ABB underwent a reorganization that divided its operations into 8 business segments and 50 business areas spread across 140 countries. It implemented a matrix structure with 4 management levels: top management set global strategies, middle management oversaw business areas and countries, lower management headed front-line operating companies, and the lowest level were profit center managers. However, ABB struggled under this structure, recording losses of $691 million in 2001 and $787 million in 2002.

1. Reorganizing ABB Presented By: PrabalPratap Singh – 09FN-076 Rajeev Kumar – 09FN-088 VarunDhupar – 09FN-114 Rajani Singh – 09FN-087 Santosh Kumar – 09FN-075 Pushkar Kumar Singh – 09FN-082

2. ABB Organization ABB – Asea Brown Boveri Limited Formed on January 5, 1988 as a merger between Asea AB and BrowenBoveri. ABB operations were divided in 8 business segments which are further divided into 50 business areas. In 1988, ABB operations were spread across 140 countries, in to 5 geographical groups – Western Europe – European community & European Free trade area, North America, Asia & Australia. These 5 geographical groups are further divided into 28 business regions. In Year 2001, $691 mn loss In Year 2002, $787 mn loss, 14% greater than that of 2001. CEO’s – Percy Barnevik(1988-96) GoranLindahl (1997 - 2001) Jorgen Centermann (2001 - 2002) JurgenDormann (2002 – Till Date)

3. The Matrix Structure It consisted of 4 Management Levels: 1. TOP MANAEMENT LEVEL - Group Executive Management(GEM) : Its members include president & CEO, Deputy CEO and 11 EVP(Executive Vice Presidents). The primary task of GEM is to devise global strategies and periodically review the performance of ABB’s 8 business segment spread over 28 business regions. Few members of GEM are involved in specified fields like audit, corporate control, corporate development, corporate finance and risk management. Allotment of corporate staff to EVP was based upon the requirements of the business segments headed by them.

4. The Matrix Structure (Contd.) 2. MIDDLE MANAEMENT LEVEL – Business Area & country managers Business Area managers report to the EVP of concerned business segment. Responsibilities are: Global strategies for allotted business unit. To ensure that required quality and cost standards are maintained in ABB’s operating companies. To allot export markets to front line operating companies. To facilitate transfer of unique technical know how within operating companies. To Focus on R & D. The country managers headed the national holding companies(NHC’s) in each of the countries in which it had operations and report to members of GEM. The country managers also formulate & implement HR policies within the country. They also interacted with trade unions, customers to sort out the local issues.

5. The Matrix Structure (Contd.) 3. THE LOWER MANAEMENT LEVEL – Heads of FLOC’s This structure consist of heads of the front line operating companies(FLOCs) of ABB. ABB’s business operation have 50 business areas where business is operated by 1300 FLOCs. FLOCs were independent business entities with own financial statement & debt requirement. FLOCs have a reasonable amount of autonomy & Responsibilities. They can retain up to 30% of their earnings. On an average, each company had 200 employees and generated revenue worth $85million.

6. The Matrix Structure (Contd.) 4. THE PROFIT CENTRE LEVEL – Profit Centers Managers It is the lowest layer of Matrix Structure, the opeartion of 1300 FLOCs were split in to 3500 Profit centres. On an average each profit centre consists of 50 people. The Profit centers were also independent entities having their own profit & loss statements. The Profit Centers are closest link to ABB’s customers.

7. Implications