PROJECT REPORT

Course name: ORGANIZATION THEORY and PRACTICE

Organizational Analysis of Buhler AG

Group No: G2
Name of the Students
Harsh Kulkarni
Rajgopal Balabhadruni
Ravi Vijay Shukla
Sachin Kulkarni
Sahana S
Sumeet Mishra

15F121
15F140
15F141
15F142
15F143
15F155

TERM 1 2016
T A PAI MANAGEMENT INSTITUTE, MANIPAL

Contents
About the company..............................................................................................2
Buhlers road to success, Goals and Strategy..........................................................3
Organization structure.........................................................................................5
SWOT analysis....................................................................................................7
Company Values and beliefs...................................................................................8
Organizational culture in Buhler............................................................................9
Organization Change.........................................................................................10
Organization environment...................................................................................12
References........................................................................................................13

About the company

Every day, billions of people use Buhler technologies to satisfy their basic needs for food,
mobility, or communication. With our industrial process technologies and solutions, we make a
significant contribution to feeding the worlds population while focusing on food safety and
security. Around 65% of the wheat harvested worldwide is processed into flour on Buhler mills.
The companys contribution to the global production and processing of rice, pasta, chocolate, and
breakfast cereals is equally substantial. Furthermore, Buhler is a leading solution provider of die
casting, wet grinding, and surface coating technologies, with a focus on applications in the
automotive, optics, electronics, printing, packaging, and glass technologies. The solutions
provided to these industries are characterized by high energy efficiency and sustainable mobility.
As a leading technology group, Buhler invests up to 5% of its turnover in research and
development every year. Buhler is proud of its Swiss roots, with 10,600 employees at some 140
sites generating sales of CHF 2.3 billion. As a family-owned company, Buhler feels particularly
committed to sustainability.

Vision of the company.

Innovations for a better world.

Approximately half of Buhler's sales revenues are generated by products that are less than five
years old. For this reason, the company invests an average of four to five percent of all profits
annually in basic research and applied development. More than 7500 patents stand testament to
Buhler's innovative power. Interdisciplinary research teams comprised of well over 200
employees are constantly on the search for new innovative solutions. While the majority of these
are self-generated, many are also the result of close collaboration with our clients as well as in
cooperation with numerous colleges and research institutes.
Buhler works globally in conjunction with other companies, colleges and renowned
institutes with its ongoing developments as well as its improvements of existing products and
solutions. Working closely together with research and development institutes is an important
cornerstone for the company's continuing advancements.
Among others, Buhler collaborates with the following universities and research institutes like
ETH Zrich (Switzerland),University of St. Gallen (Switzerland), Kansas State University
(USA), And many more.

Mission of the company

Ensure a sustainable and independent development of Buhler Group with products,
processes and services which contribute to a substantial improvement of quality of life.
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30% of global rice production is covered by Buhler solutions. Rice is the staple foodstuff
for 3 billion people
60% of all chocolate is produced in Buhler plants. 4 million tons of cocoa beans are
harvested every year
40%of industrial made pasta is produced using Buhler technology
65% of global wheat production is covered by Buhler milling solutions. 4.5 billion
People live on wheat.
75% of global meat processing is covered by Buhler solutions. Numerous malt houses
and breweries benefit from Buhlers experience
50% of all cars worldwide features die cast parts from Buhler.

The mission statement does resonates with the vision statement. All of these achievements
justify the importance the company puts to the attainment of the mission statement.

Buhlers road to success, Goals and Strategy.

Sustainable Growth
With its solid equity base, Buhler aims to achieve sustainable annual sales growth of at least 6
percent. In order to secure its long-term viability, the Group is striving for an average EBIT
margin of 8 percent.

Balanced portfolio.

Buhler is active in attractive segments of food and materials processing and is a specialist in
processes designed to transform raw materials into valuable foods or engineering materials. In its
respective markets, Buhler strives to hold a leading position (Number 1 or Number 2).

Efficiency through services.

