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ABB Case

In the 1990s, ABB was to consolidate its market space by going for major acquisitions. The company’s sales that was at about USD 15 billion in 1988 and 1989, went to over USD 30 billion in the mid 1990s. But the acquisitions did not yield the results that were expected by the company and the company went into a spin. By 1997 and later in 1998, there was a steep fall in the sales turnover of the company.The turnover fell to USD 20 billion in 1999 and the company started its divestitures. Though a higher profit was indicated in the years 1999 and 2000, it was primarily out of these divestitures. Now under this background a new strategy was worked out for the company and the strategy has to be viewed under this perception.2. Solid foundation and operating profitability is more critical than the number of businesses the company does. The company moved into a number of new areas of business that were not really contributing to the profitability of the company.2. A corporate culture for excellence and perfection in execution has to be stressed by the company. This would help the company capitalize on the man power and on the efficiency of operation of the company.These formed the core of the strategy adopted by the company. The implementation of every one of these issues was brought about in both the structure of the organization and in the spirit of the organization….
‘At home everywhere’ was made the slogan of the company.
5. Innovation will be core of the growth in all areas of business. More research establishments were positioned and more patents registered during the next five years.
These formed the core of the strategy adopted by the company. The implementation of every one of these issues was brought about in both the structure of the organization and in the spirit of the organization.
Question 2
Organization Structure
Figure 2: Interlinked business structure
The company would essentially work on a business structure that is interlinked and would produce the required result. The organization will have two major product groups. one, the process automation and two, the power systems. And derivatives of these products will also interlink the businesses and strengthen them as well. In either of the cases, this will help in customer sharing as well as in strengthening the technology in addition to cost sharing.
1. This strategy will help in strengthening the basic strategy of concentrating on the core business strengths of the company, namely, the automation and power sector.
2. This will also help in identifying the major revenue sources or customers who would provide better margins to the company’s operations.
3. By providing this kind of product organization and support, the customer will get supporting products and services that complement one another. This will increase the overall margins of the company which is also the major thrust for their operation.
4. The company visualizes this to provide an effective cost leadership in the market place. By concentrating on specific product lines, the economies of scale could be leveraged to their advantage. This would help the

ABB Case