Siemens 2014 Annual Report Download - page 239

247 D. Consolidated Financial Statements
337 E. Additional Information
213 C. Overall assessment of the economic position
214 C. Subsequent events
215 C. Sustainability and citizenship
225 C. Report on expected developments and
associated material opportunities and risks
242 C. Compensation Report and legal disclosures
242 C. Siemens AG (Discussion on basis
of German Commercial Code)

relate to all of our segments. The order in which the opportuni-
ties are presented reflects the currently estimated relative ex-
posure for Siemens associated with these opportunities and
thus provides an indication of the opportunities’ current impor-
tance to us. Nevertheless, opportunities currently considered
to entail a lower opportunity exposure could potentially result
in a higher positive impact on Siemens than opportunities cur-
rently considered to entail a higher opportunity exposure. The
described opportunities are necessarily not the only ones we
encounter. In addition, our assessment of opportunities is sub-
ject to change as our Company, our markets and technologies
are constantly developing. As a consequence, new opportuni-
ties may arise, existing opportunities may cease to be relevant,
or the significance of an opportunity may change. Generally,
opportunities are assessed to the best of our knowledge, con-
sidering certain assumptions, including market development,
market potential of technologies or solutions, and anticipated
developments in customer demand or prices, among other
things. When opportunities materialize, they may have a lower
effect than previously estimated on the basis of the underlying
assumptions. It is also possible that opportunities we see today
will never materialize.
In our view, the overall opportunity situation did not change
significantly as compared to the prior year.
We constantly strive to develop new technologies, offer new
products, solutions and services, and improve existing ones:
We invest in new technologies that we expect will meet future
demands in accordance with the megatrends demographic
change, urbanization, climate change, globalization and digital
transformation (for further information see C.. STRATEGY).
Furthermore, a growing awareness for cyber security could lead
to additional business for high quality solutions offered by the
former Industry Sector’s Industry Automation Division.
We see further opportunities in the growth potential of
emerging markets as well as established markets: We ex-
pect that in coming years growth in our markets will be driven
by countries in Asia and the Middle East, in particular by coun-
tries such as Indonesia and Turkey. Within One Siemens, we
take measures aimed at continuously increasing our share of
revenue from emerging markets. Our “Vision ” concept,
which puts a stronger focus on getting close to customers is
expected to result in higher market penetration (for further
information, see C.. STRATEGY).
We believe that developing the capability to design, manufac-
ture and sell so-called SMART products (simple, maintenance-
friendly, affordable, reliable, and timely-to-market) will pro-
vide us with opportunities to gain market share and enhance
our local presence in these strategic growth markets. Adding
further SMART products to our portfolio and developing stron-
ger sales channels would enable us to increase our revenues by
serving large and fast-growing geographic markets, where cus-
tomers making a purchase decision may consider price more
strongly than product features without compromising on prod-
uct quality and reliability.
Through selective acquisitions, equity investments and
partnerships we constantly strive to strengthen our lead-
ing technology position, open up additional potential mar-
kets and further develop our product portfolio: We con-
stantly monitor our current and future markets for opportunities
for strategic acquisitions, equity investments or partnerships to
complement organic growth. Such activities could help us to
strengthen our market position in our existing markets, provide
access to new markets or complement our technological port-
folio in selected areas.
Localizing value chain activities in low-cost countries could
further improve our cost position: Localizing certain value
chain activities, such as procurement, manufacturing, mainte-
nance and service in markets such as the BRIC countries, other
emerging markets, and the Middle East could enable us to re-
duce costs and strengthen our global competitive position, in
particular compared to competitors based in countries with a
more favorable cost structure.
We are in the process of continuously developing and im-
plementing initiatives to reduce costs, adjust capacities,
improve our processes and streamline our portfolio: In an
increasingly competitive market environment, a competitive
cost structure complements the competitive advantage of
being innovative. We believe that further improvements in our
cost position can strengthen our global competitive position
and secure our market presence against emerging and incum-
bent competitors. For example, we expect to create sustainable
value from productivity measures in connection with our
“Vision ” (for further information, see C.. STRATEGY).
Moreover, fostering a stringent claim management process can
help materialize opportunities by enforcing our claims towards
our contract partners even stronger.
We are realigning our organization: As of November, ,
we disbanded our Regional Cluster organization. Following this
organizational change, we have designated  Lead Countries
which are individually responsible for managing a number
of other countries regarding market penetration. Each Lead
Country reports directly to the Managing Board. By implement-
ing this move, Siemens intends to intensify its customer access
and expand its regional business. We expect this new setup to
further enhance our local market penetration and our customer
proximity going forward.