The extensive range of services offered by Buhler ensures that customers can operate their
production plants efficiently throughout the life cycle of the equipment. This also allows
continuous adjustment to changes in raw materials or to new consumer needs.

In the region for the region.

Buhler operates in over 140 countries worldwide through 50 of its own sales and service
companies and several agencies. Development efforts as well as production are tailored to the
needs of customers in the various regions and are, whenever possible, localized.

Focus on innovations.

About half of sales revenue (turnover) is generated with products that are less than five years old.
Buhler spends an average of about four to five percent of total annual sales on basic research and
applications development.

Strong workforce base.

Worldwide, Buhler makes continuous and substantial efforts to develop and strengthen its local
workforce base. Outstanding commitment and exceptional performance of employees are
rewarded accordingly. Unified leadership principles and strengthening of the corporate culture
are top priorities
All of these strategies are coherent with the overall mission statement and will help the company
achieving its objectives stated in mission.

Porters Five Forces analysis

Threat of new entrants (Relatively Low)

Its very difficult for a new entrant to start business in the food processing and technology
sector as the sector is both capital and labor extensive.
Buhler possess specialist knowledge in food processing and technology sector through its
150 years of operations. Its a big challenge for a new entrant to acquire the knowhow
and expertise.
As manufacturing is integral part of this sector, its takes time for a new entrant to enjoy
the cost advantage and achieve economies of scale.

Supplier Power (High)

There are a few number of suppliers and they do enjoy greater power as many of the
critical components are purchased, to name a few, motors, actuators, sensors, special
alloys, electrical components(Lugs, cables, copper bars, control panels, MPCB), pulleys,
belts and many others. Depending on these suppliers is critical.
Suppliers also come into pictures where we need specialized manufacturing capabilities.
The niche technology can be acquired to reduce the extent of the suppliers power.

Buyers Power (High)

Buhlers customer base is large and buyers do enjoy a greater power as Buhlers
machines and services are relatively costlier compared to our competitors. There is a
larger room for negotiations. Buyers are price sensitive and the difference the competitors
offer is huge.
Buhler offers individual machines as well as turnkey solutions, the size of the order does
play a crucial part in generating revenues.

Threat of substitution (Low)

The Threat of substitutes is low as there is no comparison between Buhlers products to

that of competitors. Innovation curtails the threat of substitution.

Threat of competitors (Very Low)

There is very low threat of competitors as Buhler is the market leader in food processing
technologies. The nearest competitor SATAKE is 10 times smaller compared to Buhlers
business.
The Quality offered is of top class and its the major differentiating factor compared to
competitors.
Customer do stay loyal as Buhler offers last mile solutions with its after sales service
teams
With Buhler constantly innovating, its challenging for competitors to catch up with
Buhlers growth pace.

As the buyers power is high, Efficiency through services is part of the strategy. As Buhler
banks on its innovation spree, the relative threat of entrants and threat of competitors is
significantly low.

Organization structure
Buhler is in business over 150 years and has been through world history. The group has
evolved over the years with a very dynamic structure constantly adapting to the strategies as well
as to the environment. Over the years Buhler has forayed into Distinctive product markets,
ventured into several new process technologies and in itself has become a market leader with the
nearest competitor being 10 times smaller. Since it is a family owned business, the present
structure of Buhler has board of directors as the sole shareholders, an executive board
comprising of CEO, CTO, COO, M&L head, Human resource head and CFO.
As you may know with Buhler operating in more than 140 countries, constantly evolving, the
organizational structure initially branches out according to the geographical spread primarily. We
have 7 regions namely, North America, South America, Europe, Middle East and Africa, Asia,
East Asia, South Asia which cater to the requirements and needs of all customers. Each region
has its own regional head whose responsibility includes the business development, customer
relations and operations. Each region has its own CFO, M&L head, sales and service teams,
procurement team reporting to the region head.
Buhler has a very diverse portfolio which is also its core competency, around which the entire
strategy revolves. The portfolios are recognized as respective business areas which essentially
generates revenue across all the geographic divisions. Based on the products, the knowhow and
the expertise got over the years of operations, the portfolios are carefully distinguished into 8
business areas. They are Grain Logistics, Sortex and Rice, Consumer foods, Grinding and
dispersion, Grain Milling, Value Nutrition, Die Casting, Leybold optics.
These 8 business areas operate in all the 7 regions independently with some level of
coordination. There is one business head who looks after the respective business area across all
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the regions, which basically means a regional business area head reports to the region head as
well as the entire business head. Dual reporting is visibly seen in the structure.
Each business area for example Sortex and Rice in south Asian region as its own organization
structure. The structure at the mid-levels is of functional grouping. Taking responsibilities of
their respective functions. All the business areas in any region coordinate with the functional
teams and collectively generates profit. In general a Hybrid structure is clearly visible where in
the product division and the functional division report to the regional head

