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Case Study: Abb In China

757 words - 4 pages

The Problem ABB is multinational company and is the world leader in electrical engineering. Like other companies, ABB does not want to miss the opportunity to expand its market to China because China has good market potential such as its high population, its growing economy, and its distinct economic trend compare with other Asian countries. In 1979, ABB decided to establish its first permanent office as representative office in this country. Unfortunately, ABB faces several problems when doing its business in China. One of the problems is that the company's decision-making policy in its matrix organizational structure, which is fully decentralized, is no longer efficient for ...view middle of the document...

ABB has Business Area (BA) in its organizational structure, which is responsible for worldwide market allocation and the development of a worldwide technical strategy for specific product line. Other BA's responsibilities are to coordinate supplier and deliverance, and to act as a referee in potential disagreement between companies within ABB group. Unfortunately, this function did not work well.BA could not act as referee and solve disagreeing between some China licensees and local subsidiary, because BA only looks at the global business. BA objectives sometimes are contradicted with ABB China objectives. This decentralization also brings a problem to internal communication within ABB as a whole. In transferring know-how across borders, it was one-way communication from the technology partner, business area and country level to the subsidiary. BAs also were not able to communicate ABB mission, vision, objective and corporate culture to every individual company. The top-level management is seen to be so far away from daily life at the subsidiary level in China. It seems like...

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