Corporate Strategy

1. Corporate Strategy and Proposed
Acquisition
March 2015
Baessato L. , Cecchi L. , Colombo F. , Fumagalli F. , Granvillani M. , Iseppato B.

2. History
• 1847-1865: BEGINNING AND INITIAL EXPANSION
• Foundation 1st. October 1847, Berlin , by W. Von
Siemens
• Production and long distance telegraph networks in
Europe and Asia
• 1865-1890: HEAVY CURRENT ENGINEERING AND
INTERNATIONALIZATION
• Electric trains and light bulbs
• 1890-1918: GROWTH THROUGH CONSOLIDATION AND
PARTNERSHIPS
• 1903 Siemens & Halske merged with Schuckert & Co —>
SIEMENS-SCHUCKERT
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3. History
• 1918-1933: RETURN TO THE WORLD MARKET AND UNITY WITHIN THE
“HOUSE OF SIEMENS”
• 1930 Started manufacturing radios, television sets and electron
microscopes
• 1945-1966: RECONSTRUCTION AND EMERGENCE AS A GLOBAL PLAYER
• Computers, semiconductor devices, washing machines and pace makers
• 1966-1989: NEW MARKET AREAS OF BUSINESS
• 1987 Overseeing nuclear power business
• 1989-2011: DEREGULATION AND GLOBALIZATION
• 2000 Development of Siemens Medical solutions
• 2004 Siemens wind power division
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4. Siemens Today
• Siemens is global powerhouse positioned along the electrification
value chain, as well as in the areas of medical imaging and in-vitro
diagnostics.
• Siemens is one of the world’s largest technology companies.
• Our name stands for: engineering excellence, innovation and good
corporate citizenship.
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5. Vision 2020
Electrification,
Automation and
Digitalization are
the long-term
growth fields of
Siemens.
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6. Businesses
• From Four Industries:
1. Energy (35%)
2. Industry (24%)
3. Infrastructure and Cities (23%)
4. Healthcare (18%)
(% of total revenues)
• To Nine-plus-one Divisions:
1. Power and Gas
2. Wind Power and Renewables
3. Power Generation Services
4. Energy Management
5. Building Technologies
6. Mobility
7. Digital Factory
8. Process Industries and Drives
9. Financial Services*
10.Healthcare**
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7. vRevenues by Business
Total Revenues € 71,920 million (+1% FY 2013) 6

8. Global Positioning
Germany: the main
technology partner
for the country.
China: a local partner.
Middle East:
technology partner.
Africa: Siemens is
helping upgrade Africa’s
rail infrastructure.
India: Siemens offers
integrated solutions for a
sustainable progress.
Russia: modern
technologies for the
world’s largest
country.US: sustainable
solutions for
the world’s
largest
economy.
Brazil: Reliable
infrastructure
partner.
Europe: Siemens automation systems
improve efficiency at factories
throughout the Old Continent.
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9. Revenues by Area
Total Revenues of € 71,920 million (+1% FY 2013) 8

10. Siemens Mission
We make real what matters, by
setting the benchmark in the way we
electrify, automate and digitalize the
world around us. Ingenuity drives us
and what we create is yours.
Together we deliver engineering
excellence, taking personal ownership
until we jointly succeed.
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11. Siemens Vision
We have a clear vision of what we
stand for and what our goals are.
Answering the world’s toughest
questions helped us become a
pioneer in energy efficiency,
industrial productivity, affordable
and personalized healthcare and
intelligent infrastructure solutions.
This success story would not have
been possible without our firm
believe in our core values. This is
what Siemens is all about.
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12. Values
RESPONSIBILITY
Our responsibility is to conduct all
businesses according to the highest
professional and ethical standards and
practices: there must be no tolerance
for non-compliant behaviours.
EXCELLENCE
Excellence means attracting
the best talents in the
marketplace and giving them
the skills and opportunities
they need to become high-
achievers.
INNOVATION
Our goal is to be a trendsetter in all
of our businesses. We unlock the
energy and creativity of our
employees, embracing the new and
different.
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13. Strategy
Our positioning and our strategic direction are closely linked to define milestones. We have to
take all the right steps to create value.
Drive Performance: boost
our performance. Make all
our businesses reach their
full potential.
Strengthen core: focus
on the things that
make you strong and
put other things aside.
Scale up: we will
intensify our efforts to
seize further growth
opportunities and tap
new fields. 12

