Organisational Choices : Structure - Case Study Example

With strategic and operational priorities made clear, Mr. Kindle, the new CEO was required to recommend to the board of directors the best organizational structure/model to achieve the set priorities. Analysis of the suggested three organizational models and the ability to implement them to have “One ABB” forms the basis of this case study. Therefore, under the ABB case study, we review how organizations adapt and cope with the frustrating cycle of change, weaknesses in strategic and organizational structures as well as influence of external factors.

Through this, appropriate organizational models and accompanying requirements needed to support the models have been recommended to ABB. While there are various factors behind ABB’s frustrating cycle of change, strategic factors come into sharp focus. ABB’s case study in relation to organizational change is best understood by analysis how organizations evolve as they grow and the role of business leadership in influencing the strategy formulation and execution. For example, since its establishment in 1988, the company had gone through various organizational transformations hoping to improve its condition but in most cases this ended up not achieving the much needed results and at times worsening the crises.

Barnevik’s conviction that ‘business success is 10% strategy and 90% execution’ was confirmed true in strategy formulation. The company failed strategically in its ambitious targets of profit and return on capital employed growth objectives since most of its earnings growth was based on non-operational items and debt-driven acquisitions. What this means is that a wrong strategy will fail despite exceptional execution In addition, the initial strategy that involved two stages, that is, restructuring and growth saw the company expand through introduction of centralized control system and increased investments and acquisitions.

This created a problem in its own in that the company had to manage its expansion, increased management levels. Without changing the complex control system this was a time bomb awaiting to explode since as companies expand, centralization of operations becomes a disincentive to operational efficiency and competitiveness (Dlabay and Scott, 2011). Lindahl era was also marked by similar problems but more so his failure to analyze was failing the company meant that downsizing and shifting manufacturing capacity was not going to work.

This fact dawned on him and changed the company’s on automation and power to add six more business segment, a decision that proved strategic given that revenue and profits rose considerably. The decision to centralize key decisions at lower levels reduced strategic blunders earlier occasioned by lower level managers. Organizational problems that frustrated ABB cycle of change included ‘the three internal contradictions of being global and local, big and small, and radically decentralized with centralized reporting and control.

The global matrix structure introduced to resolve these problems comprising of business and geography dimensions with 8 business segments and 65 business areas was to complex. As a result, it was changed and simplified in 1993. In addition decentralization of decision making at the lowest level possible