Discuss about the Impact of Globalization on Organizational Culture.
Organizational structure defines the manner in which the activities related to task allocation, supervision and coordination are directed in order to achieve the organizational objectives (Aquinas, 2009). Siemens is a conglomerate company from Germany having its headquarters situated in Munich and Berlin. It is one of the largest industrial manufacturing company in Europe with its branches situated in several companies. Siemens is often referred to as a global powerhouse that focuses on the areas of automation, electrification and digitalization. Siemens along with its subsidiaries employ nearly 377,000 employees across the globe and has announced global revenue of nearly €83 billion in the year 2017 (Siemens, 2018). This essay focuses on Siemens and the contextual factor globalization, its impacts, risks and some business practices and functions for enhancing organizational performance.
Siemens have an organizational structure of a company where all the members of the managing board are held responsible for managing the company. The main division of Siemens includes Energy, Industry, Infrastructure and Cities and Healthcare which represents the key activities of the organization. They are also held responsible for making decisions regarding corporate strategy and basic issues of business policy. A risk based approach is followed by Siemens which enables them to focus on the risk mitigation activities. The key drivers of the business of Siemens include automation, electrification and electrical energy which assist in focusing on their positioning along the value chain of electrification (Siemens, 2018).
Due to globalization, Siemens get affected by a variety of internal and external forces. Globalization has enabled the exposure of Siemens around the globe therefore it has to take into account the global trends for meeting the requirements of the customers. Different strategies are required to be formulated in accordance with the markets of different companies. Moreover, the expansion of operations in various parts of the globe require the employment of individuals who are able to understand the requirements of their countries and assist by providing suggestions for improving their existing operations. However, globalization presents various threats in way of success of Siemens due to the increased competition from the already established domestic companies. Therefore, the mission and objectives, value system, financial factors and internal relationship get impacted as a result of external environmental forces (RadovivMarkovic, 2012). Siemens also require new suppliers for ensuring the smooth flow of production along with new market intermediaries who will assist in the promotion, sale and distribution of Siemen’s products. The internal and external factors of globalization affect the various segments of business of Siemens. The internal factors of globalization include the changes made by Siemens for competing on a global scale. Siemens is required bring the relative changes in the process of production, development, marketing strategies and customer service for meeting the needs of the people all across the globe. On the other hand, Siemens is required to cope with the external factors of globalization by way of getting accustomed with the new market environments. Internally, globalization requires Siemens to develop branding strategies for the purpose of aligning its logo and external presence in a new market with its global image (Max, 2018). The viewpoint of the global customers regarding Siemens and its products constitutes a prominent factor of globalization because brand of the company is the first thing notices by the customers during their interaction with the company. Moreover, for the purpose of competing in the global market, Siemens is required to internally evaluate the capabilities, strengths and weaknesses of their employees and making consumer and market analysis (Czinkota & Ronkainen, 2005).
Globalization also presents a number of common, global economic, financial and societal risks for Siemens (Schermerhorn, 2009). The most common risk is the risk of high competition from the domestic companies of the target market. The competition risk can therefore result in failure of the business of Siemens in the initial stages in the target market. New market place may not prove to be successful for Siemens which may lead to heavy financial losses. Financial risk affects Siemens by changes in currency exchange rates and flexibility of government in allowing funds outside the country. Moreover, the difference in the rule, regulations and legislations of different countries may present risks for Siemens as its non- compliance may lead to lawsuits and fines having impact on the reputation and financial position of the company (Yilmaz & Flouris, 2017). Some countries do not favor the use of products manufactured by global companies and promote reliance on the domestic goods. Therefore, any misconduct on the part of Siemens can put it in trouble and can significantly impact its reputation. Economic instability can create serious risks for Siemens when the transactions takes place in the third world nations (Leitner & Meissner, 2016). The changes in the foreign- investment and domestic fiscal or monetary policies creates economic risk for Siemens. Moreover, interest rates and exchange rates also impact its business. Societal risk include the non- acceptance of the products from global company by the residents of the country. In case, if the cultures of new market are not understood properly, there is a risk of loss of earnings and the alienation of customers (Gaspar, Kolari, Hise, Bierman & Smith, 2016).
