Siemens 2007 Annual Report Download - page 33

Fit42010 33
Strengthening our
competitive position
and increasing Com-
pany value
Fit4More was a resounding success. But there’s still room for improvement and a need for
further action – particularly in the areas of compliance (see pages 42 f. and 88 ff.) and asset
management. Our conduct must meet the highest professional and ethical standards. And to
succeed, our businesses must achieve ambitious goals for growth, profi tability and cash fl ow.
In particular:
¢ We intend to grow twice as fast as the global economy.
¢ Retaining our system of Group margin ranges, we’ve set tough profi tability targets for our
Groups and for the Company as a whole. Taking into account their individual business strate-
gies, market positions and competitive environments, we’ve raised the target margin ranges
for eight of our ten Groups. In addition, we’ve introduced a new performance yardstick fo-
cused on optimizing capital effi ciency – return on capital employed (ROCE). This metric is cal-
culated by dividing income before interest expense by capital employed. We’re aiming for an
ROCE of 14 - 16% for the entire Company by 2010.
¢ In the area of cash fl ow, we’re employing another new yardstick, the cash conversion rate, to
determine how much of our profi t is converted into cash that can be used to fi nance our busi-
nesses. The cash conversion target we’ve set is “one minus the Company’s growth rate.” This
indicator is adjusted for our growth rate because growth always requires investments.
To reach our Fit42010 goals, we’re rigorously implementing four drivers:
¢ Portfolio – We’re building on our strengths in order to capture and maintain No. 1 or No. 2
positions in attractive markets and further boost our businesses in our three Sectors Industry,
Energy and Healthcare (see page 36 f.) through organic growth and acquisitions.
¢ People Excellence – We’re creating a high-performance culture, strengthening our leadership
development and promoting top talents around the globe.
¢ Operational Excellence – We’re continuing to push innovation by applying our proven top+
methods and top+ toolbox while sharpening our customer focus and enhancing our global
competitiveness
¢ Corporate Responsibility – We’re closely aligning our business performance with our commit-
ment to society and the environment in order to safeguard and increase the long-term value
of our Company.
Corporate Responsibility
¢ Achieve best-in-class in:
¢ Corporate Governance
¢ Compliance
¢ Climate Protection
¢ Corporate Citizenship
Operational Excellence
¢ Siemens Management
System (powered by top+)
with focus on:
¢ Innovation
¢ Customer Focus
¢ Global Competitiveness
Fit42010
People Excellence
¢ Develop talent globally
¢ Strengthen leadership
development
¢ Attain high-performance
culture
¢ Strengthen expert careers
Portfolio
¢ Build on our strengths in:
¢ Energy & Environmental
Care
¢ Automation & Control,
Industrial & Public
Infrastructures
¢ Healthcare
¢ IPO of Siemens VDO
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People
Excellence
Corporate
Responsibility
Operational
Excellence
Portfolio
¢ Optimize capital effi ciency,
ROCE of 14 -16%
¢ Attain cash conversion rate
of “1-growth rate”
¢ Sustain 2x GDP growth
¢ Achieve new margin
ranges
Performance
Fit4 2010