14. Goals & Objectives
GOALS OBJECTIVES
IMPLEMENT CORPORATE GOVERNANCE 2016 - Reduce costs by € 1 billion
CREATE VALUE SUSTAINABILITY Capital efficiency target: 15-20% of ROCE
EXPAND GLOBAL MANAGEMENT More than 30% of international (outside
Germany) employees by 2020
BE A PARTNER OF CHOICE FOR OUR
CUSTOMERS
Improve our Net Promoter Score by 20%
BE AN EMPLOYER OF CHOICE Approval rating over 75% on a sustainable
basis
FOSTER AN OWNERSHIP CULTURE Increase by 50% the number of employee
shareholders
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15. Resources
RESOURCE CHARACTERISTICS INDICATORS
TANGIBLE
FINANCIAL -INTERNAL FUNDS
GENERATION
-Free Cash Flow 2014: € 1,72
billion
-Debt/Equity Ratio 2014: 73.45
%
RESOURCES PHYSICAL -PLANT AND
EQUIPMENT
-SIZE
-TECHNOLOGY
FLEXIBILITY
-Market Value of Fixed Assets
-Scale of Plants
-Alternative Uses for Fixed Assets
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16. Resources
RESOURCE CHARACTERISTICS INDICATORS
INTANGIBLE
RESOURCES
TECHNOLOGY -PATENTS
-KNOW HOW
-R&D FACILITIES
-TECHNICAL AND
SCIENTIFIC EMPLOYEES
-56100 Patents
-R&D Expenditures: € 4,1billion
-R&D Staff: 28800 (17500
Software Developers there of
about 4200 S.D. at Corporate
Technology)
REPUTATION -BRAND
-COMPANY REPUTATION
-Brand Equity
-Cooperations with Top
Universities, Research
Institutes, Industrial Partners
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17. Resources
RESOURCE CHARACTERISTICS INDICATORS
HUMAN
RESOURCES
-MECHANICAL, INDUSTRIAL,
ENERGETIC, BIOMEDICAL
ENGINEERS
-LOYALTY OF EMPLOYEES
-EMPLOYEES’ TRAINING AND
SKILLS
-Number of Employees: 343,000
-Employees Turnover Rate: 9.1%
-Expenditures for continuing education:
€ 276 million
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18. Functions & Capabilities
FUNCTION CAPABILITIES EXAMPLES
R&D -RESEARCH AND INNOVATIVE NEW
PRODUCTS DEVELOPMENT
-20 Patents per day + 38 Inventions
per day
-Focus on creating next generation
products
CORPORATE
FUNCTION
-STRATEGIC INNOVATION
-MULTIDIVISIONAL COORDINATION
-ACQUISITION MANAGEMENT
-INTERNATIONAL MANAGEMENT
-Last 4 years 9 acquisitions in
different industries
-Business Units autonomy +
corporate management coordination
MANAGEMENT
INFORMATION
-INTEGRATED MANAGEMENT:
INFORMATION SYSTEM NETWORK
SUPPORTING MANAGERIAL DECISION
MAKING
-Corporate Technology: centralized
corporate-based innovation
organisation across BUs
OPERATIONS -CONTINUOUS IMPROVEMENT IN
OPERATIONS
-Capacity to align the operations and
processes with the new developed
products
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19. Adjacency Map
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20. Horizontal Integration
INFRASTRUCTURES & CITIES:
• Transportation & Logistic
• Cities
• Municipalities & DSOs
HEALTHCARE:
• X-rays
• Pacemakers
• Dentists
• Pharmaceuticals
ENERGY:
• Electric streets lightining
• Bulbs
• Semi-conductors
• Oil & Gas
• Hydropower stations
• Windpower
• Solar pannels
INDUSTRY:
• Automotive
• Marine & Ship buildings
• Mining & Cement
• Paper machinaries
• Food & Beverage Machinaries
• Data Centers
ELECTRIFICATION
AUTOMATION
DIGITALIZATION
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21. Reasons of Diversification
1. Enhance the profitability by becoming integrated in
new markets and gain market power
2. Exploit economies of scope which help to maintain
adequate margins and set attractive prices
3. Minimize expenses by capitalizing on economies of
