variable speed drives; industrial gas turbines; motor parts and rail communication systems are UK-produced. These are for the world market. Siemens traffic management systems manufactured in the UK are exported to places as far afield as China, Malaysia, Bahrain and Brazil. In 2005, exports of manufactured goods totalled £500.4 million and accounted for 16% of sales.

However, for Siemens in the UK the trend towards service provision seems unstoppable, because this is what customers want. It is easier to differentiate services than products because many products can become commodities.

The UK National Health Service (NHS) is Europe's largest organisation. Using private sector specialists, NHS Hospital Trusts in the UK are modernising healthcare.

Siemens is working with NHS Trusts and other partners to create brand new hospitals. In Barnet and Chase NHS Trust, it has embraced a 33-year Private Finance Initiative (PFI). The company is providing Accident & Emergency units, medical equipment, communications, intensive therapy units and several operating theatres.

Within these facilities, Siemens is creating hospital IT and energy management systems. These systems can integrate patient records with an electronic picture archive. This helps to improve hospital efficiency at every level. This saves lives and makes clinical decisions easier.

To raise standards of service, Siemens employs on-site contract managers to look after customer relationships and technology. This means that each customer's requirements are unique. There is not an off-the-shelf solution for all. There is an individual response to need, based on detailed interaction with a customer.


Siemens' aim is to be profitable. It seeks to be a global leader in electronics and electrical engineering. Because of this, it works within a huge range of industrial sectors. All over the world, electrical equipment controlled by Siemens electronic systems is in use.

In the UK, Siemens provides the full spectrum of products and services and, in terms of its turnover, the UK is the third biggest market in the world for Siemens. The company structure is such that it can look after local interests whilst drawing on global resources.

Although the global Siemens HQ is based in Germany, Siemens in the UK is responsible for looking after the UK market. Local management is empowered to create relationships with customers.

Company culture encourages new and better methods of meeting local needs.

Siemens continually acquires new businesses to offer what its customers need, which is increasingly end-to-end integrated solutions that allow them to concentrate on their core business. Siemens both in the UK and globally is a dynamic and responsive business.



A Vodafone case study


Vodafone is a leading international mobile communications company with interests in 27 countries and partnership agreements with a further 40 countries, including Safaricom in Kenya. It has over 71,000 employees throughout the world and in 2008 had more than 289 million customers. In the UK, more than 19 million people use Vodafone services.

Vodafone's vision is 'to be the world's mobile communications leader' and a key component of this is to ensure that customers trust and admire the company. It achieves this by taking a responsible approach to the way it conducts its business. This enhances its reputation and builds customer loyalty. Vodafone's business strategy and its Corporate Responsibility (CR) strategy are interlinked. Vodafone believes that long-term commercial rewards come from doing business in a sustainable way.

Vodafone's approach to business is two-fold:

- to provide product extension - new features, dimensions and services in saturated markets. These are areas like the UK, USA and Europe which have sophisticated users who want and expect new functions from their mobiles. Developing new ways of delivering products and services helps to keep existing customers and attract new ones. For example, 3G technology has improved the ability and quality of transferring voice and data. Very fast internet speeds allow extended services such as video calling, music downloads, mobile television and email messaging;

- to look for opportunities in emerging markets. These include some of the worlds more remote areas, including parts of Africa, where many people do not yet have access to a mobile phone. The less developed infrastructure in these areas makes traditional landline telecommunications difficult. Vodafone is committed to providing these markets with the technology to develop communication that will help both economically and socially. There are now more than four billion mobile phones across the world and 64% of all users live in a developing country.

This case study highlights Vodafone's activities in different types of economies and the impact of technology on both developed and developing markets.

What is an economy?

An economy is a system which tries to balance the available resources of a country (land, labour, capital and enterprise) against the wants and needs of consumers. It deals with three key issues:

- what is produced;

- how it is produced;

- who gets what is produced.

