Siemens CerberusEco in China: Introducing low-frills products in a high-quality company
ESMT–311–0123–1 Case, ESMT–311–0123–8 Teaching Note
Subject(s): Strategy & General Management
Keyword(s): China, low-cost competition, low-frills products, market entry, reverse innovation, sales, Siemens, competitive strategy
The case is set in November 2007. Matthias Rebellius, head of the business unit fire safety and security products, has to make a decision about the China strategy for the fire systems unit. Siemens has a very strong position globally in fire systems. Especially in developed markets, in the so-called M1 segments, Siemens is often number one or two. But worldwide and especially in China, the so-called M2 and M3 markets (Siemens terminology) had strong growth, but Siemens was not very well positioned in these segments of the market.
The case begins with a short introduction outlining the situation. It then gives a detailed background on Siemens, especially the operating division Building Technologies (BT), and within BT the business unit Fire Safety & Security Products (FS). The case illustrates that the BT division was mainly active in mature, developed markets with slow growth rates. At the same time, there was an aggressive goal of achieving annual growth rates of more than five percent with an EBIT margin of 7 to 10 percent.