August 2019: “Management may be overstrained by too many products in one organization”. That’s theory. The supervisory board of Volkswagen found that’s the case and decided to change the all over organization. Three divisions – or product lines – were established in car business: Continue reading “Volkswagen Change of Organization Structure”
August 2019: ABB, the Swiss Technology Company, is since 1988 the merged company of the former Swedish ASEA and the Swiss BBC. It was a company with a wide range of production sites and customers in countries all over the world. The first CEO was Percy Barnevik (1987 – 1996). To guarantee optimal decisions regarding production and customer usefulness Barnevik introduced the matrix organization. Continue reading “ABB – ASEA Brown Boveri”
Jan 2019: Allianz is realizing it has very many, too many, different products in its property-casualty portfolio. Increasing the number of different products in an organization causes higher costs. This theoretical organization principle is to be seen currently in Allianz in reality.
Jan 2019: MAN and Scania are two separate subsidiaries of the VW-corporation since quite some time. When acquiring VW thought truck business is resembling car business which would be advantageous for VW as well as for MAN and Scania. However before getting the full amount of profit VW saw it had to accomplish the task of coordinating the production processes of the two truck companies – starting with research and development and procurement. VW as the holding company believed monitoring and coordinating could be done in conceivable time.
In 2019 Continental is planning to install three divisions.
1 – The Automotive Group, 2 – the Rubber Group, 3 – the Powertrain Division
(the present Powertrain division is to be turned over into a listed stock company with majority still at the holding corporation).
May 2019: In 2013 ThyssenKrupp had introduced the matrix management system. Product line- and country-management were to decide jointly on all important manufacturing and customer issues. Former CEO Heinrich Hiesinger expected to improve the decisions especially in overseas markets. – A grave disadvantage in the matrix system however is the long time for decision processes. Whenever the matrix system is deemed to be necessary very often other problems are in the background. In fact developments in early 2018 showed the fundamental problems conglomerates – as of ThyssenKrupp – easily have, too many different products to be managed in one board. Continue reading “Thyssen-Krupp Corporate Organization”
Siemens 2019: The recent history of the changes of the Siemens corporate structure clearly demonstrates the general problem large companies face in regard to their allover portfolio:
- Production: how many divisions are necessary for cost efficient production.
General rule: The smaller the number of different products in one production unit, the more cost effective is the manufacturing of products – i.e. the higher the number of divisions the smaller the number of different products, i.e. the more cost efficient are production costs.
- Customers: how few divisions are optimal to serve customers best – endeavoring:
one face to the customer
General rule: the larger the number of different products in one organization unit, the more thorough are the services to customers – i.e. the smaller the number of divisions, the higher are the number of products in one organizational unit – i.e. the more thorough are services to the customers
General Electric – The New Structure
2015: GE until 2014 was defying any theoretical tenets of organizational structures. It was a conglomerate corporation with a wide range of businesses. Its divisions included on one side industrial fields as e.g. aviation, power and water, transportation and on the other side services, e.g. financial services, lending and leasing, media, entertainment and others – indeed very divers business fields.