Abb Case

Topics: Management, ABB Group, Westinghouse Electric Company Pages: 5 (1792 words) Published: June 28, 2011
1. Addressing the Comsys problem:
If I were Don Jans I would take up the COMSYS project issue with the steering committee as follows: * Currently the U.S. relays division is facing problems in allocating resources to its activities. The COMSYS project whose objective is to develop a common platform for future product development is, apparently, consuming more resources which in turn is affecting the local development of the division. As a result the front-line profit center managers’ performance is getting affected.

* The conflict between long-term technical development and short-term profits is making the situation worse. As per the Business Area’s concern, the COMSYS project should be given priority over other activities as this project, if successfully implemented, would enhance the operations and efficiency of our relays business across the world. However, the development of the project is affecting the daily activities of the company. The problem spilled-over to the regional transmission performance and thus allocation of funds to the project COMSYS (in this case investing in R&D) rises as an important issue to be discussed.

* Such an issue increases the difficulty in reaching to a decision. The more time we take in reaching to a conclusion; more will the performance of the company get affected. First of all, we need to ensure that the development of project COMSYS doesn’t affect the operations and performance of the company. Second, we need to allocate suitable resources like funds, workforce etc. for project COMSYS separately. Moreover, from the short-term perspective we need to implement the project as soon as possible as the resources allocated to the project would then be available for daily operations, and from the long-term perspective we would be able to eliminate the compartmentalized framework of the profit centers and thus form a common base of software and hardware.

* In the current situation it would be difficult to achieve this goal as the priorities within the organization doesn’t coincide. Project COMSYS is important for long-term development of the organization and, thus, needs sufficient resources for its implementation. I would, therefore, request the committee to take the afore-mentioned points into consideration and carry this discussion forward and helps us to reach to a decision.

2. ABB’s Global Matrix:
As mentioned in its annual reports for the year 1988 and 1989, the Chairman(s) has(ve) clearly mentioned about the strategy of “think global, act local”. Since the merger the ABB group has been following the philosophy of decentralization; its aim to be close to the customer, to have short-lines of communication and decision-making and clearly defined accountability, all are reflected in its matrix structure. The matrix structure was proposed by a 10-person top management so that it enables the group to achieve a balance between its global business focus through its 58 business areas with the market created by the 1300 local companies under the umbrella of several country-based holding companies. The structure focuses on the principles of decentralization and individual accountability with clearly defined responsibilities from business areas heads to regional and front-line profit center managers. The business areas were responsible for carving out strategies while the local companies were responsible for implementing the strategies and achieving the objectives. All the business area heads had additional responsibilities of their national company’s operations. Thus, the overall goal of the top management was to develop managers who can take leadership roles as a result of which “a self-driven, self-renewing organization” would be formed. One of the main reasons for the success of the matrix structure in ABB was proper communication of the philosophy by the top management to every single employee of the organization. Communicating values to the managers was given...
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