Abb Relay Business

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PROJECT REPORT ON ORGANIZATION STRUCTURE

OF

Submitted By:
Siddharth Patnaik
U110111, Sec-B
Q1) At your next steering committee with Baker and Gundemark, how are you going to deal with Comsys issue that has been giving you so much concern?
Ans: In September 1990 the nine-member task force of high potential task managers formed by Gundemark submitted a report to BA management team. The report was in line of a broad vision focused on seven core elements of relays business future development (total quality, customer focus, technology, human assets, organization, image and growth. This led to formulation of “Strategy 2000” which was unveiled at worldwide relays management meeting. One of the major focal points of “Strategy 2000” was to develop COMSYS (Common Systems) as an evolutionary process for creating modular, locally acceptable products using common tools, methods and design. In 1990, Gundemark challenged the relays R&D council to develop a common platform for future product development across units. To implement COMSYS, a cross-country team was formed consisting of technical experts from each of the four production centres and nine sub-project teams were formed. But there were problems in implementation COMSYS: * By early 1992, the nine sub-project teams were still hammering out the details of product design, operating standards and overall project implementation and were years from attaining tangible results. * This diversion of resources from local development priorities was taking a hit on the operating margins of local development centres. * There wasn’t sufficient funding to managers of profit centres to implement COMSYS project. * There was conflict between priorities of Gundemark and Joe Baker with Gundemark asking Don to invest in people and carry forward the long-term technical development and Joe Baker pushing Don for operating profits of local Centre. * The B2B segment in North America might have different framework, different standards and different regulatory structure so a product which is acceptable in India might not satisfy American standard. * The value chain of each country is different so it won’t be possible to standardize the resources and suppliers across all countries. * In North America, Europe and Australia the bids were for individual relay products hence standardization of relay products was an uphill task, standardization of relay products in developed markets would be like putting a square peg in a round hole. * The S&A expenses are highest in Allentown and Coral Springs and any R&D expenditure which occurs has to be expensed according to US GAAP and this will eat into operating margins of US Holding Company. * The tedious business of budgeting which allocates budget according to the bottom-up responses will become more difficult as the managers of profit centres * won’t be able to budget long-term integration and operational effectiveness .Budget allocated to long-term integration will be substituted by operational effectiveness and vice-versa. * ABB, Sweden handles the sales and marketing of relay products in North America, Europe and Australia hence it has knowledge about the markets of developed countries and can infuse knowledge about the demand in these countries in R&D council operating from Sweden.

COMSYS implementation had been going on for two years and success was a pipe dream, so we should...
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