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Business Behavior in Changing World: Siemens Case

Critically apply Cyert and March’s analysis of organizational decision making to the Siemens case. Compare/contrast your finding with Brusson view

According to Cyert and March, fundamental structure analyzes the process of decision making in the terms of the variables that influence the decision-making process; the goals of an organization, the expectations of the organization, and the choice of the organization (Siemens np).

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In the case of Siemens, several variables influenced the decision-making process of the organization. Siemens is a large company that has interests in various fields the world over. They include information and communication, automation and control, power, medical solutions, transport, and lighting. Technological advancements and the acceptance of novel technologies had an influence on businesses in the field of information and communication and medical solutions.

All the businesses that Siemens had a stake in were adversely affected in the wake of the global economic downturn that was witnessed towards the end of the year 2000. In addition to these developments, political uncertainty in the Middle East, as well as South America, complicated the situation for Siemens further since the organization had business interests in the mentioned regions. Investor sentiment nose-dived leading to a significant drop in the value of Siemens’ shares around the globe.

The information and communication sector was particularly affected by the economic downturn. The power generating group on the other hand grappled with drastic changes in the market conditions. The demand for power generating equipment hit record low levels. This phenomenon came about as a result of other firms that were customers of Siemens cutting back on their operating costs and expenditure as a result of the economic slump.

Siemens was forced to find out ways and means of responding to the situation it was facing. The organization enhanced its capacity while constantly improving the conditions of its gas turbines. The organization had to adopt extreme measures to counter the extreme conditions that it was encountering at the time. The organization decided to cut back on its cost by way of consolidating its manufacturing facilities, streamlining its range of products, and sacking some of its staff.

Siemens’ products were up against strong competition from rival firms that were larger and had greater resources at their disposal. The markets in which Siemens operated witnessed rapid changes due to technological advancements. Therefore, for Siemens to meet its customer’s needs, it had to develop new products continuously, update existing products as well as developing new technologies (Siemens np).

In light of Cyert’s and March’s viewpoint, choice takes place in response to a problem. In Siemens’s case, the problem came in the form of a global economic slump, rapid changes in the marketing environment due to technological advancements as well as a fiercely competitive marketing environment. These developments prompted the management of Siemens to take action in response to the problems that it was encountering at the time. These developments are considered as variables that had an influence on the next course of action to be taken by Siemens. Cyert and March were of the view that those variables that influence a choice are those that influence the definition of a problem within an organization, those that influence the standard decision rule, and those that affect the order of consideration of alternatives. The standard decision rules in return are influenced by the experience and record of the organization. Alternatives are considered depending on the section of the organization in which the decision is being made and experience in considering alternatives.

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Organizational expectations are deemed as the result of concluding analyzing the information available to the organization. Therefore, organizations have to consider variables that affect either the process of concluding, the process by which information is collected and made available to the organization. About processes used to gather information, some variables influence the process of looking for information for an organization such as intensity, the success of search & direction of search.

The information available to Siemens at the time was gathered from various sources. This information revealed the looming crisis concerning the economy, extremely fierce rivalry in the market, and the unprecedented pace of technological advancement. This kind of information had to be responded to one way or the other hence it led to the decisions that Siemens took in response to the information that was available to it at the time. After analyzing the information that was made available to it, Siemens chose to consolidate its interests in certain fields of business while at the same time relinquishing its interests in other fields of business.

Brusson’s model defined decisions as to the conscious choice between at least 2 alternatives. Concerning Siemens’ case, there were a couple of alternatives at its disposal. In light of the challenges that the organization was encountering such as the global economic downturn and rapid technological changes, Siemens had the option of staying put and engage in business as usual or review its operations and practices subject to the changes that were taking place around it. Siemens after evaluating the available alternatives opted to alter its structures, operations, and practices in an effort of adjusting to the prevailing climate at that particular time. In this regard, Brusson’s model on decision making appears to be similar to Cyert’s and March’s model (Musich, 98).

Organizations face two problems: To choose the right thing to do and getting it done. Cyert’s model was of the view that decision-making in any organization is influenced by the goals of that organization, the expectations of that organization, and the choices of the organization. Brusson’s model on the other hand pointed out that for an organization to arrive at a decision, two or more alternatives have to be weighed and one chosen over the other, the consequences of choosing either of the alternatives have to be estimated before choosing the most ideal alternative for the organization.

The actions that Siemens undertook in the light of the challenges that they were facing at that particular time were influenced by their goals. Under its engagements and interests the world over, Siemens came off as an ambitious organization whose main goal was to constantly expand its operations and capacity. The future expectations of the organization were for it to keep growing and extend its operations to as many sectors as possible. The aforementioned factors had a bearing on the decision-making process of the organization. In the wake of the economic downturn, the decisions that were made considered the organization’s goals, its future expectations, and the choices of the organization. For instance, the decision to cut on its operating costs and competitively pricing its products was informed by the firm’s aims of maintaining their profit margins in the hard economic times (Siemens 89).

