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A System Dynamics Approach to Modelling
Business-to-Business Markets - Case of Siemens
Yalin Gindiz *
University of Karlsruhe
Department of Economics and Business Engineering
Chair of Financial Engineering and Derivatives
76131 Karlsruhe - GERMANY
Phone: +49 176 241 220 92
Fax: +49 721 608 81 90
E-mail: yalin@metu.edu.tr
Alper Alsan, Ph.D.
Siemens San. ve Tic. A.S.
Corporate Strategies and Consulting
Yakacik Yolu No: 111
34861 Kartal istanbul - TURKEY
Phone: +90 216 459 3255
Fax: +90 216 459 3915
E-mail: alper.alsan@siemens.com
Abstract
This study focuses on estimating the size of the electrical and electronical
market, i.e. electromarket of Siemens Turkey using system dynamics modelling.
Corporate management has recognized the need of a comprehensive model of
the electromarket in Turkey, due to the dynamics of the Turkish market,
consolidating the data of nine operating groups in different business areas. The
backbone of the model resides in the dynamic relationship between served,
unserved and inaccessible segments of each electromarket. Nine models have
been constructed for groups that operate in energy, telecommunications,
medicals, transportation, and automation industries. Each model is converted to
a management flight simulator giving each operating group manager the chance
to simulate the results of their governance of the group’s electromarket. The
final deliverable is a consolidated management flight simulator, which will be a
support tool for exercising different market approaches and strategic options for
corporate management.
Keywords: System dynamics, modelling, flight simulator, business-to-business,
market size
*: Corresponding Author
Dynamic Modeling of Siemens Electromarket
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1. Introduction / Project Background
In their work, Leibold et. al indicate that the task of strategic management is not
to foresee the future or to implement organization wide change programs; rather
such managers establish and modify the direction and boundaries within which
effective, self-organized solutions can evolve. Non-linear social-cultural systems
react to direction in ways that are difficult to predict and control. However,
managers can guide the evolution of a self-organizing enterprise more
effectively if they gain more knowledge of the dynamics of the organization's
business system [4].
Siemens AG, the parent company of Siemens Turkey, produces a variety of
products from mobile phones to gas turbine generators to light bulbs, has
always had skillful workforce bent on high quality. In recent years, corporate
managers have recognized the fact that competing with rivals takes more than
quality- it also requires speed to market, relentless innovation, and attention to
costs [1]. This new direction necessitates Siemens Turkey to make use of
comprehensive tools for corporate management.
System Dynamics Modeling is a simulation tool that aims to support decision
processes in business, social and economic systems. The models operate by
simulating the behavior of variables by forecasting the rate of changes [7]. At
Siemens Turkey, successful implementations of several System Dynamics
models in recent years have ensured the help of such models as a decision
support tool. Prior to the current efforts, System Dynamics models have been
built for modeling the delivery delay of Medical Solutions group [5] and for
modeling energy capacity supply and demand for Power Generation group of
Siemens Turkey [6].
Corporate management of Siemens Turkey has recognized the necessity of a
comprehensive model of the electrical and electronical market; i.e.
electromarket, which consolidates the relevant market data of different
operating groups. In our study, we separately built models of nine operating
groups within certain time frame. The study has started on August 10, 2003,
and the consolidated model has been completed on March 20, 2004.
The aim of the study is to create a consolidated model in which the
electromarket data of nine operating groups are present. As a final deliverable,
a consolidated management flight simulator, which will be a support tool for
exercising different market approaches and strategic options has been
constructed.
Following sections are organized as follows: In Section 2 the dynamic problem
is defined. The market segment concept is explained and visualized in Section
3. A brief insight is given to the model development methodology in Section 4. A
generic causal loop diagram with major stock-flow variables are introduced and
models are explained in Section 5. In Section 6, validation and simulation
results are discussed. Concluding remarks are given in Section 7.
Dynamic Modeling of Siemens Electromarket
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2. Problem Definition
Siemens AG, the parent company of Siemens Turkey has certain operating
standards and definitions. Among these, the definition of markets that are being
operated in, is unique for Siemens. The total electromarket for each operating
group that is for concern is divided into three main segments: These are
inaccessible, unserved, and served markets. The definition of these segments
is standard, although each operating group can have their own view, according
to their definition.
