Strategic Analysis: To derive the critical success factors faced by Siemens Healthcare, we tried to do a PESTEL analysis and based

on that identify the strongest force affecting the company. PESTEL Analysis: To do the PESTEL analysis we first checked out some background information of the medical industry which is listed as below Political: The Government has decided to increase health expenditure to 2.5 per cent of the gross domestic product (GDP) by the end of the Twelfth Five Year Plan, from the current 1.4 per cent. Furthermore, a number of initiatives that have been proposed and taken up by the Government of India (GoI) for enhancement of the healthcare sector are: Allocation for National Rural Health Mission (NHRM) has proposed to be increased from Rs. 18,115 crore (US$ 3.23 billion) in 2011-12 to Rs 20,822 crore (US$ 3.72 billion) in 2012-13 National Urban Health Mission is being launched Pradhan Mantri Swasthya Suraksha Yojana being expanded to cover up-gradation of seven more Government medical colleges

Social: India is the most competitive destination with advantages of lower cost and sophisticated treatments, according to RNCOS report titled 'Indian Healthcare - New Avenues for Growth'. The report further highlighted that several key trends are backing the growth of India's healthcare sector. Most international patients are from Africa, SAARC and West Asia. Patients requiring higher-end tertiary care are now coming to India for cardiology, orthopaedics, neurology, oncology and organ transplants. Affordability of treatment is a big pull factor-treatment in India costs just 10-20 per cent of what it costs abroad. According to industry estimates, the market size of medical tourism in India is growing at over 25 per cent annually at over US$ 2.5 billion. Economic: India is one of the world's most lucrative healthcare markets, and is expanding rapidly, according to latest findings of a report titled 'Indian Healthcare - New Avenues for Growth'. The Indian healthcare industry estimated at US$ 40 billion in 2010is expected to reach US$ 280 billion by 2020. Further, huge private sector investments will significantly contribute to the development of hospital industry, comprising around 80 per cent of the total market, highlighted the RNCOS report, titled 'Indian Hospital Services Market Outlook'. "India is the first country to have a large number of multinational healthcare providers. There are seven-eight very active MNCs. It opens a whole host of opportunities for us. I see the healthcare sector as one of the biggest business opportunities," as per Terri Bresenham, President and CEO, GE Healthcare India, and MD, Wipro GE Healthcare, India. India will witness the largest number of mergers and acquisitions (M&A) in the pharmaceutical and healthcare sector, according to consulting firm Grant Thornton. A survey conducted across 100 companies has revealed that a fourth of the respondents were optimistic about acquisitions in the pharmaceutical sector.

Market Size: The hospital services market represents one of the most lucrative segments of the Indian healthcare industry. On the back of continuously rising demand, the hospital services industry is expected to be worth US$ 81.2 billion by 2015. The hospital and diagnostic centre in India has attracted foreign direct investment (FDI) worth US$ 1.34 billion, while drugs & pharmaceutical and medical & surgical appliances industry registered FDI worth US$ 9.19 billion and US$ 521.45 million, respectively during April 2000 to March 2012, according to the data provided by Department of Industrial Policy and Promotion (DIPP).

Technological: According to Frost & Sullivan reports, spending on information technology (IT) by Indian healthcare players was estimated at US$ 244 million in 2010 and is expected to grow at 22 per cent a year over the next 10 years. Environmental: Environmental factors do not play a major part in Medical technology domain. Legal: One of the most important factors which have given a boost to the medical industry in India is the fact that currently 100 per cent FDI is permitted for health and medical services under the automatic route. This is one of the main reasons why companies like Siemens have been able to gain a foothold in the industry. From the various environment related facts and figures available, it is clear that the Pharmaceutical and Medical industry in India is in a state of rapid growth and that Siemens Healthcare has the potential to play a big part in it. However there are two factors at play here. Given the number of players in the industry the market is highly competitive so any big player has to have a clear differentiator which in this case could arise from R&D. The clear focus on cost in Indian medical industry also dictates that cost leadership be a pre-requisite dominant strategy. Siemens clearly understands this fact as is also mirrored by their Vision and Strategy statement which states Siemens Healthcare focuses on strategies to increase both efficiencies and quality of care, while simultaneously reducing costs Their strategy from sustainability comes from arming providers with innovative tools to produce quality outcomes, achieve increased productivity and improved efficiencies, and lower overall costs all which will lead to greater economic viability. Focus is on innovative Solutions .In 2010, Siemens Healthcare invested approximately 9% of its global revenue in research and development, producing an average of five patents every single day. However the inherent characteristics of the erstwhile structure had forced a culture where R&D was losing out to day to day project delivery responsibilities. This structure had also led to increase in costs due to non-reusability of idle resources. This ultimately led to the rise of a Matrix structure

Star Framework: The Salient differences that arrived due to the arrival of the new architecture can be seen by putting the two structures in the Star Framework Before After