MS10 Organisational Design, Development and Change June 2007

MANAGEMENT PROGRAMME

Term-End Examination

MS10: ORGANISATIONAL DESIGN, DEVELOPMENT AND CHANGE

Time : 3 hours
Maximum Marks: 100 (Weightage 70%)

Note
(i) There are two Sections A and B.
(ii) Attempt any three questions from Section A. All questions carry 20 marks each:
(iii) Section B is compulsory and carries 40 marks

June 2007

SECTION A

1. Distinguish between the Functional and Product organisation and Line & Staff organisation. List out their merits and demerits with examples.

2. Describe the skills required for becoming a successful change agent and briefly discuss the role of a change agent.

3. Briefly describe the emerging trends in work organisation and discuss how they affect the quality of work life of employees, with suitable examples.

4. Describe the meaning and purpose of job design and various approaches to job design and their relevance.

5. Write short notes on any three of the following:
(i) Inverted pyramid structure
(ii) Interview as a diagnostic tool
(iii) Organisation vs. institution
(iv) T-Group training
(v) Mechanistic vs. Organic organisation

SECTION B

6. Read the following case carefully and answer the questions given at the end :

If 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 creator 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 Bamevik 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 electricale quipment 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 up to assume any headquarters functions. (ABB Marketing Services, for example, creates and runs and campaigns for ABB, but also takes on a few other clients. And Bamevik expects it to make money.) It's not just cost cutting Barnevik is after, though that is obviously important. Says he : "ldeally you should have a minimum of staff to disturb the operating people and prevent them from doing their more important jobs. " ...

Bamevik's master matrix gives all employees a country manager and a business sector manager. The country managers run traditional, national companies with local boards of directors, including eminent outsiders. ABB has about 2 such managers, most of them citizens of the country in which they work. Of more exalted rank are 65 global managers who are organized into eight segments : transportation, process automation and engineering, environmental devices, financial services, electrical equipment (mainly motors and robots), and three electric power businesses : geh€ration, transmission, and distribution.

Barnevik is well aware that the once popular management by matrix is in disfavour in the U.S. business schools and has been abandoned by most multinational companies. But he says he uses a loose , decentralized version of it the two bosses are not always equal that is particularly suited to an organization composed of many nationalities

The matrix system makes it easier for managers like Gerhard Schulmeyer, a German who heads ABB's U.S. businesses as well as the automation segment, to make use of technology from other countries. Because of the matrix, Schulmeyer has a better idea of what is available where. He says that the techniques developed by ABB in Switzerland that he uses to serviee U.S. steam turbines are more reliable and efficient than those of General Electric and Westinghouse, his main American competitors. Schulmeyer also relied on European technology to convert a Midland, Michigon, nuclear reactor into a natural gas-fired plant, ...

ABB executives say the value of the company's matrix system extends beyond the swapping of technology and products. For example, the power transformer business segment consists of 31 factories in

16 countries. Barnevik wants each of these businesses to be run locally with intense global coordination. So every month the businesss egment headquartersi n Mannheim, GermaoV, tells all the factories how all the others are doing according to dozens of measurements. If one factory is lagging, solutions to common problems can be discussed and worked out across borders.

Questions:
(a) How is ABB achieving integration and coordination of its global operations ?
(b) Which of the four basic departmentalization formats do you detect in ABB's structure of eight segments? Explain.
(c) Has Barnevik created an effective balance between centralizationa nd decentralization?
(d) How does ABB apparently avoid unity-of-command problems with its matrix structure ?