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A PESTEL Analysis of the company Siemens

Essay 2015 12 Seiten

Ingenieurwissenschaften - Maschinenbau


Table Of Content



PESTEL - Analysis
Political influence
Economical factors
Social impact
Environmental impact
Legal issues


Reference list


This essay will give a small insight into Siemens´s history and then will go over to a PESTEL analysis and show how Siemens is doing in the different parts of the PESTEL. The political paragraph will deal with the passed EU law that obligates members to save energy and become more sustainable and how this has an impact on Siemens as they set a greater focus on their sustainable energy sector and get to make more profit out of this. The economical part is going to show how Joe Kaeser as the new CEO did higher the profits from 2012 to 2014 from 4.282 million € up to 5.507 million €. In the social part the SBK as an insurance for their workers as well as the "empowering people award" will be shown, with the "EinDollarBrille" as one the winners that is now used in several developing countries to grant poor people access to cheap, 1$, glasses and a better life. The technological passage will have a short part about how Siemens pushed technology forward from the beginnings of the company on. Furthermore, this passage will focus on the new innovation of "TaxiBots" that pull aircrafts to their starting positions without using their engines and saving fuel that does not have to be used before the flight. Siemens´s impact on the environment is then shown in the next paragraph and how the company helps people in Kenya cleaning the streets, teaching them to live a healthier life and granting them cheap access to electricity and clean, fresh water. After all these positive aspects the last point is the biggest scandal in Siemens´s history in 2006 when they had a huge corruption problem that cost the company 2.5 billion € but made them a role model in the fight against corruption afterwards. The conclusion then sums up the factors and shows that Siemens is a firm that tries to do the morally best and inspire others to do this as well.


Macro environmental factors have always influenced the business in the public and the private sector. This paper will deal with the different factors that have an influence on Siemens and will provide a short overview over the company´s history and will then show the PESTEL factors having an impact on the company and the company having an impact on the factors. "The PESTEL framework is an analytical tool used to identify key drivers of change in the strategic environment. PESTEL analysis includes Political, Economic, Social, Technological, Legal, and Environmental factors." (Johnson 2008). Therefore the essay will deal with the economical part of Siemens, how they are influenced by environmental regulations, their impact on society, the technological advance Siemens brings into the market, the scarcity of resources and a legal issue Siemens had in the earlier past.

The history of Siemens began in 1847 with Werner von Siemens and Johann Georg Halske who founded the Telegraph Construction Company of Siemens and Halske in Berlin. They started of selling Telegraphs and expanding their Telegraph network from Germany into other countries such as Russia. In 1866 Werner von Siemens discovered the dynamo-electric principle and created thereby the basis for heavy-current machinery and technology that is still sold by the company. With this discovery the company started to sell more than just the Telegraphs. In 1903 Siemens and Halske merged with a German joint-stock electricity company until the foundation of the sovereign Siemens AG in 1966 as we know it today. From then on Siemens worked in four main sectors: Healthcare, Energy, Industry and Infrastructure & Cities. Today Siemens´s head is Joe Kaeser who targets a bigger focus on the energy sector as this one is going to be more important in the future. Today Siemens employs around 342.000 employees (March 2015) in branches in around 190 countries but the main office still remains in Germany in Munich and Berlin.

PESTEL - Analysis

Political influence

Siemens as a global player is strongly affected by political decisions made in different countries. But as it is a German company the focus of this paragraph will be on the German and European political decisions and how they have an impact on Siemens. Therefore the policy Germany and the EU are driving at the moment regarding the change of energy production away from nuclear power towards sustainable energies such as wind, solar and tidal power are to mention here. 2007 the members of the EU signed a contract regarding energy production, usage and saving to the year 2020. This contract has terms in it that oblige the member states to higher their coverage of energy usage through sustainable energy sources. Beside this the contract talks about a lowering of energy usage in total by an average of 1,5% per year between the year 2014 and 2020 as well as setting national goals that should be reached by the end of 2020 (Paolo Bertoldi 2007).

This brings focus to the impact those decisions have on Siemens as a company that offers very well developed wind energy technologies for on-shore and off-shore occasions. As the renewable energy sector gets more important the energy supply companies turn their focus onto this more and more. And that is the reason why Siemens is affected in a political way. Siemens supplied 83% of the newly installed wind turbines in central Europe in the last few years and as the green energy sector keeps growing they start making more and more profits out of this department. Some of the major wind parks Siemens supplied with wind turbines are the wind parks "Walney", "Greater Gabbard" and "London Array" (Ludwig Beckers 2010). Siemens has a new order to produce 150 turbines for the offshore wind park "Gemini" in the Netherlands worth around 1.5 billion €.

Economical factors

Those new possibilities for orders Siemens has coming in are leading towards the question how Siemens is doing in general economic meanings. How did the company grow over the recent years? What is the value of their shares and are they affected by Germany´s economy?

Due to the fact that Siemens has a new CEO, Joe Kaeser, who set a new policy to higher profits and cut costs Siemens is doing well all in all. Since 2012 Siemens managed to increase their net income from 4.282 million € up to 5.507 million € (Siemens 2014). This is an increase of about 28% in 3 years, which is a big step forward to reaching goals that were set up by Siemens’ managing board. The increase of income is composed of two main factors. One factor is already mentioned above, the new incoming orders regarding energy as well as other sector´s well going orders, and the other factor is cutting own costs. The second factor is highly connected to the fact that Siemens abolished a total of nine thousand jobs all over the world from 352,000 in 2012 down to 343,000 at the end of 2014. Joe Kaeser had to stand up for that decision as he was strongly criticized by the press and Siemens employees themselves. In an interview with the German "Abendzeitung-Muenchen" Kaeser stated that it was the hardest decision he had to make. During the re-structuring he puts Siemens through, Kaeser is going to abolish another 4,500 jobs worldwide due to difficulties Siemens has had in the past and the profit plans Kaeser has for the company (Abendzeitung 2015).

The topic of a company's profit leads to the topic of shares and share value. Siemens shares are a good investment for low risk investors. In the past three years the value of its shares rose from 78€ to a maximum of 105€ in April 2015 and are now at a good level of 92€. They had a small down in July to the same value as they had in 2013, 80€, when the German economy had a recession but it went up fast again. ( 2015)

Abbildung in dieser Leseprobe nicht enthalten

share value development over the past 5 years (

Social impact

To show Siemens´s impact on the society and people, there have to be two main topics that have to be named. One is the SBK, which is the insurance Siemens built up for their workers and their families, and the other one are social projects Siemens runs and supports all over the world.

The SBK is a big statutory health insurance that started in the early 20th century. It was created by Siemens and for their workers to provide them with a good healthcare in case of any injuries or other health problems. When it was founded Siemens paid one third of the dues for the insurance and they still do that for their employees. In 1996 they opened the insurance up to their employee´s families and in 1999 SBK decided to let everyone get a member even if they were not employed at Siemens or had any relations to the company. The SBK is the second biggest health insurance in Germany and has over 1 million members. This is one of the contributions Siemens had, and still has, for society.



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Titel: A PESTEL Analysis of the company Siemens