Siemens Turkey corporate managers want to be in hold of market size
movements within their operating groups. It is not hard to guess that the
conversion of market segments to each other are highly dynamic and are of
particular interest to System Dynamics problem solving. A concrete model was
crucial for Siemens Turkey that guides the managers on what the size of
inaccessible, unserved and served markets would be in the upcoming years, in
conjunction with the internal and external developments.
Dynamic Modeling of Siemens Electromarket
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3. Conceptual Approach to Business-to-Business Markets
The total market of the operating group comprises of the total business field
market in one country. This sum includes all the possible customers regardless
whether they are accessible or not. For market share calculations purposes this
amount is used. In Figure 1, the division of the total market to inaccessible,
unserved and served segments is visualized.
Total
Groups’
Market
Unserved
Basis for
market
share
calculation
by group Served
Figure 1. Division of Total Groups’ Market (Adapted from Kohléffel (2002) [3])
3.1 The Inaccessible Market
Some customers within the total market can be inaccessible due to in-house
supplies, legal restrictions and state monopolies. There are no possible ways to
reach this part of the market. Hence, this portion is named as the “Inaccessible
Market” for the operating group. Inaccessible market can be reduced with
deregulations and liberalization. The remaining of the market is thus called
“Accessible Market”
3.2 The Unserved Market
Still, a part of the accessible market may be unserved due to lack of profitability,
absence of suitable products (probably due to different standards), lack of
appropriate know-how, high competitiveness, or the buyers’ preference for
national manufacturers. Therefore, this segment is named as the “Unserved
Market” for the operating group.
3.3 The Served Market
The rest of the market, that Siemens groups operate in are the “Served Market’.
Served market consists of the segment that is tried to be served with Siemens
offerings.
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4. Development Methodology
We have launched the System Dynamics Modelling Project of Siemens
Electromarket on August 10, 2003. We initially held interviews with the strategic
planning partners that are officers of each operating group. These partners are
the representatives of Corporate Strategies and Consulting Department in their
operating group. In some cases, these interviews were converted to workshops,
in which more officers were involved. After the development of the basic
conceptual model for the operating group, the first presentation was given to
operating group directors and officers of the group. Feedbacks were collected
and the model was fine-tuned. Afterwards the final presentations and
implementation of the software has been completed. The timetable of the
project is as below:
Operating Group Completion Date
1. Medical Solutions (MED) 31.08.03
2. Power Generation (PG) 20.09.03
3. Power Transmission and Distribution (PTD) 10.10.03
4. Automation and Drives (A&D) 31.10.03
5. Industrial Solutions and Services (1&S) 20.11.03
Interim Report 15.12.03
6. Information and Communication (IC) 10.01.04
7. IC Mobile Devices (ICMD) 31.01.04
8. Transportation Systems (TS) 20.02.04
9. Integrated Building Services (IBS) 10.03.04
10. Consolidation of All Models 20.03.04
Table 1. Timetable of Electromarket Modelling Project in Siemens Turkey
At the end, on March 2004, all the models have been consolidated to reach a
model for Siemens Turkey. This model has been then presented to CEO and
CFO.
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5. Model Development
5.1 Generic Causal Loop Diagram
The operating groups of Siemens Turkey are independent from each other
considering their operations. The structural differences of the operating groups’
necessitated us to build separate models for each. The causal loop diagram in
Figure 2 is an example from Medical Solutions group.
Gross Fixed
Investment Sy
Gross Domestic
Product
eat
po Served Markel -Atcessible Marker
RRS
/ 4 Second Hand Business ~~ Liberalization
wee \ oi, va
( a “sg 7 \
‘ublic Pricing
eS Government Incentives
"Se
Technical Service
Pricing
Customer Satisfaction
Figure 2. Causal Loop Diagram for Medical Solutions Group
5.2 Stock and Flow Structure
The main stock variables that we would like to observe their level in time are
Siemens sales, served market, unserved Market and Inaccessible Market sizes
of the operating groups in Million Euros. Each model of an individual operating
group has this classification of stocks. Thus the consolidated model has 9x4=
36 stocks.