scale
4. Full utilization of existing resources and capabilities
5. Ensure an efficient capital allocation
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22. Matrix of Parenting Adv
Industry
Energy
Healthcare
Financial
Services
Infrastructure
& Cities
High
Low
Low HighFit between parenting characteristics and parenting
opportunities
Fit between
KDFs and
parenting
characteristics
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23. Vertical Integration
Power
Generation
Imaging and
in-vitro
diagnostics
Power
Transmission,
Power Distribution
and Smart Grid
Energy
Application
9.Healthcare 10.Financial
Services
1.Power and Gas
2.Wind Power
and Renewables
3.Power
Generation
Services
4.Energy
Management
5.Building
Technologies
6.Mobility
7.Digital Factory
8.Process
Industries and
Drives
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24. Reasons of V. Integration
1. Achieve maximum value added along the
entire process chain
2. Support customers with its integrated
approach through its communication-based,
automation and drive systems
3. Lower costs of transaction by removing mark-
ups
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25. Organizational Structure
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26. Parenting Style
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27. How Parent Creates Value
CENTRAL FUNCTIONS & SERVICES
• Incentive the sharing of both resources
and activities between the different
business units.
• The only business unit that is managed
separately is Healthcare.
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28. International Strategies
Automation
Electrification
Digitalization
Healthcare
TRANSNATIONAL STRATEGY
• Achieve both Global Efficiency and Local
Responsiveness
GLOBALLY MANAGED
• Products are standardized across
national markets
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29. Corporate Social Responsibility
“For us, sustainability means acting in the best interest of coming
generations with respect to the economy, the environment and the
society”
TRIPLE BOTTOM LINE
1. PROFIT
• Offering distinctive products
• Providing our customers a competitive advantage
• Strengthening our profitability over the long-term
2. PLANET
• Using responsibly our planet limited resources
3. PEOPLE
• Increase our employees’ sense of responsibilty in executing their activities
• Contribute to the sustainable development of society
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30. Mirvis & Googins’s Framework
Elementary IntegratedEngaged Innovative Transforming
• Citizenship concept: Sustainability (People, Profit, Planet)
• Strategic intent: Value Proposition ( Renewable energy)
• Structure: Organizational Alignment (Sustainability Board)
• Issue management: EHS Program
• Transparency: Public Reporting (Vision 2020)
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31. Key Sustainability Indicators
• Economic
• Revenue generated by the environmental portfolio: € 33.2 billion
• 42% of total revenues
• Environmental performance improvement
• CO2 emissions relative to FY 2010: -12%
• Number of suppliers that are part of our energy efficiency program: 916
• Energy efficiency relative to FY 2010: +8%
• Employees
• Expenditure on continuing education € 283 million
• Proportion of women in management positions 15.3 %
• Rankings
• Points in Dow Jones Sustainability Index: 92/100
These data belongs to FY 2012 30

