final ppt siemens & nafta
TRANSCRIPT
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Interdependence Between NAFTA & International Strategy of Siemens AG
Sachiko Miyake, Anna Lee, César Martínez
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NAFTA
• RIA between Canada, Mexico and USA (1994)• Liberalization of trade and investment flows• Gradual reduction of trade tariffs,
Complete eradication by 2008
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PEST Analysis on NAFTAPolitical Economical
•Formation of complimentary political organization and behavior*
•Democratic movements, empowerment of civil society capacity of less developed member country*
•Pressure to prioritize the group benefit over the domestic*
•NOTE: Kyoto Protocol in 1998*
•Free competition, improved FDI opportunities and ease of market access by small-medium enterprises•Phase-out of tariffs, unbiased cost benefits for all participants1. Consumer’s perspective: better price2. Enterprise’s perspective: higher profit margin•32.3% of USA’s export goes to Canada and Mexico (2011)•From 1993 to 2010; 218% increase on total merchandise trade•FDI from USA to Canada and Mexico; 75% growth from 2003 to 2009 (624 bil.)
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PEST Analysis on NAFTASocial Technological
•Virtually every country is involved in some form of RIA
•NAFTA population 1. In 1994: 363 millions 2. In 2009: 452 millions
•Age structure – Median Age* 1. Canada: 41 years 2. Mexico: 27.1 years 3. USA: 36.9 years
•Obama’s 2012 budget plan:
1. Increase in governmental research on renewable energy by 70%
2. Increase in research and experimentation tax credit for companies by 20%*
•Boost in innovation potential of USA power generation industry
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Siemens AG
• High Quality Engineer and Export-orientation• Present in more than 190 countries• Energy / Healthcare / Industry / Infrastructure &
Cities• USA: the single largest market• Siemens Energy: major and thriving profit
generator• Innovation, Economies of Scale and Complete
Package of Services
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History, Scandal and Awakening
• Founded in 1874 in Berlin, Germany• Bribery Scandal 2006-2008:
- Damaged reputation and market value
- 2.6 billion USD expenditure in fines and investigation fees
• Major reconstruction by a new external CEO, Peter Löscher
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Peter Löscher
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Trade Map: Siemens Energy
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What is a gas turbine
Animation: http://www.energy.siemens.com/hq/pool/hq/energy-topics/videos/Siemens_SGT100_Animation.swf
1) Compressor2) Diffuser3) Combustion chambers4) Turbine (blades)
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Siemens Performance in NAFTA
International Strategy
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Sectorial Profit Distribution (2011)
40%
46%
14%
Industory Sector
Energy Sector
Healthcare Sector
Source: Siemens Global Website
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Siemens Energy Revenue by Region (2011)
56%28%
16%
Europe, C.I.S., Africa, Middle East
Americas
Asia
Source: Siemens Global Website
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Siemens in NAFTA Region
MEXICO• Active since 1894• Largest provider of
mechanical energy• Demand for
sustainable energy
CANADA• Active since 1867• Hamilton plant in
1896• Whitby
Cogeneration plant in 1998
USA• Active since 1854• 100 + facilities• Largest single
national market
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• Turnkey Contract to power plant, 2013
• Cutting-edge turbines for maximum efficiency and ecological benefits
Performance in Mexico
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• Gas Turbine factory in Hamilton since 1896
• Shut Down in 2011
☞ New Production Line in Charlotte, USA
Performance in Canada
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• Cogeneration Plant in 1998
• Combination of heat and power to generate electricity
• Higher efficiencies than other forms of power generation
Performance in Canada
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• $350M Investment in new plant in Charlotte, USA,2011
• Expansion of the steam turbine manufacturing plant
• 60 % Sold in USA 40% Sold outside
• First two turbines to Mexico
Performance in USA
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• Increasing Demand for Cleaner Power Plant
• Charlotte as a Hub for North American Market
• Economics of Scale, logistical Cost
Performance in USA
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Strategy Transnational International Multidomestic Regional
WorldwideMarkets
Yes Yes No No
Worldwide location of
Separate Value Chain Activities
Yes No No No
Global Products Yes Yes No No
Global Marketing Yes Yes No No
Global Competitive
Moves
Resources from any country
used to attack or defend
Slight strategic variation but
identical resource from
HQ
No No
Siemens Multinational Strategy
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Year GDP Tariffs (%) (US-MX) Exports
1990 $ 6,314,596.09 5 $ 13,045.00 1991 6,539,127.13 5 7,281.00 1992 6,907,278.43 5 9,697.00 1993 7,255,414.04 5 5,595.00 1994 7,710,196.68 5 9,854.00 1995 8,025,043.28 0 4,615.00 1996 8,486,927.15 0 8,969.00 1997 9,056,091.80 0 87,801.00 1998 9,590,308.20 0 123,464.00 1999 10,195,136.64 0 53,446.00 2000 10,885,912.91 0 100,247.00 2001 11,243,060.32 0 202,575.00 2002 11,637,910.70 0 171,690.00 2003 12,197,978.00 0 87,429.00 2004 12,984,034.82 0 35,039.00 2005 13,858,088.12 0 143,279.00 2006 14,753,799.29 0 55,135.00 2007 15,492,639.76 0 74,093.00 2008 15,846,367.94 0 61,629.00 2009 15,410,506.60 0 103,860.00 2010 16,093,164.39 0 82,877.00
Trade analysis
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$5,000,000.00 $10,000,000.00 $15,000,000.00 $20,000,000.00 $-
$50,000.00
$100,000.00
$150,000.00
$200,000.00
$250,000.00
GDP
Expo
rts
0 1 2 3 4 5 6 $-
$50,000.00
$100,000.00
$150,000.00
$200,000.00
$250,000.00
ExportsLinear (Exports)
Tariff
Expo
rts
y = 55,560 + 0.003*GDP - 12,893.11*Tariffs
Regression Statistics
Multiple R 0.598
R Square 0.357
Adjusted R Square 0.286
Standard Error 49,039.159
Observations 21.000
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Conclusion
NAFTA AFFECTS SIEMENS INT. STRATEGY• GDP growth & 0% T• Transnat. Strategy• Differentiation• MX emerges as KEY profit provider– Synergy: NAFTA & Mining
Keep spending on R&D to be the leader