The dynamic behavior of the model arises from the conversion of the stocks to
each other. The assumption is that the total market is a sum of Siemens sales,
the portion of served market that is not Siemens customer, i.e. Served-not-
Customer, unserved market and inaccessible market. It is noteworthy to
mention that served market is not itself a stock, since it simply comprises of the
Siemens customers (Siemens sales stock) and the Siemens non-customers
(served-not-customer stock).
It is thus important to consider the flows between Siemens sales and Served-
not-customer stocks as adopting and quitting to be Siemens customer. Once
the client quits being Siemens customer, its market data resides in the flow from
Dynamic Modeling of Siemens Electromarket
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Siemens sales to served-not-customer stock. In Figure 3, the backbone of the
model with the major stock flow relationships can be found.
Growth by GOP GFI1 Growth by GOP GFI2 Growth by GDP GFIS
labo Conwerion Siemens
Ujenied Conversion Ra sat
sal Unserved ee er pale
1 i} at
Unserved Conversion Served Conversion Adopting
Figure 3. The Generic Model of Major Stock and Flow Variables
With certain effects, an inaccessible amount can be converted to sales after
certain flows occur. Another major flow effect is by the expanding and shrinking
effect of Gross Domestic Product (GDP) and Gross Fixed Investment (GFI). In
Figure 3, direct inflows and outflows can be observed to market stocks by the
GDP and GFI effects.
The above template is valid for all models of different operating groups.
However, the auxiliary variables and converters are different, so are the
functions that are inherent in them. In the next part we would like to define
important variables group by group.
5.3 Models of Operating Groups
The nine operating groups of Siemens Turkey have common variables as well
as distinguishing variables that affect their market size. All the variables
mentioned in this section are decision variables in the interface of the simulation
game for each model.
5.3.1 Medical Solutions Group (MED)
Siemens Medical Solutions Turkey provides complete health-care solutions and
support diagnoses and therapy in hospitals. Medical Solutions group is a market
leader in the domestic market. MED has a wide range of products from x-ray,
angiography, and ultrasound systems to computerized tomography, magnetic
resonance, nuclear medicine, echocardiography and radiotherapy [8].
The four stocks (sales, served-not-customer, unserved and _ inaccessible
markets) are the same for each model of groups. An exception to this situation
is MED, which does not have an inaccessible market defined for itself. GDP and
GFI inflows affect unserved and served-not-customer Markets.
Dynamic Modeling of Siemens Electromarket
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The conversion of sales to served-not-customer by quitting customers and the
conversion of served-not-customer market to Siemens sales by adopting
customers is modeled by a bi-flow between them. Customer Satisfaction and
Average Obsolescence form Obsolescing Time that affects quitting. Adoption is
affected from Market Share and Time to Become Siemens Customer, which is a
converter.
Served-not-customer market has also an inflow because of liberalization of
government hospitals. Government Incentives and Public Social Security
Institution Pricing of medical equipment directly affect the size of served market.
The more the government is in favor of medical liberalization, the larger the
market is.
The conversion of the unserved market to served market and vice versa is
maintained by the effects of auxiliary variables to bi-flow between them. These
variables are The Amount of Barriers to Second Hand Business, Volatility in TL
Rate, and Absence of Appropriate Product. These are converted to market size
in Million Euros with a conversion fraction.
Unserved market has an additional inflow from growth by financing. This flow
considers the favorable conditions of Borrowing Interest Rates for leasing
purposes. The better the rates are it is easier to find financing and thus the
market is larger.
5.3.2 Power Generation (PG)
Power Generation Group offers environmentally compatible power generation
systems, and services for power plant projects. Siemens Turkey PG Group in
partnership with the PG Group of Siemens AG Germany, provides multi-
purpose services and turnkey solutions for steam and gas turbines, and electric
and automation systems for all types of power plants. The PG Group in Turkey
specializes in engineering, production, erection and commissioning services for
the electrical and instrumentation and control systems of thermal and
hydroelectric power plants. Projects in power plants range from super efficient
gas turbines to computerized control systems [8].
Growth of GDP and GFI are standard among all models. Additional to these
two, Energy Demand Increase is another major variable that affects the inflow
to unserved and served-not-customer markets.
The served-not-customer market has an additional inflow, which is Capacity
Necessity. The two auxiliary variables that affect this inflow are the Coverage
Ratio of Installed Capacity of the Demand in MW and GWh. The more the
capacity necessity, the higher the served market would be for PG Group.
