Case Study : Abb Deutschland

Asea of Sweden and BBC of Switzerland announced the merger in 1987 to form ABB company. Each parent company is to hold 50 percent of the new company.

BBC was the third largest company in Switzerland, and it has been very successful in the electric industry. Its past successes mainly owe to the focus strategy and geographic organization. BBC emphasized technology and quality, which enabled it build up its competitive advantage and achieved long-term success. In order to meet the market environment at the time, together with the deep-rooted culture, it built up the geographic organization. This organization stresses local autonomy because it is believed the local management is the best place to negotiate with the public utilities and this structure can meet the strictly local competition. Moreover, it resulted from the foreign exchange restrictions during the definite historical time. The strategy and the organizational structure brought about continuous successes because of the booming demand. However, it increased risks at the same time. When the economy collapsed and demand declined in the 1980s, the company faced with a stagnating situation. The organization structure made decision-making much slower than the changing market required. In 1987, the company once tried to shift its structure to divisional organization, but it’s not implemented into reality.

BBC’s corporate culture reflected the organizational tradition and the characteristics of the business. The culture mainly includes the following aspects: 1. Focus on technology. This is the core competency of the company, but aroused some problems at the same time. It bred certain arrogance and neglected the changing market and customers. 2. Perfectionism in problem solving. This may bring out exactness and right solutions, but the real market often requires quick action. When the perfectionism is achieved, it is often found to be too late. 3. Specialization and compartmentalization of activities. This separation led to a lack of coordination. 3. Centralizing in decision-making. Because of the characteristics of the industry and the focus strategy, a centralized decision-making model was built up. This directly led to the bureaucracy in the head offices. Besides, the company became internally political. 5. Put the human dimension first. It can be the respect of employee, but excessive will result in lack of financial and strong performance orientation.

The organizational structure and corporate culture caused duplication and local protection, even serious internal conflicts, among which the relationship between Baden and Mannheim is quite obvious.