ABB CASE ANALYSIS

ABB CASE ANALYSIS

Introduction to caseMerger of ASEA AB of Sweden and BBC Brown Boveri Ltd. Of Switzerland in 1987 to form ABB

ASEAs 65000 employees + BBCs 85000 employees combine together to form it.

Matrix Organization of 850 separate legal entities operating in 140 countries

It is comprised of many independent decentralized business units, each with its own products, clients, competitors and profit goals.

Headed by Percy Barnevik and Thomas Gasser.

3ASEA CONTRIBUTIONS Superior profit PerformanceSophisticated Management ControlMarketing Agressiveness.Barneviks strong LeadershipBBC CONTRIBUTIONSStrong Order BooksHigh Technichal Expertise

As a result, it is created ABB that becomes worlds largest producer of engineering Products & Services, based on the principles of decentralization of responsibilities and individual accountabilityRationale for evolution.

How ABB is organizedFive global divisionsABBs portfolio covers:Electricals, automation, controls and instrumentation for power generation and industrial processesPower transmissionDistribution solutions

Power ProductsPower SystemsDiscrete Automation and MotionProcess Automation$10 billion$6.8 billion$5.6 billion$7.4 billion(2010 revenues)

Low Voltage Products$4.5 billion

Low-voltage productsMotors and drivesIntelligent building systemsRobots and robot systems

ABB Group March 23, 2015 | Slide 4

4

Executive Committee Chaired by CEO.Business Segment ManagerBusiness Area Manager (BA)Local Operating CompaniesProfit Center Manager 1Profit Center manager 2Local Operating CompaniesProfit Center Manager 1Profit Center Manager 2Country ManagerTop ManagementMiddle level ManagementMid level ManagementFrontline ManagementFrontline ManagementORGANISATIONAL ARCHITECTURE OF ABB

5

How effective is ABBs structure?ABB has put up a very effective model which addresses the following key modalities:-

Aligning to the global growth outlook while strengthening local operations.Empowering employees by giving them responsibility, accountability and exposure.Emphasis on communication of culture and a culture of communication.Combination of Divisional and Functional organaisation structure to levearge technology, operartional efficiency and Centralized control.

StrengthFinding and coaching global managers Talent oriented selection procedureRobust communication system visibility and transparency at all levels.Bringing global technology at door step of local operations.Strong value systems focused on communication, work ethic and decisiveness.Allows employees to work on more than one projectKnowledge about variety of products due to decentralization.Access to the Global technologies & technical advancements world wide with mutual contribution with local development & innovations.

StrengthThere is an effective local control in the form of various legal entities formed with separate Financial reporting to the respective Company Presidents who in-turn report to the Regional Manager (one of the 11 executive vice-presidents) based in the Country itself.

While the responsibilities have been decentralized , there is a strong accountability at the local level. This gives freedom for the local Managers to act based on the market needs while meeting the Companys targets indicating a meaningful autonomy.

WeaknessTwo way communication might not always happenDifferences between business area leaders and national country executives could effect businessGeographic impact factors might not be easy to handle on such a large scaleLocal operations teams might not align with ABBs vision/mission effectively.Reporting to two or more manager can lead to conflict and confusion among employees.Since most companies are acquired ones, difficult to propagate ABBs culture.

WeaknessBusiness area are meant for strategy setting ,whereas the regional area are meant for execution of strategy. However, there was no clear distinction between two.

System looks complicated,time-consuming and clumsy.

No in depth knowledge about any single function