ABB Case Study

CEO compensation has been a heated debate for many years recently, and it can be argued

1. Denver Airport considering automated baggage system should start out by assessing their design and performance of these devices cautiously and far in advance of their use.

Despite of these good things, Ford Motor faced a loss due to some wrong decisions taken by the management regarding their business strategy. The decision of centralizing the management made them think narrowly which results in too much Americanization and ignorance of local market in the rest of the world.

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While it was foreseen that the company would initially take financial setbacks because of the reorganization, it was not believed that the financial risks would be drastic. However, the impending report that Mr. Elesser has to present to the board will detail a net income that will be nearly 26 million dollars in the red for 2004 (see exhibit 2)3. The blunt force restructuring met resistance on numerous fronts. First of all, the various components of the company did not operate under the same uniformed leadership objectives. Each division was set up to look out for their own interests and markets. When the restructuring plan that focused on a more centralized management process, many of the things that worked for one division did not necessarily work for other divisions of the company. This left some divisions at a severe disadvantage. Another obstacle that worked against the restructuring was the employee unions in which the company had to deal. The unions were not on board with the various downsizing and restructuring methods. In addition, the company had to deal with a couple of different unions which posed a problem with negotiating tactics. Benefit costs were also a significant investment that did not hold up well under the auspice of restructuring.

Each division is operating independently with its own division manager. Also, each division’s performance had been judged on its profit and return on investment (ROI). The company policy of decentralizing responsibility and authority for all

1).They was losing the support and trust of their stakeholders due to their business operations in Burma. Their brand was deterring and they were losing continuous

Regionalization: New structures were formed in order to approach the ID problems. The organizational reconstruction focused on speed of results, process to be driven by B&L executives, and input from as many B&L employees as possible. A significant amount of time and money was dedicated to creating a task force that was goal was to evaluate organizational structure. They concluded that it was necessary for a fine-tuning of the current organization structure, a regional structure, a product-region matrix, and a global product structure.

The IT folks couldn’t communicate properly with the business about their ideas and strategy that confused the business and made them reject the ideas that were actually worth trying.

When the public sees a salary that they consider to be too big; they are usually looking at only half of the picture. It is impossible to look at just the salary, without taking any other factors into consideration. One must look at the amount of earnings, compared to the profits of the company. For instance, Robert Allen, who runs ATT, was recently pointed out by 60 Minutes as being an overpaid executive. Their major problem was that he had been responsible for laying off 40,000 employees, while still managing to give himself a large pay increase. At first glance, this situation may appear to be one involving a greedy and overpaid executive. However, upon closer examination, it proves to be much to the contrary. The situation wherein the 40,000 employees were laid off was not a matter of getting rid of people for an unfounded reason. It was more a matter of getting rid

Bottom-line, they put all their eggs in one basket; they failed to have a backup product to develop a quick revenue stream to further fund their long-term goal. However, without a crystal ball that was a difficult decision.

  The key distinguishing features of Organization 2005 consist in the abolishment and reorganization of the Matrix structure around three interdependent organizations: Global Business Units (GBUs), Market Development Organizations (MDOs) and Global Business Services (GBS). Furthermore P&G implemented several policies that empowered executives in order to facilitate faster decision-making, which in turn should promote innovation and increased agility on the market.

As seen from figure 2, the matrix organisational structure is complex and aligns functional and divisional organisational structures merged into a hierarchical structure. The student observes that with this comes the potential to on the one hand, improve interdepartmental collaboration through avoiding silo-functioning and yet, on the other hand, blur the unity of command structure in an organisation that can be counterproductive. A critical analysis of two major advantages and disadvantages of this organisational structure here

Because this is a complex organization with sophisticated management practices, in MBA classrooms it may be necessary to spend some time in the early discussion ensuring that there is a clear understanding of the ABB’s matrix structure and the management roles and relationships in the relays business. In executive education programs, participants are more likely to have had experience in such subtle organization processes, and the instructor can move more quickly from the basic diagnosis to the more evaluative and reflective discussion. Executives will be interested to discuss issues like what makes this global matrix work when so many others have failed, and what value is being created in return for the substantial operating cost such

In the cases analyzed, we might infer that during a period of economic difficulties companies had gone through deep discontinuity. As such, this determined the need for a turnaround to realign the companies’ strategies with the external and internal environment. These changes impacted the four companies analyzed previously.