Abb: the Company That Grew Too Big, Too Fast and the Organizational Structure and Strategy Changes to Address the Issues

Topics: Organizational structure, ABB Group, Economic growth Pages: 8 (2387 words) Published: September 30, 2012
ABB: The Company that Grew Too Big, Too Fast and the Organizational Structure and Strategy Changes to Address the Issues

International Management- MGMT 6377

Spring 2012

University of Houston- Victoria

Table of Contents

|Table of Contents |2 | |Abstract |3 | |Introduction |4 | |Barnevik’s Vision for Globalization |4 | |Barnevik’s Matrix Structure |5 | |ABB’s Change Agent for a “Knowledge-based” Company: Lindale |7 | |ABB’s Restructuring Period |8 | |ABB as a Power, Automation and Robotic Technology Leader |8 | |Recommendations |9 | |Conclusion |10 | |References |11 |


This paper examines the global growth and development of the company Asea Brown Boveri (ABB). This paper will present the historical organizational structures and globalization strategies with particular emphasis on Percy Barnevik’s influence and leadership direction for the company. In addition to the structure and strategy, this paper will address the events and situations leading to company’s downfall and the major changes made by Barnevik’s successors. Areas to be examined include how the organization structure evolved, and how the leaders address the issues resulting from the company’s rapid growth and expansion into new industries and markets.


Asea Brown Boveri (ABB) began like many of the multinational corporations created in the late 1980’s and early 1990’s. During this time period, there was a worldwide movement of tariff reductions and prominent movement towards trade liberalization. Regional trading blocs were forming with NAFTA in North America and the European Community (later on the European Union) in Western Europe. Economic factors also were influencing the development of global corporations during this time period. The oil crisis of the 1970’s had dramatically affected global economic growth, but the power sector was particularly impacted by stagnant growth. In Europe, a decline in demand resulted in many power companies having surplus that they could now channel into new markets because of the promotion of regional and international trade. ABB was a company born out this environment by the merger of Asea AB of Sweden and BBC Brown of Switzerland. Both companies had a rich history in power generation and power supply equipment. At the time, this was the world’s largest cross-border merger since Royal Dutch and Shell merged (Kets de Vries, 1998). A huge proponent of this merger, key leader and Chief Executive Officer (CEO) of the newly formed ABB was Percy Barnevik. Barnevik advocated the notion of large conglomerated organizations with many business segments in many geographical locations across the world. He envisioned a globalized ABB through...
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