Management Strategies of ABB and Lindahls Successful Leadership - Assignment Example

The study also elaborates on how managers in other fields can fit into the management of unfamiliar fields by applying universally adapting strategies. Managers, therefore, emerge as resourceful personnel if they have a wide scope of experience rather than being centralized to one line of thinking.

When Barnevick was chief executive officer at ABB, profitability was based on the acquisition of firms as a means of diversity to enhance competitiveness. The plan worked well for the firm noting the changes in profitability and the return on capital. The maxim on ‘thinking Global while acting local’ relieved massively on acquiring firms that had a local impact in their respective regions. The products offered were standardized for the markets, hence global. This is evidenced by the fact that some were being exported to other areas such as Africa. While dealing with global products, the firm was profitable.

The downtrend in ABB started after the change of management when Barnevick stepped down as CEO. The scenario explains the consequence of a change in management in an organization. It expresses the need to hire leaders who can impart continuity in the operation. The closedown of Combustion engineering was a case of poor market choice. It expresses the need to research extensively before carrying out an investment. Though operating separately, firms under the same umbrella should be controlled by sound centralized structures. The competitiveness of ABB became widely challenged due to minimal bureaucracy. With a compact structure, signals of failure become detected at early stages facilitating counteraction.

After handing over to Lindahl, the profitability was reduced to making losses due to different management styles. Lindahl, however, acted like an economist by consolidating the market to areas that offered a competitive strategy. The new CEO concentrated on using the Asian markets where the costs of production were low. The case explores how managers implementing the same strategy can embrace different roles. Barnevick’s focus relied on firm acquisition while Lindahl focused on labor-intensive manufacture. The new leadership strategy once again increased the profitability of the conglomerate.

Lindahl’s successful leadership was not satisfactory since the position was handed over to another CEO, Jorgen Centermann, who held the position of the Automation business. Centermann’s strategy focused on customer segments. Centermann can be noted as a modern manager due to their indulgence in the use of the internet in the business. The strategy introduced, however, drove the firm back to making losses rather than propelling it forward.

All the CEOs above relied on global standardization to enhance competitiveness. A different perspective came into being with the replacement of Centermann with Dormann. This CEO did not have knowledge of the electrical engineering field like the previous CEOs. Within a short period, Dormann was able to uncover the deficiencies in the firm and set out to eliminate them. With the keen leadership, the board became aware of various investments done for the firm under the leadership of Barnevick and Lindahl. The firm unearthed interests vested in assets such as jets and armored limousines. They also discovered that pension schemes were set up in the past for the two CEOs. These attributes remained unexploited and formed part of the asymmetries for the organization. It is, therefore, true to say that Dormann’s approach relied on the identification of asymmetries that can be exploited to increase competitiveness in the market. The new strategy worked out for the firm since it was able to solve its liquidity problems by selling some of its assets.

The case study provides proof that different management strategies apply under secluded situations. The globalization strategy was faced with challenges in places like Japan probably because the goods were standard, and other manufacturers could produce equally valid or better quality products locally. The European market could also have been affected due to the competitive advantage of local firms in the region that had established a customer base in the region. The failure of Combustion engineering is a misfiring in global strategy due to over-ambition characterized by poor knowledge of the field. Had Banervick done comprehensive research into the components used by the company, the closure may have been avoided.

The turnaround of the firm under the leadership of Dormann shows the input that different management skills can bring to a firm. The inside-out strategy received profitable execution to set the firm back on a competitive trend.

The case study emphasizes transparency in operation, in any strategy chosen. The lack of a centralized, bureaucratic structure cost the firm immense setbacks due to managers in the constituent firms carrying outside deals. The board was not aware of the pension funds that had been set aside for Barnevick and Lindahl. The case also questions the input of boards in decision-making in a firm. Oddly, the board was not aware of vast investments such as the half stake in the South African airline. Reconciliation of records and accountability faced difficulty due to the existence of independent balance sheets for the companies under ABB. Transparency and more involved leadership form the basis for credible decision-making in planning for the future. Read More