1. Evaluate the use of a matrix organization by ABB.

What benefits accrue to ABB by having such an organization and what costs are there to the company? Asea Brown Boveri (ABB) is a global organization headquartered in Zurich, Switzerland. The company was founded in 1987 when the Swedish firm Asea merged with the Swiss company Brown Boveri. At the outset the merged company consolidated operations based on layoffs, plant closings, and product exchanges between countries. The company also expanded through acquisition. The company is organized in a way that combines global scale and world technology with emphasis on local markets. The overall ABB management philosophy applied worldwide is: ‘Think global, but act local.’

ABB is one of the world’s largest electro technical corporations with annual revenues (turnover) exceeding US$25 billion. More than 240,000 people are employed worldwide. These employees work in more than 1300 companies that operate in 140 countries.

These companies are organized into 5000 profit centers.

ABB is a global organization of much business diversity.

Yet its organizing principles are simple. Along one dimension, the company is a distributed global network. Executives around the world make decisions on product strategy and performance without regard for national borders. Along a second dimension, it is a collection of traditionally organized national companies, each serving its home market as effectively as possible. ABB’s global matrix holds the two dimensions together.