TRANSITION TO A TRANSNATIONAL ORGANIZATION BOSCH GROUP IN INDIA International Management Fall 13/14 Mariana Silva 10737 Filipa Malheiro 11500 Fermín Ezcurra

T R A N S I T I O N T O A T R A N S N AT I O N A L O R G A N I Z AT I O N

BOSCH GROUP IN INDIA

International Management Fall 13/14

Mariana Silva 10737Filipa Malheiro 11500Fermín Ezcurra 1489

Mei Wei Chee 1613Javier Resúa 1436

Daniel Chow 1558

Enterprise Group

Bosch Group in India

CEOJavier Resúa

Organization Development managerMei Wei Chee Business DevelopmentDaniel Chow

Business DevelopmentFilipa Malheiro

Business AnalystsFermín Ezcurra

Business AnalystsMariana Silva


AGENDA

• Bosch groupThe beginning

InternationalizationBosch group nowadays

• Organizational Structure

• New matrix structure in Bosch: Vertizalization

• Bosch group in IndiaBosch organization in IndiaVerticalization process

• ChallengesFragmentation of the organization

Confusion and conflictVoice of the Region May Be LostResentement Across Different Bosch Companies in India

• Conclusion

• He was a pioneer and inventor

• He spent 10 years working around the

world which shaped the future directions

for Bosh

The founder, Robert Bosch (1861-1942)

Robert Bosch in 1886

Who established the firm?

November 15, 1886First workshop

• Robert founded “Robert Bosch CmbH” in Stuttgart in 1886

• It was a small workshop with a staff of just two

• He started the company as the “Workshop for Precision Mechanics and Electrical Engineering”

Pen drawing of the first workshop, 1886

International sucess:

• First office outside Germany in 1898, in London

• United States in 1906; South Africa, South America and Australia in 1922

Internationalization

First Office abroad, London

Global Company:

• 75% of its revenues generated outside Germany • More than 350 subsidiaries across 60 countries

• Products are sold in around 150 countries

• Leading multinational technology and services company

• Diversification. Core products are: Automotive components: brakes, electrical drives, motors, etc. Industrial products: drives, packaging technology, etc. Consumer goods and building products: household appliances,

etc.

• Revenue: In 2012 generated sales of 52.5 billion euros• Employees: 306,000 around the world• Equity: A non-profit foundation holds the 92% of the capital stock

Nowadays

Research & Development

Success in innovation and creativity

• More than 4 billion euros for research and development in 2011

• Over 4,800 patents applications worldwide in 2012

• International research and technology structure

• 1,300 employees pave the way for the technologies of tomorrow



BOSCH ORGANIZATIONAL STRUCTURE

Phase 11886 to 1900

•No need for formal structure •Interact with employees on personal basis

Phase 21900 to 1925

•Transit from craft to industrial production•Functional structure•Activities differentiated horizontally and vertically to obtain economies of scale•Begin international activity

Phase 31925 to 1960

•Functional structure around assembly line system launched in 1925 due to the after effects of WWI•Begin diversification


BOSCH ORGANIZATIONAL STRUCTURE

Phase 41960 to 1990

•Restructuring of the company due to WWII•Three waves of diversification – Power Tools (1960), Packaging Technology (1964) and Telenorma (1982)•Adoption of product divisions

Phase 51990 to 2007

•Required matrix structure•Primacy given to geographic structure

Phase 62007 to now

•Verticalization achieved by transforming global matrix structure into transnational structure•Global divisions, Corporate departments, Regional organization and Global sales and marketing organization


NEW MATRIX STRUCTURE IN BOSCH


VERTICALIZATION

• With a transnational structure, Bosch generally organize its business along geographic, product and functional levels.

• Integration is achieved within various product categories or within geographic areas or functions.

• A transnational structure helps coordinate all related business activities simultaneously.

