ABB Case Analysis Illustration

Evolution of Organizations : A Case Study on
Presentation on
Evolution of Organizations
A Case study on
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)
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 in
combination on
performance
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 forces
which shape
the working of
Organization in
Long Run
fields of forces
which commit
the
organization as
whole to course
action
Organization
structure,
reporting and
controls
Represents the
human, social
&
psychological
forces
Measures the
Efficiency,
Profitability,
Rate of growth,
Market
acceptance
When handled
properly, with a
visionary
management,
leads to Superior
Performance
Evolution of ABB
SITUATION VARIABLE
ASEA - Slow Growth
BROWN BOVERI Low
sales, Returns,
Management Problems
Merger and birth of ABB
STRATEGIC VARIABLES
Focus on Electrical Power
Efficiency and responsiveness to
customers
Alliances and Acquisitions
Global scale, World Class
Technology Orgn with Local roots
Efficiency in operation lines
Global growth
Performance monitoring by
ABACUS
PATTERN VARIABLES
Effect of Situational,
Structural, Strategic and
Behavioral variables in
combination on
performance
Matrix organization structure
Accountability & Ownership
Multiple reporting
Conflicts due to varied interests
Merger of ASEA
and BROWN
BOVERI
To evolve as a
Globally Local
company
Functioning with
Clear
Responsibility
and
Accountability
Un aligned
targets and
CONFLICTS
Efficient, Grow
Globally and
strategize
businesses
Deficiency to
produce
GLOBAL
MANAGERS
Origins of ABB
1988
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 Low
sales, Returns,
Management Problems
Merger and birth of ABB
Merger of ASEA
and BROWN
BOVERI
Strategy of ABB
Locally responsive
Maintain credible local presence in each of
its markets
Be very efficient and cost effectiveness
AEGs steam turbine business
Westinghouses power distribution and
transmission
Integration of these companies to ABB
To be a Big Global player with strong
Local roots
Efficiency in product lines and global
operations
Retained earnings shall be 30 to 40 % of
Total Earnings
STRATEGIC VARIABLES
Focus on Electrical Power
Efficiency and responsiveness to
customers
Global scale, World Class
Technology Orgn with Local roots
fields of forces
which commit the
organization as
whole to course
action
Percy Barnevik, CEO
Be global along
with being local,
Big and small ,
Centralized and
decentralized
Structure of ABB
Superstructure of Orgzn -
Relationships
Infrastructure of Orgzn -
Controls
Organization
structure,
reporting and
controls
BUSINESS SEGEMENT
EXECUTIVE COMMITTEE
NATIONAL COMPANY
LOCAL OPERATING COMPANY
Profit Centre
Business 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 country
operating Manager
Profit Centre Profit centre Manager
From the nature of operations, the organization structure need to be was one of
an international matrix of business and geography
Centralized & transparent Company wide information system ABACUS
ABB accounting and communication system
Structure of ABB
Superstructure of Orgzn -
Relationships
Infrastructure of Orgzn -
Controls
Organization
structure,
Reporting and
controls
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 alliances
and capable of thinking in group terms are given responsibilities
Drive entrepreneurship Local companies
Organization Structure has to push
Accountability
Decision making
Responsibility for action, far down the organizational hierarchy
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
A
B
A
C
U
S
Efficiency in operation lines
Global growth
Performance monitoring by
ABACUS
Efficient, Grow
Globally and
strategize
businesses
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
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
J oint performance evaluation of LOC Heads
Constant exchange of communication and information
Actual Behavior
Represents struggle to meet demands
Conflicts, Cooperation, morale
Unaligned
targets and
Conflicts in the
system
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 Top
management
Global Managers
Acquisition,
Change,
Deficiency to
produce
GLOBAL
MANAGERS
Satyandra, Sanjay, Amitabh, Shilan, Abnish

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Evolution of Organizations : A Case Study on

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