Page 117 - DMGT402_MANAGEMENT_PRACTICES_AND_ORGANIZATIONAL_BEHAVIOUR

Management Practices and Organisational Behaviour

Notes
of a specific coordination mechanism results in a unique organisational form and/or processes
that have consequences for achievement of organisational goals. Coordination is a constituent
application of systems thinking in the sense that it requires an organisation wide examination
in how a change in one component of the organisation affects other components of the same
system. The aim of coordination is not new; improvement of performance is a universal
organisational goal. Approaching the task from a broad perspective differs from the traditional
mechanisms of analysis i.e. breaking down the problem into small parts. Finally focusing on
dependences and coordination mechanisms is not a one-time effort. For organisations in dynamic
environments, it is a recurring theme.

Case Study ABB

f lean and mean could be personified, Percy Barnevik would walk through the door.
A thin, bearded Swede, Barnevik is Europe's leading hatchet man. He is also the
Icreator of what is fast becoming the most successful cross-border merger since Royal
Dutch Petroleum linked up with Britain's Shell in 1907.

In four years, Barnevik, 51, has welded ASEA, a Swedish engineering group, to Brown
Boveri, a Swiss competitor, bolted on 7 more companies in Europe and the U.S., and
created ABB, a global electrical equipment giant that is bigger than Westinghouse and can
go head to head with GE. It is a world leader in high-speed trains, robotics, and
environmental control.

To make this monster dance, Barnevik cut more than one in five jobs, closed dozens of
factories, and decimated headquarters staffs around Europe and the U.S. Whole businesses
were shifted from one country to another. He created a corps of just 25 global managers to
lead 21,000 employees. IBM has talked with Barnevik and his team about how to pare
down its own overstaffed bureaucracy. Du Pont recently put Barnevik on its board. Says a
senior executive at Mitsubishi Hearqy Industries: "They're as aggressive as we are, I mean
this as a compliment. They are sort of super-Japanese."
ABB isn't Japanese, nor is it Swiss or Swedish. It is multinational without a national
identity, though its mailing address is in Zurich. The company's 13 top managers hold
frequent meetings in different countries. Since they share no common first language, they
speak only English, a foreign tongue to all but one. Like their boss, senior ABB managers
are short on sentiment and long on commitment. An oil portrait of a 19th-century founder
of Brown Boveri hangs in ABB's headquarters, but few are sure what his name is. (lt's
Charles Brown.) Ask for a fax number, though, and you're likely to get two, office and
home.

To Barnevik, today's competitive market economy is a "cruel world". Not making it any
kinder, he has launched a personal war on what he sees as excess capacity- 2% to 3% in the
electrical equipment industry in Europe alone. Educated in Sweden and the U.S. (he studied
Business Administration and Computer Science at Stanford in the mid-1960s), Barnevik
thinks European industry must be restructured massively to become competitive in world
markets. He foresees billions of dollars of mergers and acquisitions in the next three to
five years. Europe's best strategy against the Americans and Japanese, he believes; is to
break free of, protected national markets.
Before the merger, Brown Boveri had 4 people in Baden, Switzerland. ASEA had as many
as 2, in Vasteros, Sweden. The combined company now employs just 15 in a modest
six-storey building across from a train station in west Zurich. Where did everybody go ?
Many were fired. The rest were sent to subsidiaries or offered jobs in new companies set
Contd...

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