Organization structure change

Innovation is anchored in the Executive Board. Research and development has been represented
at the level of the Executive Board since 2011.
Buhler makes the most of the expertise available in its extensive network so that they can
create even better solutions for their customers. For example, Buhler has found a way to unlock
employees potential with the Buhler Innovation Challenge. But the company goes further than
that, including universities, customers, and partners in their development projects too. The
implementation of the open innovation approach is unique for an industrial company.
From growing crops to processing and selling, there are so many different parties
involved that it would be impossible for a single market participant to develop the silver bullet
solution. Company needs efficient cooperation along the entire supply chain. Innovation and lifelong customer partnerships have made Buhler what it is today. This inventive spirit and long
term thinking are also reflected in their efforts with regard to open innovation.
Additive manufacturing methods such as 3D printing has a huge impact on the
business. This technology brings unprecedented possibilities for developing, producing, and
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adapting machines. It could be used to produce spare parts locally, or even to print out foods.
Another key topic is the Internet of Things
As these aspects posed significant challenge, a new department Corporate technology was
created. The crucial task for the Corporate Technology Group is to prepare key technologies so
that they can be used in all areas of the company. The Group is supported in this regard by the
newly created Innovation Advisory Board With the collective wealth of expertise on the board, it
will support Buhlers innovative capacity in areas such as intelligent process optimization. This
also called for a cultural change.

SWOT analysis
Strengths.

Experience of more than 150 years and presence in more than 140 countries.
The company holds global leading market position in technology and methods
a. Production of pasta and chocolate, grain into flour and feed
b. Die Casting, Wet Grinding, Surface Coating
c. Turn key projects with infrastructure support and last mile solutions
Innovation- half of the revenues is generated from product which are less than 5 years
old, with investments of 4% to 5% of all profits annually.
Weakness

The company does provide turnkey solution but there are a few unsatisfactory machines
in the line which makes the mill weak
A drop in Organic growth figures, but the takeover and acquisitions do make up the profit
A need to import few of the components necessary for building machines to the countries
where the manufacturing of the same is not possible
High Inventory carrying costs such as transport, insurance, storage and packaging.
Opportunities
Improving on Organic growth figures with definite plans and timelines.
Acquisitions and takeovers resulting in improved sales and revenue figures
Being more competitive with cost and overhead expenditures
Entering into new market segments like cotton, Toor Dal, Puffed rice
Threats
The risk of currency exchange fluctuations
Lots of regional players and businesses offering prices as low as half of BUHLER
charges there by losing market share
Extremely regulated food processing sector(Processing without losing nutritional value)
Business dependent on monsoon. Non availability of raw materials triggers lesser
demand for processing machinery.
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As there are significant opportunities for Buhler to expand into other unexplored food
processing avenues. With the strategies in place, potential can be tapped.