There are three main types of economy: planned economy, market economy and mixed economy. Planned (also known as command) types of economies were found in previously communist countries, such as Romania, Bulgaria and Russia, and in North Korea today. In a planned economy the government makes all decisions for society. Producers only make what they are instructed to make. The main benefits are that most workers are employed and most people enjoy a similar basic lifestyle. The problems, however, may be far-reaching:

- a planned economy gives little capacity for development, so growth and investment is limited;

- the infrastructure is usually under-developed as government spends on other areas such as defence;

- wages are state-controlled, so people have less motivation to perform at higher levels;

- prices are fixed by government. Consumers often cannot afford luxury goods such as computers or mobile phones, which are taken for granted in developed countries.

In market economies (also known as free enterprise) the government's role is limited to providing legislation to protect businesses and consumers and making sure no single business or organisation restricts competition. It also provides essential services (like police and defence) and ensures the country's money supply is stable. The main features are:

- businesses are motivated by profits to make products that customers will buy;

- customers' demand for products and services affects the levels of supply and the pricing;

- if customers do not buy and demand falls, then a business must make less, be more efficient or produce an alternative product.

There are few, if any, examples today of countries with a purely free market economy. A purely market economy could have several drawbacks. It could lead to inequality in society. For example, those who can afford to pay for health care receive it, those who cannot pay, do not. In times of economic crisis, without government intervention, many businesses, such as major banks which have a fundamental role in the nation's economy, would fail.

The mixed economy is a combination of both planned and market economies. Most countries demonstrate a mixed economy, including the most developed countries like the UK and the USA. Even a communist country like China has an economy which relies on a mixture of state and private enterprise:

- in a mixed economy, the government contributes and controls some resources and the market controls the rest;

- the proportion of each contribution may vary. For example, in some Scandinavian countries, the state provides a very high level of social benefits but charges high taxes. In the USA, public benefits (such as free national health care) are minimal. The UK position is somewhere in between.

Developed economies

Developed mixed economies such as the UK produce large numbers of goods and services to meet consumer needs. This sector represents the top of the socio-economic pyramid. In this type of economy, where customers have choice, Vodafone needs to differentiate itself in the market. It relies on its strategic mix of innovation in products and services, customer focus and its responsible approach to business to meet consumer demand and develop long-term customer relationships.

Vodafone's business model is market-orientated and customer-focused. It researches customer needs and desires and produces products and services to meet those needs. For example, in the UK's developed market, Vodafone provides its customers with the benefit of:

- network coverage for calls and data across almost 100% of the population;

- a wide range of handsets and airtime plans to suit every type of customer and use;

- access to messages, email, the internet and the sharing of images, videos and music through mobile phones.

In developed economies, mobile phones are considered a normal part of life and the functions they provide add value to landlines. Customers expect increasingly sophisticated products. Vodafone's integrated mobile system can be used for business, education or socialising. The latest handsets allow people to keep in touch with family and friends through emails, messaging and networking sites such as Facebook and Twitter. They can research and develop their interests online or play games, listen to music or watch TV in any location.

Developing economies

Developing economies are those countries in the middle or bottom layers of the socioeconomic pyramid. These countries often face great difficulties in improving their economies. For example, in planned economies, assets like land or property are owned by government. Individuals and businesses are not used to making decisions and operating to make a profit. When Bulgaria moved from its previous planned economy to a mixed economy at the collapse of the Soviet Union, its agriculture, banking system and industry were not able to support the levels of output the economy needed. However, with investment, economic growth is now growing at a steady rate and Bulgaria was able to join the European Union in 2007.

Developing economies, like many emerging African nations, may also be market economies but share features which hold them back:

- the population lives on very low incomes (typically less than $2 or about £1 per day);

- poor infrastructure such as transport (roads or railways) or local government;

- poor communication systems;

- low levels of basic health and education;

- a low Gross National Product (GNP).

Kenya is a developing market economy. Its infrastructure and communications are extremely poor. Over 75% of the country's workforce is in agriculture which can be affected by the climate. Telephone landlines are scarce, expensive and difficult to install. Kenya has just 450 bank branches which are based in cities and tourist areas. 80% of Kenyan adults have no bank account. Many of these are self-employed business people, such as small farmers. Only 27 % have access to a bank because of the remote distances involved. In addition, theft is a problem in many areas. These problems mean that small businesses find it difficult to operate.

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