Siemens 2013 Annual Report Download - page 156

92 A. To our Shareholders
117 B. Corporate Governance 155 C. Combined Management Report
156 C. Business and economic environment
173 C. Financial performance system
179 C. Results of operations
192 C. Financial position
204 C. Net assets position
207 C. Overall assessment of the economic position
209 C. Subsequent events
210 C. Sustainability
227 C. Report on expected developments and
associated material opportunities and risks

C.. The Siemens Group
C... ORGANIZATION AND BASIS OF PRESENTATION
We are a globally operating technology company with core
activities in the fields of energy, healthcare, industry, and in-
frastructure, and we occupy leading market positions world-
wide in the majority of our businesses. We can look back on a
successful history spanning  years, with groundbreaking
and revolutionary innovations such as the invention of the
dynamo, the first commercial light bulb, the first electric
streetcar, the construction of the first public power plant, and
the first images of the inside of the human body. On a continu-
ing basis, we have around , employees as of September
,  and business activities in nearly all countries of the
world and reported consolidated revenue of €. billion in
fiscal . We operate in excess of  major production and
manufacturing plants worldwide. In addition, we have office
buildings, warehouses, research and development facilities or
sales offices in almost every country in the world.
Siemens comprises Siemens AG, a stock corporation under the
Federal laws of Germany, as the parent company and a total of
about  legal entities, including minority investments. Our
Company is incorporated in Germany, with our corporate
headquarters situated in Munich. Siemens operates under the
leadership of its Managing Board, which comprises the Presi-
dent and Chief Executive Officer (CEO) and the Chief Financial
Officer (CFO) as well as the heads of selected corporate func-
tions and the CEOs of the Sectors.
Our fundamental organizational principles are:
> the CEO principle,
> the end-to-end business responsibility of the Sectors,
Divisions and Business Units, and
> the unrestricted right of selected corporate functions to
issue instructions in relation to a function to the extent
legally permissible.
The Siemens Managing Board is the sole management body
and has overall business responsibility in accordance with the
German Stock Corporation Act (Aktiengesetz, AktG). At all
other organizational levels within our Company, management
responsibility is assigned to individuals who make decisions
and assume personal responsibility (CEO principle). This prin-
ciple establishes clear and direct responsibilities and fosters
efficient decision-making.
Our Sectors, Divisions, Business Units and Financial Services
(SFS) are “global entrepreneurs” and have end-to-end business
responsibility worldwide, including with regard to their operat-
ing results. They therefore have “right of way” over the regional
units in business matters. During fiscal  our regional units
were organized in Clusters and Countries, which were respon-
sible for the local customer relationship management and for
implementing the business strategies of the Sectors and SFS
as well as the requirements set by the corporate functions.
In addition to their particular authority to issue binding com-
pany-wide guidelines and to their monitoring and coordinat-
ing responsibilities, the heads of selected corporate functions
(Finance and Controlling, Legal and Compliance and Human
Resources, for example) have an unrestricted right to issue
instructions in relation to a function across all parts of the
Company to the extent legally permissible.
Below the Managing Board, Siemens is structured organiza-
tionally into Sectors, SFS which acts as business partner for
the Sectors and also conducts its own business with external
customers, Cross-Sector Services that support other Siemens
units, Corporate Units with specific corporate functions, and
regional Clusters. The Sectors are principally broken down into
Divisions and these in turn into Business Units.
Our business activities focus on our four Sectors, Energy,
Healthcare, Industry and Infrastructure & Cities. These Sectors
form four of our reportable segments. In addition to our four
Sectors, we have two additional reportable segments: Equity
Investments and SFS.
Within this combined management report, we provide finan-
cial measures for our four Sectors and for two Businesses,
each combining two Divisions within a Sector as well as for
eight Divisions of our Sectors. These financial measures in-
clude: orders, revenue, profit and profit margin. Divisions
within a Sector may do business with each other, leading to
corresponding orders and revenue. Such orders and revenues
are only eliminated on a Sector level. Furthermore, our report-
able segments may do business with each other, leading to
corresponding orders and revenue. Such orders and revenue
are eliminated on the Siemens level within Eliminations, Cor-
porate Treasury and other reconciling items and are not
included in orders and revenue with external customers (ex-
ternal orders and external revenue, respectively) reported in
this document. Free cash flow and further information is
reported for each reportable segment in the Notes to Consoli-
dated Financial Statements. For information related to the
definition of these financial measures and to the reconci-
liation of segment financial measures to the Consolidated
Financial Statements, see C. NOTES AND FORWARD-LOOKING
STATEMENTS and NOTE  in D. NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS.
C. Business and economic environment