Because of every business action and policy could affect their performance, individual companies face barriers in doing their business. 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. The key, of course, is that this internal competition be constructive, not destructive. With good communication both in individual company and headquarters level; the company can increase coordination, get the benefits of being global and being multi domestic with a high degree of decentralization. We are strong because we are the only multidomestic player in the world. If we need someone to sort out a problem with circuit breakers in Spain, we know who from Germany can help.
The closer we get to top management, the tougher we have to be with head count. Barnevik relinquished to became Chairman in 1997, after Barnevik´s tenure the following were: Göran Lindahl 1997-2000 , Jörgen Centerman 2001-2002 , Jürgen Dormann 2002-2004 , Fred Kindle 2004-2008 , and Joseph Hogan 2008 to present. For example, one of our new plants makes power electronics for many of the locomotives we sell in Europe. Every project requires our best people and best technology from around the world. For example you can recommend a low cost strategy but the company core competency is design differentiation. But our headquarters is not in Sweden, and only two of the eight members of our board of directors are Swedes.
Global managers minimize those problems and work to eliminate them. However, where an organization is spread geographically friction is common among regional and functional heads reducing performance. Think back 15 years ago, when Asea was a Swedish electrical company with 95 % of its engineers in Sweden. They must have the self-confidence not to become paralyzed if they receive conflicting signals and the integrity not to play one boss off against the other. The teams include managers with functional responsibilities in all the local companies, so they come from around the world. They can retain up to 30% of their earnings.
Every month, the Mannheim headquarters distributes detailed information on how each of the 25 factories is performing on critical parameters, such as failure rates, throughput times, inventories as a percentage of revenues, and receivables as a percentage of revenues. However, they caution that this model may not be a panacea to current organizational challenges and companies will have to modify their approach and adapt to varying situation faced by such companies. We have to demonstrate that sharing pays—that contributing one idea gets you 24 in return. The work force has been slashed from 520 to 180, throughput time has been cut by one-third, work-in-process inventories have decreased by 80 %. We provide more technical and managerial support than we might to a company in the United States, but we are just as demanding in terms of results. There are lots of tough questions, and my job is to answer on the spot.
Checklist Is the background clear, concise, and easy to follow? You force them to create personal alliances across borders, which means that sometimes you interfere in hiring decisions. The top-level management is seen to be so far away from daily life at the subsidiary level in China. We are in the process of building this federation of national companies, a multidomestic organization, as I prefer to call it. StrÃ¶mberg is a hell of a lot stronger because of this. We must be a Norwegian company to work effectively in many businesses.
Germany is a case in point. Every organization has its own culture, history and special situations that make transferring learning directly from one to another a challenge. Where do these new managers come from? I believe you can go into any traditionally centralized corporation and cut its headquarters staff by 90 % in one year. Structure has a part to play but it is that make a matrix work or fail — and skills tend to get much less attention. Every manager with a global role must be fluent in English, and anyone with regional general management responsibilities must be competent in English. Obviously, you rotate people around the world. 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.
The European electrical industry was crowded with 20 national competitors. How effectively can we translate our multidomestic presence into competitive advantages in third markets? Time line also provides an insight into the progressive challenges the company is facing in the case study. Regional managers as well as business area managers could track the operations of individual companies. At that meeting, we presented our policy bible, a 21-page book that communicates the essential principles by which we run the company. Recommendations The Percy Barnevik management philosophy: 1.
You spin off 30 % of the staff into free- standing service centers that perform real work—treasury functions, legal services—and charge for it. This is not a natural process. Take a small break, grab a cup of coffee or whatever you like, go for a walk or just shoot some hoops. For decades, Zamech had been run as a giant overhead machine. We also have businesses that are superglobal. The 100 professionals who happen to sit in Zurich could just as easily sit in Chicago or Frankfurt.
These 5 geographical groups are further divided into 28 business regions. To make real change in cross-border mergers, you have to be factual, quick, and neutral. They can handle the frustrations of language barriers. When you come face-to-face with this lack of communication, this massive inertia, you can get horrified, depressed, almost desperate. Cannes and its aftermath was a small step. You can aggregate and disaggregate results by business segments, countries, and companies within countries.
We want to create a process of continuous expertise transfer. The case presents a new born company that has just handled a merger: because of the great uncertainty and delicacy that distinguishes the situation, this first step is even more important. We like people who are like us. Non-core Activities Division 2004 — 2008: Fred Kindle Eliminated 2 core power and automation technology divisions and replaced with 5 divisions: 1. During the period of Barnevilk, despite the outstanding achievement on the whole, there still existed some flaws already. Due to the autonomy given to business areas, some decisions that were to be implemented across the board were either abandoned or poorly executed.