Effects of Globalization on firms - OECD.org

1 Confidential/ Siemens AG / Siemens Business Services 2006. All rights reservedParis, October the 9th2006 Siemens Business ServicesEffects of Globalization on firms Elie COHENC hief Executive OfficerSiemens Business Services FrancePage 2 October-06 Confidential/ Siemens AG / Siemens Business Services 2006. All rights reservedAgenda Company profile Globalization overall context Impacts on Siemens strategy Q&A sessionConfidential/ Siemens AG / Siemens Business Services 2006. All rights reservedCompany profilePage 4 October-06 Confidential/ Siemens AG / Siemens Business Services 2006. All rights reservedSiemens overall profile Over 155 years of expertise World leader: 21stlargest company in the world Largest company in the electrical & electronics sector 8thlargest business in Europe 6thbiggest employer in the world with a global network of 426,000 people in 190 countries Sound financial management with global revenues of 80 billions Investment of 500m in workforce skills Innovation is the key to entrepreneurial success generating more than 30 inventions a dayPage 5 October-06 Confidential/ Siemens AG / Siemens Business Services 2006.

2 All rights reservedActive in six business areasLightingAutomation and ControlInformation andCommunicationsPowerTransportationMedi calOSRAMA utomation andDrivesIndustrial Solutions and ServicesCommunicationsSiemensBusinessSer vicesPower GenerationPowerTransmission andDistributionTransportationSystemsSiem ens VDOA utomotiveMedical Solutions26%23%16%10%19%6%External sales of Operations Groups excluding Other OperationsSiemens Building TechnologiesPage 6 October-06 Confidential/ Siemens AG / Siemens Business Services 2006. All rights reservedMajor R&D investments Our patent positions (2005): Germany: No. 1 Europe: No. 2 : No. 10 Recent breakthroughs: Piezoinjection(reduces fuel consumption by 20%) Softswitch(true carrier-grade reliability: ) syngo(workflow integration up to 25% time savings) Combined cycle power plant(increases degree of efficiency: )Major innovations billion in fiscal 2005 47,000 R&D employees worldwide 30,000 software engineers 150 R&D locations in over 30 countries around the world 8,800 inventions in 2005 53,000 active patentsInnovation is our lifebloodPage 7 October-06 Confidential/ Siemens AG / Siemens Business Services 2006.

3 All rights reservedCanadaUSAA rgentinaBrazilAustraliaSingaporeChinaRus siaSouth AfricaIndiaCISI talyTurkeyHungaryAustriaPolandCzech RepublicFinlandSwedenNorwaySwitzerlandGr eat BritainDenmarkNetherlandsBelgiumFranceGe rmanyIrelandSpainPortugalGreeceCroatiaSl ovakiaRomaniaThailandFujitsu partner for ASPO verall presenceConfidential/ Siemens AG / Siemens Business Services 2006. All rights reservedGlobalization overall contextPage 9 October-06 Confidential/ Siemens AG / Siemens Business Services 2006. All rights reservedOver centuries, the economy centre of gravity has made a full loop1300 years250 years310 years45 yearsPage 10 October-06 Confidential/ Siemens AG / Siemens Business Services 2006. All rights reservedInitial concept and consequences Started in the early nineties with an export model of democracy, society, way of life and economy model to emergent countries Culture, history, existing models and utopias were nottaken into account Balance of trading and richness were not anticipated Risks and benefits to population were not appreciated People aspiration to better life in their context and culture Developing countries claim to raise local added value Elite has to be educated initially in developed countries Infrastructure services must be developed to market and social standardsPage 11 October-06 Confidential/ Siemens AG / Siemens Business Services 2006.

4 All rights reservedGlobalization : threats or opportunities ?Heavy social impactKnowledge evaporationCoordination increaseHeavy image impactChallenged servicequalityChallenged securitymanagementComplex reversibilityNew markets accessCompetitiveness increaseDefined rules and dutiesDefined formal SLAsDefined policies and toolsLong term partnershipReinforced methods & ICTL eversStrong ethic policiesPartnership instead of purchasingEnhancement of GovernanceCompanies will balance threats and opportunities by structuring themselves stronger than actuallyPage 12 October-06 Confidential/ Siemens AG / Siemens Business Services 2006. All rights reservedGlobalization : opportunities and opportunitiesHeavy social requirementsKnowledge evaporationNon adapted EducationInfrastructure saturationCulture unfit Ethic challengesLeversTransparencyInvestment instead of subsidesSharing instead of concentratingLow and high cost Countries will benefit from Globalization by balancing commercial exchanges and experience sharingEducational programs sharingInfrastructure ProjectsShared ethic policies andImage Multi-Culture benefits Staff retention programsSet up social pre-requisitesConfidential/ Siemens AG / Siemens Business Services 2006.