For the purpose of enhancing the organizational performance, Siemens should make some decisions related to business practices. Siemens should aim at developing high performance culture within the organization which in turn will act as the key to organizational success. The introduction of high performing work practices with the strategic objectives of Siemens will assist in aligning the output of the workforce with the organizational objectives. It will involve employee involvement practices for encouraging communication and trust between the employer and employees. These practices allow the employees to have better control over their daily work and operational decision making which leads to motivation, communication, leadership and teamwork. Moreover, employee engagement should be facilitated by providing financial rewards to the employees along with equality in terms and conditions, flexibility, family- friendly policies, subsidized training opportunities and career progression plans which in turn will create a higher sense of organizational commitment. Application of best practices will allow Siemens to learn from other’s experiences. This can be done with the help of benchmarking which will allow Siemens to make comparison of their business with other prosperous business and will assist in highlighting the areas where there are possibilities of improvement. Siemens can also engage into strategic planning, financial planning, forecasting and performance monitoring as the best practices. High performance work practices should also be concerned with HR practices that include performance appraisals, strategic workforce planning, recruitment processes, work redesign and continuous improvement program for the organization. Such decisions related to business practices will assist in enhancing the organizational performance of Siemens.
The strategy of Siemens is to focus on the business and customers and streamlined governance. For this purpose, Siemens have expanded their market penetration along with the maintenance of flexible and lean structures. Market- integrative setup has been selected by Siemens that allows combining coordinated vertical approach with a common regional organization. For the purpose of achieving this strategy, Siemens should integrate its business functions with the strategy. The important functions of the business include operational, financial, human resource, marketing and sales function. Equal consideration is required to be given to all the functions for the achievement of strategy. The creation of the products will come under the operation function. Siemens need to properly manage equipment, information, technology, people and all other resources for the smooth production of its products. All the operations will be performed on time when the finance function will be given due consideration. This function is necessary for procuring the money needed by the business for strategy attainment (Kim, Park & Prescott, 2003). Such function will assist in the proper allocation of funds and will aim at increasing the money invested in the strategy by way of sound financial programs and policies. Its proper management will only be possible with the help of employees who work for attaining the objectives of the organization. Proper consideration of human resource function will allow Siemens to recruit the best suitable employees for the organization. Such employees after proper training and development will become the asset of Siemens and assist in achieving the strategy by making constant efforts (Lawler, 2012). Marketing function will meet the gap between the objectives of the organization and its attainment by creating a process that will bring consumer and producers in a relationship. Proper marketing will lead the organization towards increased sales. When all the functions are taken into consideration and improvements are made where necessary, the sales of the products of Siemens will significantly improve leading the success of the strategy (Morschett, Schramm-Klein & Zentes, 2015).
Therefore, it can be concluded that there is a great impact of globalization on the business of Siemens. It requires the employment of new individuals, producing products in order to meet different requirements of different parts of the globe and analyzing the consumers and the market. Globalization also presents a number of common, global economic, financial and societal risks for Siemens. Moreover, for enhancing the performance, Siemens should make business practices decisions regarding benchmarking, high performing work practices, employee engagement, etc. Also, Siemens should give proper consideration to all the important functions of business including operations, finance, human resource, marketing and sales for the purpose of achieving its strategy.
References
Aquinas. (2009). Organization Structure & Design : Applications And Challenges. Excel Books India.
Max. B. (2018). What Are Some Ways in Which Global Forces Affect Business Today?. Retrieved March 25, 2018 from https://smallbusiness.chron.com/ways-global-forces-affect-business-today-67573.html
RadovivMarkovic, M. (2012). Impact of Globalization on Organizational Culture, Behaviour and Gender Role, IAP.
Schermerhorn, J. R. (2009). Exploring Management. John Wiley & Sons.
Yilmaz, A. K. & Flouris, T. (2017). Corporate Risk Management for International Business. Springer.
Leitner, J. & Meissner, H. (2016). State Capture, Political Risks and International Business: Cases from Black Sea Region Countries. Routledge.
Gaspar, J., Kolari, J., Hise, R., Bierman, L. & Smith, M. (2016). Introduction to Global Business: Understanding the International Environment & Global Business Functions. Cengage Learning.
Lawler, E. (2012). Effective Human Resource Management: A Global Analysis. Stanford University Press.
Czinkota, M. R., & Ronkainen, I. A. (2005). A forecast of globalization, international business and trade: report from a Delphi study. Journal of World Business, 40(2), 111-123.
Kim, K., Park, J. H., & Prescott, J. E. (2003). The global integration of business functions: A study of multinational businesses in integrated global industries. Journal of International Business Studies, 34(4), 327-344.
Morschett, D., Schramm-Klein, H., & Zentes, J. (2015). Strategic international management. Springer.
Siemens. (2018). About Siemens. Retrieved March 25, 2018 from https://www.siemens.com/global/en/home/company/about.html
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