Abb Case Analysis
ABB
Power and Productivity for a Better World
COMPANY BRIEF
ABB (Asea Brown Boveri) was formed in 1988 by the merger of two companies: the Swedish company ASEA and the Brown Boveri of Switzerland to create a global electrical engineering giant. Percy Barnevik (of ASEA) was the chief executive and master mind of the restructuring process that integrated both the companies.
* In your opinion, was the organization structure chosen for Asea Brown Boveri by Barnevick appropriate?
The Organisation structure chosen for Asea Brown Boveri is the Matrix form of organisation structure. This form of organisation structure creates dual lines of authority and combines functional and product departmentalization.
Advantages provided by this model: * The business of ABB was very complex. The matrix form of organisation helps the company deal with internal and external complexity. * Barnevick realized that geography is important but so is function, and so is customer grouping, product and technology. Hence, he went for a matrix organisation which essentially encompasses all of these factors of complexity. * The leadership at ABB believed more in decentralized form of organisation and the matrix structure facilitated faster decentralized decisions. * Improved global and regional products. * This structure facilitates rapid response to changes in any two or more environments. * Matrix structure provides speed and flexibility which results in efficient use of the company’s resources. * Matrix management includes improved motivation among employees and managers. As a result decision making process within the group becomes more democratic and participatory which brings specialized knowledge and skills to the table thereby increasing the efficiency of the organisation. * Since the company based lot of significance to communication within organisation, the matrix structure would work for them. * It reflected the needs of global and
Power and Productivity for a Better World
COMPANY BRIEF
ABB (Asea Brown Boveri) was formed in 1988 by the merger of two companies: the Swedish company ASEA and the Brown Boveri of Switzerland to create a global electrical engineering giant. Percy Barnevik (of ASEA) was the chief executive and master mind of the restructuring process that integrated both the companies.
* In your opinion, was the organization structure chosen for Asea Brown Boveri by Barnevick appropriate?
The Organisation structure chosen for Asea Brown Boveri is the Matrix form of organisation structure. This form of organisation structure creates dual lines of authority and combines functional and product departmentalization.
Advantages provided by this model: * The business of ABB was very complex. The matrix form of organisation helps the company deal with internal and external complexity. * Barnevick realized that geography is important but so is function, and so is customer grouping, product and technology. Hence, he went for a matrix organisation which essentially encompasses all of these factors of complexity. * The leadership at ABB believed more in decentralized form of organisation and the matrix structure facilitated faster decentralized decisions. * Improved global and regional products. * This structure facilitates rapid response to changes in any two or more environments. * Matrix structure provides speed and flexibility which results in efficient use of the company’s resources. * Matrix management includes improved motivation among employees and managers. As a result decision making process within the group becomes more democratic and participatory which brings specialized knowledge and skills to the table thereby increasing the efficiency of the organisation. * Since the company based lot of significance to communication within organisation, the matrix structure would work for them. * It reflected the needs of global and