Technology
Buhler operates large batch and mass production technology, moderate technical complexity,
moderate centralization, moderate formalization, moderate span, proportion of skilled workforce
is low as most of the work is repetitive and mundane, manager to total employee ratio is high as
there are more labors to monitor. Buhler has mechanistic structure, there are certain high talent
employees who focus their efforts on lean manufacturing to improve quality and cut waste. Big
batch size and customized product flexibility. High analyzability and high variability because of
the diverse portfolio and unexpected circumstances, ever changing customer needs and
requirements. Intensive technology is characterized by a work process in which input, conversion
and output activities are inseparable and reciprocal interdependence is all about activities of all
people and all departments fully depending on each other

Company Values and beliefs

Spirit of Discovery: Our desire to know more.

The intelligence and enthusiasm to resolve complex challenges perfectly and make new
discoveries along the way make us stand out from the crowd. Knowledge, engineering
pedigree, commitment and perseverance, as well as the competencies that go hand in
hand with these qualities, characterize the passion for research that has made Buhler an
outstanding and innovative technology group, and that guarantees us a clear competitive
edge in the long term.
Quality Leadership: We can still get even better.
If it's made by Buhler it has to be the best. This never-ending demand is based on quality
leadership that already exists or that Buhler must achieve in future. In whichever area the
company are involved, Buhler fulfills this ambition through quantifiable, transparent
quality goals, and open dialogue with our customers and partners. This enables Buhler to
deliver the performance we promise and thereby enhance our customers' trust in us.
Focus on Solutions: We also build machines among other things.
Buhler understands that a customer's profitability also has an effect on the business
performance. Companys efforts are therefore focused on increasing our customers' levels
of success. And because the company always apply networked approaches to complex
processes, Buhler can work in a solution-oriented way to make improvements for
customers throughout the value chain. This gives Buhler a clear performance advantage
over straightforward machine manufacturers.
Globalist: Wherever our customers are, so are we.
Buhler is a global corporation with Swiss origins. Size, a worldwide presence and a
multicultural team with a strong local presence make the company a global player and
give the company an advantage in terms of availability on the world market
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Organizational culture in Buhler

Rites and Ceremonies
Rites and ceremonies are important for an organization to incorporate culture into its employees.
At Buhler, there are several occasions during which everyone gathers for celebrating the
occasion. This helps in bringing coalition between the management and the employees. Also, the
new employees come to know about the company in a much better way. This leads to reinforcing
the commitment to common goals, this is a right of integration.

National safety day is being celebrated every year on 4th March. Mock drill is conducted
to train everyone about how to act during emergency/ accident.
Annual address takes place in which the director addresses about the companys growth
and future prospects. Also, director answers all the questions being asked by the
employees.
Vishwakarma divas has high values and regards in minds of workers, on this day,
machines are worshipped. Sweets are distributed among the workers and they also
provide gifts.

Symbols
No individual cabins for any employee, this reinforces the cultural values of open
communication, collaboration, creativity and equality.

Stories and Myths

During one annual conference, while everybody was approaching the seminar hall in their cars,
the security personal didnt stop the directors car for security check so the director, himself
ordered for the checking of his car. By telling this story, employees emphasize both the
importance of following the rules and the critical contributions of every employee from the
bottom to the top of the organization.
Control Systems
The Companys incentive based compensation system and its focus is on innovation and sales.
Organization Structure
Buhler structure reflects the emphasis the departments puts on empowering and supporting
lower level employees. Managers appreciate any sort of contributions coming from the labor
towards for the improvement of the production process. Some of the contributions are
incentivized.
The culture prevailing in the organization is CLAN culture. External environment includes
customers and competitors. Customers expectations will change rapidly. The product
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requirements will change rapidly from the customer view point. Employees are very well taken
care by the company. Meeting the needs of the employees as the route to high performance. The
Clan culture at Buhler helped the company to grow.

