n the case study titled “ABB’s Relay Business: Building and Managing a Global Matrix”, the author attempted an examination of the success and challenges that occurred as a result of the decision to merge two medium scale telecommunications companies - Asea and Brown Boveri. The merger was necessitated by the depression in the utility equipment market. As a result of this, the chairmen of both companies met and decided it was in the best interest of the two companies to come together in forming an allegiance that will place them in a position where they can operate on a global scale. The merger was completed in 1987 when Asea Brown Boveri was birthed and the former chairman of Asea chosen to be the leader of the transition process.
As expected from any merger, the new company, under the leadership of Percy Barnevik, planned a process that will bring about a radical change in the afore existing companies, Envisioned and equipped with the right frame of mind, Barnevik sought to bring about a much needed change that had brought the two companies together. His vision was informed by two major facts - that the declining trend in the power generation capacity will soon reverse itself and only companies that operate on a global scale can maximize this change that is about to occur and the fact that government hold much control and ownership of power companies and that only companies that have a strong national presence will eventually stay in business.
With the formation of the new company came a new philosophy. After painstakingly choosing the managers who will lead the company in the change process at different levels, Barnevik built an organization that was accommodating and allowed the workers in the company to work at their optimum level. The workforce was reduced in order to increase productivity and ensure that every worker brought value into the company. The new company was run on the principles of decentralized duty and personal accountability and there...
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