Reorganizing ABB - From Matrix to Consumer - Centric Organization Structure (B)


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Case Details:

Case Code : HROB033
Case Length : 13 Pages
Period : 1998 - 2002
Pub Date : 2003
Teaching Note :Not Available
Organization : ABB
Industry : Power, Transportation, Financial Services
Countries : Switzerland

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

Customer-Centric Organization

On January 1, 2001, Jorgen Centerman became the CEO of ABB. Centerman was driven by a modern outlook, which revolved around serving the customers better by using IT. He conducted an analysis of ABB's customers, which revealed that the top 200 of them accounted for 30 percent of the company's revenues in 2000. Of this, 180 clients purchased their requirements from one ABB unit. The top 200 clients spent 8% of their total product expenditure on ABB's products. Based on the results of his analysis, Centerman soon announced major changes in Lindahl's group organization structure. In his new customer-centric organization structure, the entire ABB group was re-aligned around customer groups...

Restructuring by Dormann

Jurgen Dormann became the CEO of ABB in September 2002. He felt that the restructuring exercise initiated by his predecessor was not yielding the desired results. In order to further simplify ABB's organization structure, he created two new divisions - the Power Technologies Division by merging the Utilities division with the Power Technology Products division; and the Automation Technologies Division by merging the Industries division with the Automation Technologies Products division...

The Implications

According to the analysts, the changes in the organizational structure of ABB, made by Lindahl, Centerman and Dormann resulted in the centralization of authority in the hands of global managers based in ABB's headquarters. As a consequence, the strategy of "think globally, act locally," for which ABB was renowned, suffered a setback.

Analysts felt that under Lindahl, ABB had benefited by creating three new business segments. The positive financial results were reflected in the financial year 1998, the first year of implementing the new structure...

Exhibits

Exhibit I: Financial Performance of ABB
Exhibit II: Abb's Organization Structure Under Lindahl (1998)
Exhibit III: Abb's Customer-Centric Organization (2001-02)
Exhibit IV: Jorgen Centerman's Customer-Centric Organization (2001-02)

 

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