According to Brusson’s model, evaluation of viable alternatives is of extreme necessity before arriving at a decision. In reality, it is much easier to find decision processes that consider few alternatives than ones that consider many since considering multiple alternatives evokes uncertainty which in turn reduces motivation & commitments. Concerning Siemens, the organization chose to develop new products, update existing products, and develop new technologies in response to rapid technological advancements in the market they were operating in. The organization opted for this alternative to that of doing nothing about it after evaluation of both alternatives.

Rational decision-makers are required to consider all relevant consequences that alternatives might have. Siemens considered the consequences of maintaining the prices of their products internationally after the strengthening of the Euro relative to other currencies making the prices of its competitors cheaper than its prices. The organization chose to review its prices after concluding that it would adversely impact the organization’s profit margins in the event it fails to revise its prices in a manner that they are competitive when compared to those of its rivals.

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Apply the Bates model to Siemens case

Bates’ model was concerned with employee participation in the decision making processes of an organization. Organizational change refers to the movement of an organization away from its present state and toward some desired future state in a bid to increase its effectiveness.

According to Bates, culture gives meaning to our social & organizational lives by providing a relatively self-contained order. Questioning a culture could be both threatening and upsetting.

Value dimension is the morality or the collective conscience of the society or organization. According to Bate it is none of the above and is as its product. To Bate, the term culture’ can be defined as the meaning of aspects of the conceptual structures which people hold in common and which define the social or organizational ‘reality’.

Conceptual structure in an organization entails one’s roles, the roles of others, rules and institutions, a conventional way of acting, and specific issues such as the nature of authority, leadership, and democracy.

Siemens is an internationally oriented organization. It has diversified interests in various fields of business. Each different segment of the organization faces its unique challenges, operates in a market that is entirely different from that of other segments. These different segments of the Siemens organization are headed by different individuals. In the light of the aforementioned facts, individuals within the different segments of the organization will tend to keep the issues affecting them to themselves. There is no brainstorming between the employer and the employee when the firm is faced with a challenge to finding a way around the challenge. The prevailing view within the company appears to consider complaining as a cause of more problems than it would solve. Employees of the organization are more concerned with coping with the situation rather than changing it ( Kamal 124).

Siemens management made a lot of decisions in response to the changes and challenges that the firm was witnessing. However, there is no indication whatsoever of the management consulting the employees of the different segments of the organizations before arriving at those decisions. This incident serves to shed some light on the culture of the organization with regard to the relationship between the employers and the employees. The relationship can be described as a casual one at best. Culture affords employees of any organization with a language, with crucial background knowledge, with ways of thinking about the world, with tools, and with ways of solving problems. Siemens as an organization did not value the need for harmony and inclusiveness in their organization (Musich, 47).

The employees might have been by default or by design vague about the genesis of the problems that the organization that they were working for was facing. They may have lost interest in attempting to find solutions for the problems facing their organization. Normally, problems are privately discussed between one or two close colleagues only. Sources of problems are generalized and externalized since no one to offend the other person as it is deemed as unethical as per the organization’s culture and moral standards. The attitude of fear is prevalent within the organization since no employee attempts to apportion blame to their superiors.

The culture of subordination was inherent in Siemens. There are certain decisions that the management of the firm might have arrived at that ended up adversely affecting the organization. A case in point is the decision by the organization to divest in some business areas while consolidating its hold on other areas through mergers, acquisitions, and strategic alliances. Decisions to integrate were arrived at without bringing the employees of the firm onboard although some of the decisions posed risks to the firm since some of its partners were competitors and there was difficulty in integrating people, operations, and technologies. Despite all these developments, the employees of Siemens never dared to challenge those in authority. They always waited for them to take the initiative in resolving the problems that the firm might be facing now even if they made the wrong decisions. The importance is usually attached to leadership as an initiator for change and solving problems. Subordination is misconstrued as not taking responsibility for solving problems even they directly affect you. Junior employees often consider themselves powerless and counter dependent. This affects making decisions by top managers not consulting their subordinates (Witfield 63).

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Since Siemens is a large organization that operates globally with interests in information and communication, automation and control, power, medical solutions transport and lighting it, therefore, follows that its operations are equally diverse. These diverse business operations have barely anything in common hence it is only logical that everyone keeps to themselves.

In light of the aforementioned facts, the different interests within the organization found it necessary to claim a personal territory in which one could engage in their business without causing any disturbances to the others. In return, one is expected to let others return the favor by doing the same thing. The above belief leads to a highly differentiated organizational structure, clear divisions, and each division is highly departmentalized and each department is sectionalized. Horizontal & vertical links between people are weak, no teams work for taking decisions. Any approach to the problem – solving is individualistic and only when he fails then he revert to his supervisor.

