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

2387 WordsSep 30, 201210 Pages
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…show more content…
When asked by Kets de Vries (1998) about what excited him at work, Barnevik responded “I know I am competitive. Beating the competition for a big project gets me excited; so does breaking into a new industry where we weren’t previously.” This thirst for conquest in combination with his belief that “the costs of delay exceed the costs of mistakes” (Karlgaard 1994) led to lot of hasty acquisitions and ABB growing into 8 major business segments within the first 8 years of existence. Barnevik’s Matrix Structure In order to consolidate ABB’s numerous companies spanning across six continents, Barnevik utilized a matrix structure. Barnevik, an avid supporter of decentralization, wanted ABB to be very flat. Under ABB’s matrix structure, there were never more than five people between the CEO and the shop floor (Kets de Vries 1998). This matrix structure initially began with the 8 business segments and their 65 business areas on one axis and all of the geographical regions and their countries on the other axis. The business segment and geographical arrangement supported the original business strategy of leveraging core competencies and focusing on the local customer. Barnevik believed that technology allowed for better and faster communication which enabled his decentralized organizational structure. Centralized reporting and communication was the only operation that Barnevik wanted
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