ABB Case Analysis Illustration

Presentation on

Evolution of Organizations A Case study 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 fields of forc es which shape the working of Organization in Long Run

fields of forces which commit the organization as whole to course action

Measures the Efficiency, Profitability, Rate of grow th, Market acceptance

SITUATION VARIABLE

STRATEGIC VARIABLES

PERFORMANCE VARIABLES

• External Environment • Constraints • Opportunities • Threats

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

• Evaluating Perforormance • Within & Outside • Reference to Standards

STRUCTURAL VARIABLES • Organization structure • Superstructure of Orgzn - Relationships • Infrastructure of Orgzn - Controls

When handled properly, with a visionary management, leads to Superior Performance

PATTERN VARIABLES • Effect of Situational, Structural, Strategic and Behavioral variables in combination on performance

BEHAVIOURIAL VARIABLES • Actual Behavior • Represents struggle to meet demands • Conflicts, Cooperation, morale

Organization structure, reporting and controls

Represents the human, social & psychological forces


Evolution of ABB Merger of ASEA and B ROWN BOVERI

SITUATION VARIABLE • ASEA - Slow Growth • BROWN BOVERI – Low sales, Returns, Management Problems • Merger and birth of AB B

Functioning with Clear Responsibility and Ac co un tab il it y

To evolv e as a Globally Local company

STRATEGIC VARIABLES • Focus on Electrical Power • Efficiency and responsiveness to customers • Alliances and Acquisitions •Global scale, World Class Technology Orgn with Local roots

Efficient, Grow Globally and strategize businesses

PERFORMANCE VARIABLES • Efficiency in operation lines • Global growth • Performance monitoring by ABACUS

Deficiency to produce GLOBAL MANAGERS

PATTERN VARIABLES • Effect of Situational, Structural, Strategic and Behavioral variables in combination on performance

STRUCTURAL VARIABLES

BEHAVIOURIAL VARIABLES

• Matrix organization structure • Accountability & Ownership

• Multiple reporting • Conflicts due to varied interests

Un aligned targets and CONFLICTS


Origins of ABB 1988 •

ASEA – – – –

Merger of ASEA and BROWN BOVERI

•

BROWN BOVERI – – – –

SITUATION VARIABLE • ASEA - Slow Growth • BROWN BOVERI – Low sales, Returns, Management Problems • Merger and birth of AB B

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

Reduction of sales, Returns, Management problems National subsidiaries constraining the growth of BBC Intense local competition Resistance to rationalization of production and cross-border coordination 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


Strategy of ABB • •

fields of forces which commit the organization as whole to course action

• •

STRATEGIC VARIABLES • Focus on Electrical Power • Efficiency and responsiveness to customers • Alliances and Acquisitions •Global scale, World Class Technology Orgn with Local roots

•

Locally responsive Maintain credible local presence in each of its markets Be very efficient and cost effectiveness Alliances and Acquisitions – AEG’s steam turbine business – Westinghouse’s power distribution and transmission Integration of these companies to ABB

•

To be a Big Global player with s trong Local roots

•

Efficiency in product lines and global operations

•

Retained earnings shall be 30 to 40 % of Total Earnings


Percy Barnevik, CEO

Be global along with being local, Big and small , Centralized and decentralized

Structure of ABB • Organization structure, reporting and controls

Busi ness Segment – – Busi ness Segment Manager and Member of Executi ve comm ittee • Power Plants • Power Transmiss ion and Power Distri bution • Industrial & Buildi ng systems EXECUTIVE COMMITTEE • Transportation • Finance BUSINESS SEGEMENT

STRUCTURAL VARIABLES • Organization structure • Superstructure of Orgzn Relationships • Infrastructure of Orgzn Controls

– Busi ness Area – • Bus iness Area Manager

NATIONAL COMPANY

LOCAL OPERATING COMPANY Business

Profit Centre

Geography

– 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 info rmation system – ABACUS – AB B accounting and communication s ystem


Structure of ABB •

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

Organization structure, Reporting and controls

STRUCTURAL VARIABLES • Organization structure • Superstructure of Orgzn Relationships • Infrastructure of Orgzn Controls


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 PERFORMANCE VARIABLES Efficient, Grow • Functional councils • Efficiency in operation lines Globally and • Controllers and Managers • Global growth strategize • Performance monitoring by • Task Force businesses ABACUS • 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

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

•

Joint performance evaluation of LOC Heads

•

Constant exchange of communication and information

Unaligned targets and Conflicts in t he system

BEHAVIOURIAL VARIABLES • Actual Behavior • Represents struggle to meet demands • Conflicts, Cooperation, morale


Pattern Variables in ABB •

Change in Top Management –

ABB’s acquisitions necessitated restructuring of Executive committee

–

Formation of 3 regions

–

Abolition of Deputy CEO

–

Reporting changed from Country level to Regional level

Ac qu is it io n, Change, Deficiency t o produce GLOBAL MANAGERS

PATTERN VARIABLES

•

Extensive communication

•

Constraints in Development of Global Managers due type of operations


• Change in Top management • Global Managers

Satyandra, Sanjay, Amitabh, Shilan, Abnish


ABB Case Analysis Illustration

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