SMA Microelectronic doc

Organizational Design Session #4– Case Readings

SMA: Micro-Electronic Products Division

SMA Overview & Operations
 HQ for almost all divisions were in Switzerland
 Plants and sales offices established globally but bulk of decision-making occurred in Switzerland
 Face-to-face meetings and informal communications were central to the org culture
 Somewhat functional rather than solely product-designed organization. While plants were viewed as profit centers, major sales transactions and decisions regarding new products were made at a high level in the organization. Divisions had minor sales forces and limited mkt efforts (due to nature of product)
 Focus on microelectronics and mechanical products with a strong emphasis on the importance of R&D (more $ as a % of sales than competition)
 Growth at an average of 10% due to unique technologies, capabilities, and strength in manufacturing
 Limited competitive threats (SMA advantages: technical know-how, invested capital, patents)
 Micro-Electronic Products Division (MEPD) was one of eight divisions in SMA

History of MEPD – Timeline
 1980’s saw demand increase for highly reliable components (particularly with telecom companies and postal agencies). Expanded one plant and opened another
 Mid-1980’s saw a shift in demand:
 MEPD focused on serving the new commercial electronics mkt as well as other new markets
 Leveraged R&D and mfg abilities to enter markets quickly and establish strong postions
 1987 – built plant in France
 1988-1990 – Fierce competition among firms led to falling prices, pressure on costs and quality. Managers at MEPD felt they were now in a commodity business while having significant pressure to meet unique customer requirements
 1989-1990 – Poor performance was a reflection of increased competition coupled with perceived lower future demand
 1990 – half of MEPD’s sales were to OEMs who bought the components in large volume for their products while the