ABB CASE ANALYSIS

Introduction to case
Merger 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.

Rationale for evolution.

ASEA CONTRIBUTIONS
Superior profit Performance
Sophisticated Management
Control
Marketing Agressiveness.

BBC CONTRIBUTIONS
Strong Order Books
High Technichal Expertise

Barneviks strong Leadership

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 accountability

How ABB is organized

Five global divisions

Power
Products

Power
Systems

Discrete
Automation
and Motion

Low Voltage
Products

Process
Automation

$10 billion

$6.8 billion

$5.6 billion

$4.5 billion

$7.4 billion

(2010 revenues)

ABBs portfolio covers:

Electricals, automation,
controls and instrumentation
for power generation and
industrial processes
Power transmission
Distribution solutions

Low-voltage products

Motors and drives

Intelligent building systems

Robots and robot systems

ABB Group

ORGANISATIONAL
Executive
ARCHITECTURE
OF ABB
Committee
Top Management
Chaired by
CEO.

Business
Segment
Manager

Country
Manager

Business Area
Manager (BA)

Local Operating
Companies

Profit
Center
Manager 1

Profit
Center
manager 2

Middle level
Management

Mid level Management

Local Operating
Companies

Profit
Center
Manager 1

Profit
Center
Manager
2

Frontline Management

Frontline Management

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.

Strength
Finding and coaching global managers Talent oriented

selection procedure
Robust 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 project
Knowledge about variety of products due to decentralization.
Access to the Global technologies & technical advancements
world wide with mutual contribution with local development
& innovations.

Strength
There 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 vicepresidents) 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.

Weakness
Two way communication might not always happen
Differences between business area leaders and national

country executives could effect business

Geographic impact factors might not be easy to handle on
such a large scale
Local 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.

Weakness
Business 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