5 All rights reservedImpacts on Siemens StrategyWe must be Well prepared to master global challenges, leveraging on permanent innovation and differentiation, to growth Well prepared to master global workforce, leveraging on off shoring, to insure competitiveness and continuityPage 14 October-06 Confidential/ Siemens AG / Siemens Business Services 2006. All rights reservedGlobal Mega trendsUrbanization Today: 280 million people in mega cities (> 10 million) 2007: First time in human history more people living in cities than in rural areas 2015: 350 million people in mega cities Challenge for infrastructureDemographic change Average life expectancy increases globally Population growth from more than 6 billion to 8 billion by 2025 Challenges for infrastructure and healthcareGlobal Mega Trends : shaping tomorrow s marketsPage 15 October-06 Confidential/ Siemens AG / Siemens Business Services 2006.

6 All rights reservedSiemens today No. 1 in healthcare IT Technology leader in imaging systems Innovation leader in healthcare processes Percentage of 80+ generation to grow globally Healthcare costs in industrialized nations rise to trillion in 2010 (2002: trillion) In Germany, healthcare costs account for of GDP Increasing consumption of oil (until 2030 CAGR ), natural gas ( ) and coal ( ) to fuel global energy demand requires efficient systems and solutions for mining industries Increasing world population requires efficient production and supply of food and goodsSiemens today Leading solution provider for mining, oil & gas industries Number 1 in industry automation Well prepared to master global challengesHealthcareIndustryPage 16 October-06 Confidential/ Siemens AG / Siemens Business Services 2006.

7 All rights reservedSiemens today Drinking water treatment Water distribution Wastewater treatment billion people without drinking water billion people not connected to waste water systems 40% increase in water consumption by 2025 More than 40% increase in worldwide energy demand in the coming 25 years Increase of CO emission risk to global climateSiemens today Strong No. 2 in power technologies worldwide Complete range of fossil fuels, wind power, biomass and fuel cells Trendsetter in intelligent power generation and distribution Low-loss electricity transportWell prepared to master global challengesWaterPowerPage 17 October-06 Confidential/ Siemens AG / Siemens Business Services 2006. All rights reserved 2010: Per passenger airline mileage will double compared to 1995 Americans spend billion hours a year stuck in traffic jams Need for more efficient urban security systems Larger and more frequent events in mega-stadiumsSiemens today High-performance rail systems Telematicssolutions Fleet management Communications solutionsMobilitySecurityWell prepared to master global challengesSiemens today Single supplier of integrated electronic security solutions Ticketing systems Biometric identification systems Page 18 October-06 Confidential/ Siemens AG / Siemens Business Services 2006.

8 All rights reservedGlobal Data CentersGlobal Call CentersPartnerfor AsiaDelivery locations are key competitive factorsIndia (Bangalore, Chennai) Application Support Application Management Center Outsourcing Transition supportChina Shared Service CenterRussia(Voronezh) Inbox, Invoice ServicesTurkey(Istanbul) Customer Interaction Center Remote Management ServicesIreland(Cork) Customer Interaction Center Marketing ServicesCzech Republic(Prague) Accounting ServicesSingapore Shared Service CenterSouth East Europe( Bratislava) Inbox ServicesCanada(Toronto) Customer Interaction CenterSkill base, Cost, Language, Time zone, StabilityUSA(Mason, Chicago) Customer Interaction Center Data CenterGermany(Fuerth, Munich, Paderborn) Customer Interaction Center Data CenterAustria(Vienna) Customer Interaction Center Data CenterDelivery location selection criteria:ICT, Collaborative, Knowledge Mngt, WorkflowConditions:Page 19 October-06 Confidential/ Siemens AG / Siemens Business Services 2006.

9 All rights reservedIndia BPO for Barclays Reservation Centre for major Car rental company Accounts payable for Siemens USChina HR processes for Siemens Companies Accounts Payable for Siemens CompaniesVoronezh, Russia HR back-office for Siemens in GermanyTurkey Helpdesks for global electronics corporationBratislava Airline back-office for major European CarrierUK BPO for Financial Services, Siemens UK, and GovernmentIreland Multi-lingual Service DeskSouth Africa IT and Business Process Services for Department of LaborGlobal delivery backbone is a support of competitiveness, innovation and growthPermanent increase of the local added valuePage 20 October-06 Confidential/ Siemens AG / Siemens Business Services 2006. All rights reserved22%25%33% 27%33%21% 36%21%25% 3%8%6% 12%13%15% Employees (thousands)Sales (billions of euros)Major facilities Global presence : basis for competitivenessAmericasEurope(excl.)

10 Germany)GermanyOthersAsia-PacificAs of September 30, 2005 Page 21 October-06 Confidential/ Siemens AG / Siemens Business Services 2006. All rights reservedCorporate Responsibility at its bestCorporate GovernanceCorporate Citizenship Generation21 (education program) Caring Hands (charity program) Support for the arts and sciencesBusiness PracticesSustainabilityPage 22 October-06 Confidential/ Siemens AG / Siemens Business Services 2006. All rights reservedQuestions and Answers