Reorganizing ABB - From Matrix to Consumer - Centric Organization
Structure (A)
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Case Details:
Case Code : HROB032
Case Length : 15 Pages
Period : 1998 - 2002
Pub Date : 2003
Teaching Note :Not Available
Organization : ABB
Industry : Power, Transportation, Financial Services
Countries : Switzerland
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Structure (A) case study
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"This is an organization that fosters sharing and
collaboration between its operations in different parts of the world and links
closely with clients, suppliers and the countries where it is present. Its
combination of multi-domestic local presence and coordination by means of a
global matrix organization is a unique response to the 'think global, act local'
imperative."1
- Kevin Barham and Claudia Heimer on ABB2.
Introduction
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For the financial year 2001, Zurich, Switzerland-based Asea Brown Boveri Limited
(ABB), one of the world's leading multinational companies, reported it's
first-ever loss of $691 million in its 14-year post-merger record. For the
financial year 2002, ABB reported a bigger loss of $787 million representing a
14% increase in losses compared to 2001 (Refer Exhibit I).
Moreover, there was also a fall in revenue by 23 % compared to 2001. For the
nine month period ended September 2002, ABB reported a pre-tax profit margin of
just 2.5%, which was significantly lower than that of its European competitors -
France-based Schneider3 (8%), and the
UK-based Invensys4 (10%).
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Analysts felt that poor strategic decisions taken by the top management of
ABB and HR-related problems arising due to frequent changes in the
organization structure were some of the reasons for the poor financial
performance of ABB. They also felt that the frequent changes in the
leadership of ABB during the late 1990s and early 2000s made matters worse
for the company.
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From 1988 to 2002, ABB had four CEOs - Percy
Barnevik (1988-96), Goran Lindahl (1997-2001), Jorgen Centermann
(2001-02) and the current CEO Jurgen Dormann since September 2002.
During this period, the organization structure of ABB was changed
three times5. The matrix
structure of Percy Barnevik (Barnevik) was restructured by Goran
Lindahl (Lindahl). Jorgen Centerman (Centerman) changed ABB's
organization structure once again, replacing it with his own
customer-centric model, while Jurgen Dormann (Dormann) intended to
consolidate ABB's core businesses, undertaking yet another revision
in the organization structure of ABB. |
Reorganizing ABB - From Matrix to Consumer - Centric Organization Structure (A)
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