Organization Change
Like every other company, Buhler AG faces challenge in keeping up with changes in the
external environment. There is always a room for new discoveries, new inventions and new
approaches to come out of the standard ways of doing things. Change is thus a significant aspect
which every organization needs to keep a track on. Buhler focusses on the changes in the rapidly
growing external environment in order to succeed in responding to the challenges of all times,
while at the same time securing the organizations future.
Constant innovation is an integral part of Buhlers corporate culture and helps the company
stay one step ahead of its competition
- Calvin Grieder, Group CEO, Buhler AG
At Buhler, innovation is defined as taking risks. By taking high risks, tougher entrepreneurial
decisions can be made. It is all about how collaborative Buhler is with its customers, academics,
suppliers and other companies, so as to keep up with pace in the changing world.
The strategic types of change in Buhler can be differentiated into technology, products and
services and cultural changes.

Technology changes:
These refer to the changes in the production processes that would encourage competence.
These changes include work methods, equipment, skill based changes and workflow. Some of
the changes in technology at Buhler are:
Vacuum deposition technology: Development of ion-beam sputtering enables
smoother, denser, and zero-defect coatings to be produced for different precision
optics applications.
Lost Core Process: A die casting process to produce geometrically complex
components. The internal geometry is mapped by a salt core which is flushed out
using high-pressure water after molten aluminum has been cast around it.
New techniques in optical analysis and chemistry: The reduction of mycotoxins in
maize (corn) using optical sorting contributes significantly to optimizing food safety
and reducing waste product.

Products and Services:

Congee, Chinese breakfast food.

Buhler employs extrusion technology to meet the Chinese market requirements. This
includes alignment of the increasing demand for staple foods with specific cultural
features of the Chinese market.
Atta flour in Indian market
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New processes have been developed in collaboration with local Indian partners. The
new HC Power Mill and the PESA Mill are capable of replacing conventional chakki
or stone mills without compromising the special properties of these flours.
Sanitary Dryer in Ready to eat cereal packets.
A result of Buhlers initiative to collaborate with its customers collecting input from
many companies, evaluating their requirements, aligning them , and producing a
single solution for next-generation dryers.

Strategy and Structure Changes:

Annual Supplier Innovation Challenge:

Establishing close partnerships helps to pursue the promising initiatives. Employees
contribute their business ideas. These ideas were mainly focused on food security,
nutrition and accessibility to food in countries like India and Africa.
World Food System Center:
At Zurich, the WFSC was cofounded that provided a common platform to 33
professors and industry experts. Various scenarios like future availability of crops and
technological developments in food value chain.

Cultural Changes:

Employee-driven ideas put into practice

- Isigayo A small maize mill that provides stability at the communal level in
Africa.
- Pargem A processing solution for unlocking the intrinsic nutrition in pulses
Adaptability to regional requirements:
- The end products are aimed at satisfying the local culture and tradition.
After implementing few initial ideas, there are changes in the mindset of the employees.
Further. Buhler AG implements an ambidextrous approach towards innovation. Exploring the
new opportunities and exploiting the current capabilities are the two building blocks that Buhler
employs in its work culture. The platform is provided for encouragement of new ideas and
creativity among the employees. The ideas of employees are valued immensely and support has
always been provided to turn such ideas into business.
One of the hottest trends is open innovation, which supports idea generation from
customers, strategic partners, suppliers and other outsiders. Buhler does not shy away itself from
this trend too. It directs such new ideas into its product and service development processes.
Having competed in the two Supplier Partnership challenges, there is always a continued effort
to maintain an open challenge in areas that require collaborative solutions.
The need for the change arose from customers as the Buhler understands the pulse of the market.
This change is implemented effectively with necessary allocation of resources.

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Competitive advantage at Buhler

Innovation has always been a key element at Buhler which provides a competitive edge
over its competitors. Few examples that reflect Buhler being a competitor in the market are
listed below:
In 2014, Inter-park: the worlds largest trade show in the field of food processing
and production was held in Dsseldorf/Germany. It provided an ideal platform for
Buhler to once again prove the competitive edge. In addition to technologies, there
was vested interest towards automotive solutions and global customer offerings.
Grand Slam its global Customer Service initiative is to be selectively
strengthened by the addition of some 100 decentralized service stations. In order to
further boost its competitiveness, the division is also continuing to invest in its
employees skills.

