ABB Case Analysis Illustration

8/10/2019 ABB Case Analysis Illustration

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Evolution of Organizations : A Case Study on

Presentation on

Evolution of Organizations

A Case study on


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Adapted from presentation by:

Mr. Satyandra Vadavalli (EMP15/A/42) Mr. Sanjay Patil (EMP15/A/26)

Mr. Amitabh Srivastava (EMP15/A/40) Mr. Shilan Shah (EMP15/A/33) Mr. Abnish Singh (EMP15/A/36)


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Model of Organization Functioning

SITUATION VARIABLE

External Environment Constraints Opportunities Threats

STRATEGIC VARIABLES

Organizations Goals Top Management Ideology Org strategy for Growth & Survival Gen POLICY VARIABLES

PERFORMANCE VARIABLES

Evaluating Perforormance Within & Outside Reference to Standards

PATTERN VARIABLES

Effect of Situational,Structural, Strategic and

Behavioral variables incombination onperformance

STRUCTURAL VARIABLES

Organization structure Superstructure of Orgzn - Relationships Infrastructure of Orgzn - Controls

BEHAVIOURIAL VARIABLES

Actual Behavior Represents struggle to meet demands Conflicts, Cooperation, morale

fields of forc eswhich shape

the working ofOrganization in

Long Run

fields of forceswhich commit

theorganization aswhole to course

action

Organizationstructure,

reporting and

controls

Represents thehuman, social

&psychological

forces

Measures theEfficiency,

Profitability,Rate of growth,

Marketacceptance

When handledproperly, with a

visionarymanagement,

leads to SuperiorPerformance


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Evolution of ABB

SITUATION VARIABLE ASEA - Slow Growth BROWN BOVERI Lowsales, Returns,

Management Problems Merger and birth of AB B

STRATEGIC VARIABLES Focus on Electrical Power Efficiency and responsiveness tocustomers Alliances and AcquisitionsGlobal scale, World ClassTechnology Orgn with Local roots


Efficiency in operation lines Global growth

Performance monitoring by ABACUS

PATTERN VARIABLES

Effect of Situational,Structural, Strategic andBehavioral variables incombination onperformance


Matrix organization structure Accountability & Ownership


Multiple reporting Conflicts due to varied interests

Merger of ASEAand B ROWN

BOVERI

To evolve as aGlobally Local

company

Functioning withClear

Responsibilityand

Accountab il it yUn alignedtargets andCONFLICTS

Efficient, GrowGlobally and

strategizebusinesses

Deficiency toproduceGLOBAL

MANAGERS


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Origins of ABB1988

ASEA Slow Growth Rate and Low Profitability New CEO Percy Barnevik Redesign of the Company Increased Sales and Profitability

BROWN BOVERI Reduction of sales, Returns, Management problems

National subsidiaries constraining the growth of BBC Intense local competition Resistance to rationalization of production and cross-border co-

ordination by subsidiaries

Merger of ASEA and BROWN BOVERI to form ABB CEO - Percy Barnevik

Formation of an Organization 140 countries Coordinates 2,10,000 employees

Working in 300 companies and 5000 Profit centers

SITUATION VARIABLE

ASEA - Slow Growth BROWN BOVERI Lowsales, Returns,Management Problems

Merger and birth of AB B

Merger of ASEAand BROWN

BOVERI


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Strategy ofABB

Locally responsive Maintain credible local presence in each of

its markets Be very efficient and cost effectiveness Alliances and Acquisitions

AEGs steam turbine business Westinghouses power distribution and

transmission Integration of these companies to ABB

To be a Big Global player with strongLocal roots

Efficiency in product lines and globaloperations

Retained earnings shall be 30 to 40 % ofTotal Earnings

STRATEGIC VARIABLES Focus on Electrical Power Efficiency and responsiveness to

customers Alliances and AcquisitionsGlobal scale, World ClassTechnology Orgn with Local roots

fields of forceswhich commit the

organization aswhole to course

action

Percy Barnevik, CEO

Be global alongwith being local,Big and small ,Centralized anddecentralized


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Structure of ABB


Organization structure Superstructure of Orgzn -Relationships Infrastructure of Orgzn -Controls


reporting andcontrols

BUSINESS SEGEMENT

EXECUTIVE COMMITTEE

NATIONAL COMPANY

LOCAL OPERATING COMPANY

Profit CentreBusiness Geography

Business Segment Business Segment Manager and Member of Executive committee

Power Plants Power Transmission and Power Distribution Industrial & Building systems Transportation Finance

Business Area Business Area Manager

Country Country Manager

Local operating Company / Business Unit Local countryoperating Manager

Profit Centre Profit centre Manager

From the nature of operations, the organization structure need to be was one ofan international matrix of business and geography

Centralized & transparent Company wide information system ABACUS

ABB accounting and communication system


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Structure of ABB


Organization structure Superstructure of Orgzn -Relationships Infrastructure of Orgzn -Controls


Reporting andcontrols

Initiatives Lean HQ Identification of managers who are

Flexible Cooperative in multicultural environments Adept for innovation, risk taking Ability to motivate others

People who aspire to become SUPER STARS willing leave old alliancesand capable of thinking in group terms are given responsibilities

Drive entrepreneurship Local companies

Organization Structure has to push Accountabi lity

Decision making Responsibi lity for action, far down the organizational hierarchy


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Performance Monitoring in ABB Business Segment - Business Segment Manager, Member of Executive committee

Business Area - Business Area Manager responsible for

Efficiency in the product line

Growth of business globally Supporting Team BA Board Functional councils Controllers and Managers Task Force

Country - Country Manager responsible for

Coordination of various businesses in the country Local operating Company / Business Unit Local country operating Manager

Supporting Team Steering committee with reps from National company and BA

Profit Centre Profit centre Manager

ABA C U S


Efficiency in operation lines Global growth Performance monitoring by

ABACUS

Efficient, GrowGlobally and

strategizebusinesses


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Deliverables Business Area Manager

Responsible for the world wide strategy and performance Coordinates technology development Decides transfer prices among local operating companies in BA Transferring expertise within BA Capturing economies of scale Chosen among the LOCAL COMPANY OPERATING MANAGER Dissemination of Best practices Training and development of Managers

Country Manager

Profit & Loss responsibilities for all activities within the country Realize potential synergies across various companies Present Local face for various projects within the country

Provide Legal and political infrastructure for operations Co-ordinate personal development programs Local operating Company / Business Unit

Headed by a President with CEO responsibilities for his operations Implement the plans and objectives of BA Profit Centre


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Behavioral traits in ABB Local company heads are reporting to

BA Managers

Country Managers

Priorities of BA Managers and Country Managers are different BA Manager Global Efficiency Country Manager Local responsiveness

Mismatch in expectations in Performance evaluations

OUT COME : CONFLICTS

Joint performance evaluation of LOC Heads

Constant exchange of communication and information


Actual Behavior Represents struggle to meet demands Conflicts, Cooperation, morale

Unalignedtargets and

Conflicts in t hesystem


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Pattern Variables in ABB Change in Top Management

ABBs acquisitions necessitated restructuring of Executive committee

Formation of 3 regions Abolition of Deputy CEO Reporting changed from Country level to Regional level

Extensive communication

Constraints in Development of Global Managers due type of operations

PATTERN VARIABLES

Change in Topmanagement Global Managers

Acquis it ion,Change,

Deficiency toproduceGLOBAL

MANAGERS


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Satyandra, Sanjay, Amitabh, Shilan, Abnish

ABB Case Analysis Illustration

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