Dynamic Modeling of Siemens Electromarket
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An inflow to unserved market size else than GDP and GFI Growth is the Effect
of Credit Rating. The favorable conditions in the ratings directly affect the
market size. The conversion from inaccessible to unserved market is affected
from the auxiliary variable Accessing to Bilateral Government Agreements, for
which accessing causes unserved market to go up.
5.3.3 Power Transmission and Distribution (PTD)
The transmission and distribution of energy to consumption points safely and
efficiently is as important as the generation of the required amount of energy at
the highest quality and the lowest cost. PTD Group offers consultancy,
engineering, turnkey solutions, and after-sales services for all voltage levels
from 0,4 kV up to 400 kV. Private and state-owned power transmission and
distribution companies, as well as industrial plants, benefit from Siemens
solutions. Siemens conducts the network planning of new systems, and the
modernization of existing ones [8].
Except the four standard stocks, PTD model has different auxiliary variables
and converters. The GDP and GFI growths affect inaccessible, unserved and
served-not-customer markets similar to other models. PTD Group has also the
auxiliary variable Energy Demand Increase like PG group which affects
inaccessible, unserved and served-not-customer markets.
Sales is affected from the same variables as in MED group, except here there is
a Pricing Effect from Export Sales. As export sales revenue grows, the fixed
costs are shared between both export and local sales. This ends up in more
competitive pricing of local products, which causes higher sales.
Served-not-customer stock of PTD has an extra inflow that is affected from
three auxiliary variables. Level of Outsourcing is a determinant of how large the
served market size is. The degree of Privatization also affects the served
market size. TEDAS (Turkish Electricity Distribution Company) Requirements
are also important, since the higher these requirements are the better Siemens
have chances to enter the market with high caliber products.
The conversion from inaccessible market to unserved market has one major
auxiliary variable which is Accessing to State Owned Companies. The higher
the accessing fraction, the greater the unserved market is.
5.3.4 Automation and Drives (A&D)
With the increasing importance of automation techniques in industry, systems,
which ensure total compatibility between units, have become a necessity. The
Automation and Drives Group offers services to its customers with switchgear
and installation technologies, motor and motor speed control systems, and
process automation techniques [8].
Dynamic Modeling of Siemens Electromarket
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For A&D Electromarket model, the four stocks are the same as previous
models. The GDP and GFI growths affect the stocks except sales stock.
Additional to the same variables that affect sales, there is an Euro-Turkish Lira
Parity auxiliary variable, which directly affects sales. This variable is introduced
to the model since most of the group’s products are sold in Euros, and that the
strengthening of Euro against TL hurts sales of A&D Group.
Served market is additionally affected from Competitive Pricing and from
Presence of Imitations and Low Cost Local Producers. The imitation products
are a threat for the market of A&D in Turkey, and therefore this variable is
crucial.
Efficiency in Sales Channels is another auxiliary variable and a decision
variable in the game interface for the unserved market of A&D. The better the
efficiency, the greater the market size is.
5.3.5 Industrial Solutions and Services (I&S)
Industrial Solutions and Services Group is one of the world’s leading suppliers
of electrical equipment and drives as well as automation and IT solutions for
many different industries. It also works on infrastructure projects encompassing
drinking and wastewater, marine engineering, airport installations, alternative
power solutions, and traffic control and guidance systems [8].
The inaccessible, unserved, served-not-customer and sales stocks are the
same for the model. The macroeconomical decision variables in the interface
are GDP and GFI Growth same as the previous models. Additional to these a
Government Spending and Incentives variable is included in the model that
affects the inflow to stocks.
Level of Outsourcing is a crucial auxiliary variable that affects served market
size. The higher the tendency to outsource in the market, the larger the market
size is. Served market also has an inflow that is affected from Investment
Opportunities Abroad.
Unserved market has an inflow that grows its size with a positive feedback loop
connected. This inflow is affected from Local Company Competition auxiliary
variable.
5.3.6 Information and Communication (IC)
Siemens has three fundamental core competencies in information and
communication technologies: next-generation Internet, wireless
communications and advanced electronics. This combination enables the
company to offer full array of mobile business solutions from a single source,
Dynamic Modeling of Siemens Electromarket
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ranging from innovative voice, data and video communications equipment for
end users to complete networks and tailored applications. The networks group
also provides comprehensive engineering and consulting services, from
network planning to financing and from installation to training [8].