Organization environment
Environment in a broad sense is infinite and includes everything outside the purview of
any organization. But this anything has every potential to impact the organization partly or
wholly. Environment protection in Buhler is an important business mission. An environmental
management concept requires a systematic consideration to be given to ecological aspects.
Buhler was one of the first Switzerlands companies to have been ISO 4001 certified (1996).
Buhlers environment comprises of the industry sector, raw materials procurement sector,
the marketing sector, the human resources sector that make up the task environment.
The technology and innovation sector is the major sector in the General Environment
along with an eye on the government regulations, economic conditions and financial resources
forming a key part of it. Buhler also has an International Environment for its variety of products
and services.
Closeness to customers and a focus on customers are a long Buhler Tradition
-Calvin Grieder
Buhler keeps itself abreast with the changing environment with its prime focus on the
customers. A Group wide program is designed to offer various redefined services to the changing
customer needs. Besides its high innovation power, Buhlers business success depends on its
global presence and its closeness to its customers.
Buhler offers a simple environment to its customers. Customers are supported not only in
the handling of their orders, but they also receive full support before and after the supply and
start-up of their production parts. The portfolio of services extend up to the point of automatic
remote monitoring and remote maintenance of a plant all throughout the year. But in addition to
being expected to run smoothly at customers sites, Buhler-supplied plants must also be
continuously adjusted to reflect the development of raw materials and changes in consumer
requirements. For this purpose, Buhler has set up a team of so-called Plant Doctors. These
experienced professionals make regular on-site visits to local plants. They check the plant and
equipment, make adjustments to processes, and if required team up with customers to improve
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existing plants. This typically involves issues such as energy cost reductions, separation of
contaminants caused by environmental influences, or the achievement of a consistently high
flour quality when processing wheat of varying quality.
In addition to product innovations, high productivity is a crucial success factor for food
producers and engineering materials manufacturers. In order to achieve it, they can rely on a
wide range of Buhler services. The solution of complex financing issues is their specialty. But
the experts from the Financial Services department are active not only in-house. They also
provide customized financing services to Buhler customers, who therefore benefit from more
than just top-notch technology solutions.
The research laboratories of the Buhler business units are also available to customers.
Here they can test plant and equipment on a commercial scale or verify new product
formulations. Confidentiality is the top priority. Building global relationships is an important
feature which Buhler focusses on with utmost importance. The establishments of typhoon-proof
in Madagascar, adding value to the rice pasta at Brazil, research developments at Syngenta are
few of the projects that enhance their client relationships globally and help Buhler to have a
competitive edge. This is how Buhler marks its influences on its external resources.
Buhlers internal environment focusses on its development of employees. A Buhler
learning center has been setup to serve the purpose. By offering business-relevant training, the
Buhler Learning Center contributes to the long-term success of the company. This is
accomplished by strengthening common values and by promoting management, leadership, and
functional competencies. The Buhler Learning Center is a center for all kinds of learning
(classroom, distance learning, etc.) where best-quality training is offered. In addition to courses,
the Center also offers coaching, team development, conflict management, etc.
Also a licensing system has been developed which is linked to the Buhler global strategy
and thus provide a certification for specific employees in their professional area. These
licenses are defined in the areas of Sales, Finance, Customer care, Leadership, Fulfillment and
Product development. All Buhler employees undergo induction programs in which much stress is
laid on the organizational culture and code of ethics. Along with the licenses, Buhler provides
training on anti-corruption, recent trends in Information and technology, various global
languages, methodological skills, personal skills, leadership development, functional skills and
quality-environment-health-safety.

References
Daft, R. (2014). Understanding the Theory and Design of Organizations (11th ed.). Cincinnati,
Ohio: South-Western College Publishing.
Home. - BUHLERGROUP.com. (n.d.). Retrieved September 24, 2015.

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