32. Concrete Projects
1. “ COLLECTIVE ACTION “
• Against corruption
• Interest groups, working together
• Create fair market conditions
• Promote innovation (on the basis of
price, quality and capacity to innovate)
1. CORPORATE CITIZENSHIP PROJECTS AROUND
THE GLOBE
• Electricity for a better quality of life
(India rural village)
• Education as Key Resource: Mandela
School of Science & Technology
2. INNOVATIONS AND PIONEERING
TECHNOLOGIES
• Vegetable oil transformer for ultra-high
voltages
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33. Proposed Acquisition:KiteGen
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34. KiteGen
KiteGen focus on searching an alternative
and more effective way to produce
electricity through the exploitation of an
untouched, huge and powerful renewable
energy source: the High Altitude Wind
Energy (HAWE).
Two high-strength cables transmit the
traction of the wing and control its
direction and orientation through the
automatic kite flight control system that
maximizes the production of energy.
Relying on 40 mother patents registered
worldwide (over 3.500 total patents in the
world).
KiteGen
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35. KiteGen Vision
VISION:
KiteGen’s vision is a new type of electric
generation plant, based on a renewable
source, suitable for any territory, in direct
competition with today’s conventional
production (coal, oil or nuclear), in the
GigaWatt class.
VALUES:
• Encourage the production of eco-
sustainable energy
• Respect for the environment
KiteGen Vision
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36. KiteGen Advantages
1. Financial resources: KiteGen needs a considerable amount of financial resources to
develop its ambitious project
1. Manufactoring capabilities: KiteGen could exploit Siemens capabilities in the
manufacturing phase, EOS
1. Reputation: Siemens brand reputation is recognized all over world for the quality of
its products
1. New customers: The possibility for KiteGen to have access to Siemens’ portfolio of
customers
KiteGen Advantages
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37. Siemens Advantages
1. Innovation: KiteGen can exploit an unexploited, virtually
endless and almost universally available energy power, that
is high altitude winds
2. Worldwide Trend: Google, China Vcs and several other
companies around the world are investing in the
exploitation of the high altitude wind energy
3. Competitive Advantage: The Energy business is considered
an hauling sector for Siemens, acquiring KiteGen we may
obtain a future competitive advantage over GE
4. Access to Complementary Assets: Relying on 40 mother
patents registered worldwide (over 3.500 total patents in
the world) which cannot be imitated
Siemens Advantages
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38. Bid Price
• Due to the fact that the company patrimonial
value is mostly determined by the MARKET
VALUE OF KITEGEN’S PATENTS , we have based
our proposed bid price on this value
• MARCO CICCOLINI, the business plan developer
of KiteGen, has provided us this value :
€ 260 million
Bid Price
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39. Bid Price
 ATTRACTIVENESS TEST:
• Unexploited, virtually endless and almost universally
available energy power
• Coherent with Siemens’ tendency to be a pioneer in new
technology development
• A considerable number of companies are investing in this
technology
 ENTRY COST < EXPECTED PROFITS:
• According to our financial statement our Operating Cash
Flow of € 7,670 million allows us to buy it for € 260 million
• Kite energy cost, for their last station project named
Carousel, is less 10 €/MWh
 BETTER-OFF TEST:
• Siemens managing KiteGen could create additional value
In Conclusion
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40. Bibliography
http://www.siemens.com/entry/cc/en/
http://www.siemens.com/annual/14/en/download/pdf/Siemens_AR2014_Vision2020.pdf
http://www.siemens.com/about/en/history.htm
http://www.siemens.com/jobs/en/ataglance/
http://www.siemens.com/about/en/businesses/
https://www.swe.siemens.com/greece/internet/en/Documents/Siemens-company-presentation.pdf
http://www.siemens.com/annual/14/en/company-report/our-path/
http://www.siemens.com/jobs/en/ataglance/values_vision.htm
http://www.siemens.com/about/pool/strategy/siemens-strategy-overview-path.pdf
http://www.siemens.com/about/sustainability/en/index.php
http://www.kitegen.com/en/kiteblog-2/
http://kitegen.com/wp-content/uploads/2010/07/PEN-KGR2010.pdf
http://www.forbes.com/companies/siemens/
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Bibliography

41. Personal Contacts
*Siemens: Conte Elisabetta
Corporate Account Manager
*KiteGen: Ciccolini Marco
Business Development Manager
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Personal Contacts