The stocks are standard for IC Group as well. The effects of GDP and GFl
Growth are by inflows to market segment stocks. There are several other
auxiliary variables that affect the sales and served-not-customer inflows.
The sales stock is specifically affected from Competitive New Product
Development, Competitive Sales Force and Competitive Pricing variables. It is
noteworthy to mention that these three variables emerge from the basis of
Siemens’ competitive advantage notion.
The served market segment is additionally affected from, Administrative and
Political Environment, Technological Development, Privatization of Turkish
Telecommunications Co. (TT), Tariff Indicator of TT and Computer Sales and
Internet Connection Growth variables.
5.3.7 IC Mobile Devices (ICM D)
The recent and rapid developments in telecommunications can be evidenced
from the increasing uses and functions of mobile telephones. ICM D is actually
a subgroup under IC Group. However, because of the fast consumable nature
of their products, it has been decided to classify ICM D market as a separate
and unique entity [8].
Four stocks are the same as the above models. Additional to GDP and GFI,
Euro-Turkish Lira Parity is an additional macroeconomic decision variable that
affects sales. The lower the rate is, the more favorable effect there is for sales.
The Pricing Level and Weighted Distribution of the distributors are the two other
auxiliary variables that affect sales.
Served market has an additional inflow that is affected from auxiliary variables,
Marketing Expenditures Level and New Product Launch and Campaigns. The
default value of the current level is zero for both variables. On the game
interface Marketing Expenditures can vary between an increase of 80% and a
decrease of 80%. Similarly, the default value of zero can increase in a scale
when new product is launched.
Presence of Operator Subsidy and New Technology Launch affect the unserved
market. They both a default value of zero and can be altered as a decision
variable in the interface. Parallel Import and Illegal Sales affect the inaccessible
market. It is not possible to serve the illegal portion, though this type of sales is
included in determining the market size.
Dynamic Modeling of Siemens Electromarket
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5.3.8 Transportation Systems (TS)
The fact that Siemens supplies full scope of requirements for turnkey installation
of all kinds of transportation systems, has led to become the world leader in rail
systems. TS concentrates on the development, improvement and integration of
highway, railway and air transportation. The group also provides and installs the
traffic management and control systems [8].
TS Group has not defined unserved and inaccessible markets so this leaves
served-not-customer and sales stocks only. However, we have included dummy
stocks for unserved and inaccessible segments that have a value of zero, for
consolidation purposes.
Additional to GDP and GFI macroeconomic indicators, the Euro-Turkish Lira
Parity is also introduced to the model. The lower the parity is, the cheaper the
products are, which causes sales to increase.
Competitive Pricing and Public Tenders Law are the two other auxiliary
variables that affect sales. The Acceptance of Public Tenders Law is a 3-scale
indicator. Zero is the current default value with no progress. The initial progress
(scale at 1) concerns the acceptance of the "Limiting the Duties" item. When the
scale is at 2, this means the international fortification is accepted. Scale of 3
signals a scope extension.
Favorable Political Environment, Treasury Guarantees, Absence of Product and
Presence of Special Credits (such as EIB, Worldbank, and softloans) are
additional variables that affect the served market.
5.3.9 Integrated Building Services (IBS)
IBS Group works towards ensuring efficiency at all stages of modern buildings’
lifespan from design and construction to utilization. Services cover the full range
of buildings and facilities: hotels, hospitals, industrial plants, universities,
schools, business centers, airports, harbours, and shopping malls [8].
The four stocks are also present in our last group’s model. GDP and GFI
Growth affect the market segment stocks separately. An auxiliary variable, the
Presence of Competitive Services is defined for IBS, which is a cause for
Customer Adopting flow.
Administrative and Legal Conditions, Level of Outsourcing, New Technology
Usage, and Privatization are other auxiliary variables that affect served market.
Among these the default value of Privatization variable is zero as the current
level and is subject to increase as the market is privatized.
Dynamic Modeling of Siemens Electromarket
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5.4 The Consolidated Model
As a final deliverable, nine simulation games for each operating group and a
consolidated simulation game for Siemens Turkey have been prepared. Each of
the nine games has its separate decision variables; only three of the decision
variables are common. Namely, these are
e Gross Domestic Product Growth,
e Gross Fixed Investment Growth,
e Euro-Turkish Lira Parity.
