The Six Sigma 'Plus' Quality Initiative at Honeywell
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Case Details:
Case Code : OPER024
Case Length : 16 Pages
Period : 2003
Organization : Amazon.com
Pub Date : 2003
Teaching Note : Available
Countries : USA, Global
Industry : Online Retailing
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"Adding elements of the Baldrige assessment process to Six
Sigma will help us put more emphasis on identifying and meeting - or exceeding -
customer requirements than ever before."
- Michael R. Bonsignore, Chairman & CEO, Honeywell Inc., in
mid-2000.1
Integration of Forces
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In June 1999, AlliedSignal, a US-based aerospace and auto parts company
announced its merger with Honeywell, another US-based aerospace and industrial
controls major. The merger, valued at $15.5 billion in stock and assumed debt,
created a Fortune 50 company, with $24 billion in revenues and over $45 billion
in market capitalization. Slated to function under the name 'Honeywell
International Inc' (Honeywell), it was a truly global technology company, with
technical and product leadership in various industries.
Besides cost savings of over $500 million annually, the merger was expected to
offer many business synergies to the two companies.
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The combined financial, technological, managerial, cultural and operational
strengths of both the companies were expected to drive the growth of the new
company. Savings were to be made by way of rationalization of overhead
costs, integration of research and development (R&D), quality initiatives
and purchasing efficiencies.
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Commenting
on the merger, Lawrence A. Bossidy (Bossidy), Chairman and CEO,
AlliedSignal, said, "We will be a world-class company in every sense of
the word. Growth and productivity will be our dual focus. Combining
Honeywell's proven strengths with those of AlliedSignal will enable us
to reduce cyclicality while enhancing earnings consistency."
Michael R. Bonsignore, (Bonsignore) Chairman and CEO, Honeywell said,
"The merger would result in the creation of a new global corporation
with a strong balance sheet, efficient management, technology
leadership, vast potential and the vision and ability to achieve the
company's ambitious financial goals.2 |
The merger was completed in December 1999 and Bonsignore
became Honeywell's CEO. By this time, the company had identified many revenue
and growth synergies, and opportunities from integration of businesses and
resources. It had also increased its cost-savings estimate from $500 million to
$750 million annually by 2002.
The Six Sigma 'Plus' Quality Initiative at Honeywell
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