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Siemens is breaking ethical standards to achieve higher profits

Siemens AG is one of the largest electronics and electrical engineering companies in the world. The company was founded in 1847 and its headquarters are in Munich, Germany. Siemens AG produces equipment for industry, healthcare, energy, and infrastructure. Siemens currently does business globally and is similar in size to General Electric.

The financial position of the company is stable since 2009. There was a dramatic decline in revenue from 2008 to 2009 due to the recession but since 2009 the company’s revenue has not changed much, but did slightly decline by about one million dollars (Standard & Poors). The company’s earning per share has increased since 2008. Earnings per share in 2008 were 1.90, each year it steadily increased and now in 2011 earning per share are at 10.78 (Standard & Poors). Earnings per share in 2010 and 2011 are much hire than they were before the recession began in 2008.

German economy is still strong which is a plus for Siemens AG. German industrial order growth remains robust at close to 10% after 18 months of strong growth and German industrial production remains strong (Prozesky, Vos, & Cole, 2011, p. 67). Although, most economies of Europe are still struggling but strong growth in Asian and emerging markets is an opportunity for Siemens AG. The US economy other than the housing market is also starting to pick up. Spending in the US has risen since 2009. Durable goods spending in the US fell 3.7% in 2009, but gained 7.2% in 2010 (Standard & Poors).

Even though Siemens AG has recovered from the recession it does have some ethical problems. It was discovered that Siemens had an annual bribery budget of about $50m that it used to buy telecom and power equipment contracts in the early 2000s (Prozesky, Vos, & Cole, 2011, p. 66). It has also been doing business with Iran’s oppressive regime. Siemens sold network infrastructure and software solutions to the Iranian government, which then used this technology to observe, block, and control domestic communications (Schrempf, 2011, p. 95). Siemens is breaking ethical standards to achieve higher profits, in the end it may cause profits to decline.

Siemens AG is a company that has strong growth potential. This company is worth investing in when looking at the company’s financial position. But when it comes to ethics there is some concern that not only Christians’ should be concerned with. This is why investing in Siemens AG is not a good idea because eventually Siemens AG will loose value due to bad ethical decisions.

References
Prozesky, M., Vos, D., & Cole, C. (2011, October). Siemens: not yesterday’s sauerkraut.
Bernstein Black Book - The Best of Bernstein: European & Emerging Markets
Edition, 65-70.
Schrempf, J. (2011, October). Nokia Siemens networks: just doing business – or
supporting an oppressive regime? Journal of Business Ethics, 103(1), 95-110

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