These three are classified under Macroeconomic Indicators in the consolidated
model. All the other decision variables have also been consolidated in the
Siemens Turkey model. The consolidated model therefore has an interface that
can be used as a flight simulator by corporate management.
The Table 2 below summarizes all the decision variables of each model for
market segments that are also present in the consolidated model.
Dynamic Modeling of Siemens Electromarket
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Dynamic Modeling of Siemens Electromarket
6. Validation and Simulation
Simulations are done for 9 years of which 6 years are to the future. In other
words the simulation ends in 2009. Year 2001 is labeled as Year 1 and so on.
The simulations are undertaken on a quarterly basis. In the validation phase,
the available data for the years 2003 and before have been used as given and
the models are constructed accordingly. It was observed that a good simulation
fit for the past years are reached.
It is aimed that operating group managers should gain expertise in the
simulation games by altering the decision variables. The consolidated game is
prepared for the CEO and CFO, and their console consists of all the decision
variables both unique and common in nine models.
In Figure 4 and Table 3 below can be found the graph and table for the
simulation with the default values of functions. The Gross Domestic Product
Growth and the Gross Fixed Investment Growth default values for 2004 and
later are obtained as estimates from Chief Economist / Corporate Relations
department at the Headquarters of Siemens AG at Munich. The values for years
2001-2003 are used as given. These default values can be found in Figure 5
and 6.
@ 1: Siemens Total 2: Siemens Accessible 3: Siemens Served 4: Siemens Local Sales
1 7000: : ; a
3 H
4: i
1
| 3600:
1
|
4 o+ |
1.00 3.00 5.00 7.00 9.00
page 1 . Years 12:25 11 Mar 2004 Pe
Na@et ? Siemens Market Development (in Milion Euros)
Figure 4. The Growth of Siemens Turkey Market and Sales with Default Values
Dynamic Modeling of Siemens Electromarket
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@ 1033 16 var 2004 Paz Table (Total Markets of Operating Groups)
Years 1 2 3 4 a 6 7
MED Total Market ior 108 700) 103 107 112] 16]
PTD Total Market Es 542 79 56 578 636) 007
PG Total Market 7 207 Ey 379) #1 612 285)
185 Total Market 1.122 1.097 383 966; 1088 1.169) 1.269]
‘ABD Total Market 2a 266 263) Es] 307 ES) 360]
TC Total Market 1.140 376 083 613 679 904 1.097|
TOMO Total Market 499 604 3) 468) 515) 544 574
TS Total Market a 83 175 339 a7 575; 420) 322 337,
1S Total Market 1071 1058 1023 1.028) 1037 1048] 1.062| 1.079] 1109]
Siemens Total $327 5.025 4470 4726) 5.169) 5.93) 6.251 6.489] 6.868]
4 >
Table 3. The Growth of Siemens Operating Groups’ Market with Default Values
Wet Yeas GDP Growth
7.000 7.200
2.000 -7.300
3.000 4.900
GDP 4,000 4.100
Growth 5,000 4.800
6.000 4.600
7.000 4.600
8.000 4.300
3,000 4.300
1
7.000 facoo
B Years Data Points: 3
Figure 5. The Default Values of Gross Domestic Product Growth Function
fs500 Gross Fixed
Oe Years Investment
Growth
1.000 16.90
2.000 31.50
Gross Fixed| 3.000 4.300
Investment 4.000 6.300
Growth 5.000 5.600
6.000 5.400
7.000 5.400
8.000 5.300
3.000 5.300
-35.00
a) — Loo
Yeats Data Points: 9
Figure 6. The Default Values of Gross Fixed Investment Growth Function
Dynamic Modeling of Siemens Electromarket 16/19
When the two main decision variables, GDP Growth is set to 6.0% and GFI
Growth is set to 15.0% constant growth, the values of total market size change
accordingly as in Table 4.