The consequences of isolation can lead to a myriad of problems for the organization. Crucial information may be withheld leading to adverse effects on the organization. The expertise at the organization’s disposal may not be fully utilized.

Define strategy using external resources. Identify and analyze the current strategy of Siemens

Strategy refers to a plan of action designed to attain a particular goal. Siemens has recognized the significance of climate change as one of the most vital challenges facing humanity. This perspective has enabled the company to do away with its manufactured products’ total emissions by 15times. Siemens has an objective of becoming the leader in the reduction of climate change and it has worked towards this by improving the clients’ performance through providing efficient products.

Siemens has numerous projects globally and this paper will give an insight into the recent projects underway internationally with the intent of giving a clear perspective of how exactly companies are working to combat climate change. Since Siemens is an international company in the industrial manufacturing sector, it carries out cross-border transactions with clients across the globe, and hence analyzing the company’s operations in the United States would be appropriate. By and large, the organization centers on renewable energy generation, resourceful conventional power generation, proficient power transmission systems, efficient heating and lighting, efficient transportation, as well as energy/greenhouse gas checking systems (Siemens np).

Moreover, wind energy is a core part of Siemens’s eco-portfolio. Siemens Energy constructed wind turbines, that are said to contain internationally 1,800 megawatts of offshore wind capacity put in place or on order by end of 2008. A core project situated on Denmark’s seacoast was its 2008 Rods and II wind farm contract with E.ON to produce around 90 wind turbines. The turbines that are expected to be finished by 2010 are expected to generate 207 megawatts. Siemens is also engaged in another core project in Sweden of constructing Wind turbines for a gigantic wind farm by a firm known as Vattenfall. This particular project is expected to produce approximately 170 megawatts. Further than turbine manufacturing, Siemens engages in extensive research in an effort of ensuring that the turbines run efficiently. Siemens runs wind turbine research and development stations in Denmark, Germany, and the Netherlands as well as in the United Kingdom.

Siemens has commercialized waste renewable energy to alter methane greenhouse gas from decaying waste into energy for use in industries. Siemens’s outlook concerning renewable energy is that it is not only profitable but environmentally beneficial as well. For instance, the Three Rivers waste situated in South Carolina teamed up with Siemens in constructing technologies to process the gas to be used as fuel. Siemens then partnered with Kimberly Clark, which processes the gas and uses it for its purposes. This process lowers the use of fossil fuels by utilizing existing waste. Since the process occurred many kilometers away, it enhanced transmission proficiency with Siemens’s sophisticated energy transmission expertise. At the same time, it was economically beneficial to its client Kimberly Clarke, who could purchase the energy from Siemens at a much lower cost than from conventional electricity. The reduction from this Siemens venture led to the removal of the greenhouse gas impact of 41,000 vehicles from the roads.

The other aspect of Siemens’ plan to fight climate change is becoming a member in various non-governmental organizations. Its most’ recent involvement entailed taking part in the World Economic Forum’s working paper. Siemens also have membership in principal companies of the Carbon Disclosure Project’s Climate Leadership Index. Another important membership is The U.S. Climate Action Partnership. Remarkably, Siemens worked with twenty-four organizations at USCAP in developing a lawmaking agreement as part of a plan for legal action. This membership indicates that Siemens supports climate change legislation to 80% emissions reduction cuts in 2050 back to 2005 levels, and a cap and trade emissions scheme. GE, a direct competitor, is also a member showing that competitors take climate change seriously and transmitting their green credentials to the public.

Moreover, Siemens had to construct a sustainability board of executives to transmit information to the public and run sustainability attempts throughout the organization. It appointed a Chief Sustainability officer to put in place sustainable measures all through diverse businesses. Whereas the sustainability board’s role is to deal with sustainability attempts, little information exists about the board’s attempts.

Siemens has recognized the impact of the global economic downturn on its business performance. Its stock from April 2008-09 lost around half its value but it remains steady as by April 2009 at around $65 per share. However, the firm foresees its “environmental portfolio” accounting for around €25 billion of international income by 2011, in light of 10% yearly expected expansion. Rationally, this objective indicates management’s lofty expectations for Siemens’ green initiative. PricewaterhouseCoopers projects Siemens merchandise impact by 2011 to cut emissions by 0.275 billion tons, matching the total emissions produced by six of the world’s biggest cities. If this takes place, Siemens will attain an additional green warrant to tone down some criticism that had been leveled against the company.

Works Cited

Kamal Dean Parhizgar. Multicultural behavior and global business New York, NY: Routledge. 2002. Print.

Musich, Paula. Siemens intergrates telephony. e-week, 2003. Print.

Siemens. Siemens Annual report. 2002. Print.

Witfield, Kermit. Siemens leverages its R&D might, automotive design & production. 2003. Print.

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