ABB’s Relays Business: Building and Managing a Global Matrix – Case Solution

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ABB's Relays Business: Building and Managing a Global Matrix Case Answers

Executive Summary – ABB’s Relays Business: Building and Managing a Global Matrix

This ABB’s Relays Business: Building and Managing a Global Matrix case study discuss the development of the relay business of ABB while highlighting the advantages, effectiveness, and challenges faced in a matrix organization.

This case also highlights the changes in the ABB organization that was brought about by the vision of Barnevik, which was focused on streamlining the company’s operations with the current market trend of globalizing while at the same time maintaining a strong national presence.

This case study also discusses the relationship between strategy and its implementation, which is essential in an organization. It is essential in organizations like this, which are trying to create a leadership position in the global market.

We have also identified that factors like effective communication, efficient flow of information, and delegation of decision-making to middle-level managers enabled ABB to successfully implement a matrix structure.

INTRODUCTION

The Chairmen of the two companies, Asea and Brown Boveri, are in talks for the merger of their two companies because of the current scene in the market. Two significant trends have shown up in the present scenario. The new demand in the power industry can be met only by the companies operating on a global scale. Because of the firm government control on power companies, orders will continue to go to the companies with a strong national presence.

To face this situation, Percy Barnevik, the CEO of Asea, who was also asked to lead the operations at ABB, formulated a strategic vision that would guide the new company in operating at both national and global levels.

After the formation of ABB, the top management decided on a matrix structure for the new organization to create a balance between the global business of the company built on 60 Business areas (BAs) and the 1300 local companies, which made ABB’s national presence. Barnevik’s management model focused on the twin principles of decentralization of responsibility and individual accountability.

To ensure national focus and implement decentralization, the 1300 local companies were given control of the company’s key resources and to maintain individual accountability. A new system ABACUS was developed, which aimed at creating transparency within the organization. In the new system, the managers were expected to act quickly and provide quick results rather than waiting for a perfect solution.

The key purpose of this report is to identify the factors which led to the matrix structure being a success for ABB while most of the other firms which had tried implementing it suffered a failure. Also, we aim to find out the underlying challenges which most of the frontline managers were facing. Finally, it is the objective of this report to understand how, despite it all, the company was making a profit.

CASE ANALYSIS

Initially, ABB’s top management had the challenge of merging both Asea and Brown Boveri. The management is challenged on how to have a strategic vision for the company and to create a matrix organization built on approximately 60 global business areas.

It is also the management’s concern on how to create a management team, assign responsibilities to the managers, and standardize the principles and practices of the organization across the companies acquired by ABB.

This is a problem since…