@ 1191 16 her 2004 Paz
Table (Total Markets of Operating Groups)
Siemens Total
Years 1 2 3 4] 6 | 7
MED Total Market 101 106 i 116 122 128 195
PTD Total Market 535 e12 704] 310 932 1.088] 1.225
PG Total Market 537 519 475 412 492 670] 67
18S Total Market 1.122 1.268 1441 1641 1.860 2.129) 2.428
‘ASD Total Market 241 267 296 3a 362 401 48 01 543]
TC Total Market 1.140 246 267 262 fc 1237 1.466 1.666 1.868]
TCMO Total Market 409 546 595 64 702 761 a27| 393 o77|
TS Total Market at 84] 180 347 443 605 537 382] 410]
18S Total Market 1.071 1.083 1.096 1.113 1.133 1.167 1.188 1.219] 1.268
5.327 5.430 5.754| 6.275 7017 3.147] 3.914] 9.633] 10.598]
ST
Table 4. Siemens Operating Groups’ Market with Constant Growth in Economy
Table 5 shows the situation when there is a severe constant economic crisis
with a GDP Growth at -6.0% and a GFl Growth at —-15%. It should be noted that
decision variables could be altered on yearly terms, although in Table 5 a
constant crisis is shown.
@ 1195 15 Nar 2004 Paz Table (Total Markets of Operating Groups) ? *¢ 283
Years 1 2 3 4] 5 6 7 3 Firal
MED Total Market 101 3 a a | 73] 75] 7 8
PTO Total Market 535 4 386) 328 279 239) 206) 7 183
PG Total Market 7 #3 4209 364 383 469) 301 at 263
185 Total Market 1.122 387 690 564 473 405; 353; 313 782
‘ABD Total Market 241 244] 248 251 264] 257 260 26a] 267
1 Total Market 1.140 759 on an 07 551 eat ent 708
TCMO Total Market 409 40 405 368) 326) 208) 202] 250 238
TS Total Market at 77 169 313 366) 467 308; 108 100
18S Total Market 1071 1.026) 983 94 910 880) 862 228 807
Siemens Total $327 4.406) 3.927| 3.021 3.401 3.644] 3.370] 3.017| 2.802 w
4 >
Table 5. Siemens Operating Groups’ Market with Constant Crisis in Economy
Dynamic Modeling of Siemens Electromarket
17/19
7. Conclusions and Further Research
Our work is the first to undertake such an empirical study with Siemens data in
this area. We aimed to develop a flight simulator for the corporate management
that will enable them to expertise their knowledge of market size. It was
important to communicate our work to group managers, which are the end-user
of our nine simulation games.
It was hard to reach numerical data for some of the variables that are too
abstract, so we tried to solidify the concepts and refined the data. Though, we
insisted on using the abstract variables by setting them a scale, which can be
conceived by the end-users.
This model can be further developed to include other operating groups such as
Electronic Components, Programming and Software Engineering, which are not
currently included in the consolidated model. Also a horizontal development is
possible, which is to develop market size models for other countries that
operate under Siemens AG.
Another development possibility lies in the area of introducing competitors as
stocks or auxiliary variables to the model. By this approach, the boundaries will
be drawn wider and so that the relative market share can be calculated from the
output of the model.
Dynamic Modeling of Siemens Electromarket
18/19
References
[1] Daft, R. L. (2003), “Management” 6" Ed., Thomson: Ohio.
[2] High Performance Systems (2002), “Ithink Modelling Guide”
[3] Kohléffel, K.M. (2000), “Strategisches Management- Alle Chancen
Nutzen — Neue Geschaefte Erschliessen” Hanser: Munich.
[4] Leibold, M, Probst, G., Gibberti, M. (2002), “Strategic Management in the
Knowledge Economy” Publicis, Wiley: Erlangen
[5] Soydan, A. |. and Sire, Y. (2003), “Investigating the Effect of Account
Receivable and Delivery Delay on the Profitability of a Medical
Department: Siemens Case” 21th International System Dynamics
Conference Proceedings, New York.
[6] Soydan, A. I. and Karanfil, O. (2002), “Estimating the Possible Electricity
Energy Shortages for the Years 2003-2015” Bosphorus University,
Unpublished Report.
[7] Sterman, J.S. (2000), “Business Dynamics: Systems Thinking and
Modeling for a Complex World” McGraw-Hill: New York
[8] Wells, N. (2002), “Journey to the Future with Siemens Turkey” Pasifik
Tasarim: Istanbul.
Dynamic Modeling of Siemens Electromarket 19/19
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