Global Matrix Struct

ure

Transnational Struct

ure

Bosch in India

1. Bosch Organization in India

2. Verticalization Process in India


1. BOSCH ORGANIZATION IN INDIA

▪ 1951 - Bosch started operating ▪ 1953 – Development of manufacturing operations -> segments:

- automotive technology- industry technology- consumer goods and building technology- engineering an IT services

▪ Over the years the company tried to focus on innovation

In India, the Bosch group had about

25.000 employees

Revenues around 113.000 million

11 manufactoring sites and

4 developmen

t centers

IN 2011


Business divisionsBosch Ltd

India’s largest auto-component manufacturer

Bosch Chassis systems India Ltd Business areas: actuation, foundation and modulation of the braking systems and produce hydralic brake for

a wide range of vehicles

Bosch Rextroh India LtdFocus its production on industrial hydraulics,

electric drives, controls, linear motion

Robert Bosch Engineering Business Solutions Ltd

Lending global supplier of technology and services



Implications of Verticalization For Bosch Group in India

Genesis in poor North America performance (sales and

profitability were not too good)

Recent changes:

• Link Indian operations to other countries

• Increase the set of product divisions

• Allows best practices, ensues consistency in manufacturing processes and facilitates balancing of production

• Produce more units at competitive prices


Consequences of these recent changes:

• Mobility of resources between subsidiaries

• Uniformity of products and manufacturing methods

• Development of a global product strategy

PROBLEM: Regions may become weak

Solution: Country Head. The country head is the head of all entities in India. Local needs of the Indian market and Indian operations are preserved.


Advantages

• Facilitates coordination of the value chain• Decisions consistent with strategic objectives• Duplicating activities across subsidiaries• Reduces the risk that lower-level of employees make mistakes• Consistent dealing with stakeholders

Disadvantages

• Discourage initiative among lower-level employees• Demoralized employees simply wait to be told what to do• Loss of innovation from bottom-up information flow• Slow information flow


2. VERTICALIZATION PROCESS IN INDIA

- Started in 2007 and offered several opportunities to Indian units perfome better

What are these opportunities?

Verticalization Process: Opportunities

Some of the smallest

divisions were neglected

These smaller divisions have

now the attention of the top managers

Limited carres’ opportunities

Employees can pursue careers in the global

divisions

The interaction betwee sectors

was limited

Indian operations have

now the opportunity to

participate

The opportunity to understand the Dynamics of global industry was unknown

Indian bases are now able to

develop a global perspective

BEFORE AFTER

Greater visibility for smaller divisions

New Career opportunities

New opprtunities to contribute globaly

Development of a Global perpective


CHALLENGES

1. Fragmentation of the organization2. Confusion and conflict3. Voice of the Region May Be Lost4. Resentement Across Different Bosch Companies in

India


1. FRAGMENTATION OF THE ORGANIZATION

Many units instead of

one

Conflicts between

units

Profitability became public

to every employee

Difficult for employee mobility

Multiple reporting within India and outside which

causes delays in resolving simple issues

More profitable divisions are reluctant to “subsidize” the

less profitable ones

Conflicts between divisions that are supposed to work in

synergies because of different goals and

incentives

Requires the approval of the Global Product Group


2. CONFUSION AND CONFLICT

Difficult to adapt to this new method

Personality

crashes

Indian culture

Multiple reporting lines

The Head of the Division has to report to the MD of Bosch in India and to a person in

the Asia region

The importance of command is no longer

there

Strong and assertive personalities dominate over

the weak and submissive ones

“We do not have the ability to adjust. Some of us talk

too much”


3. VOICE OF REGION MAY BE LOST

• Target responsibility has final authority in case of conflict.

• Other markets might be more attractive than India.


3. VOICE OF REGION MAY BE LOST

• Products unique to India may be neglected by Global Product Group.

• Administrative decisions used to have more freedom before verticalization.


4. RESENTMENT ACROSS DIFFERENT BOSCH COMPANIES IN INDIA

•Due to verticalization.

•Human resources decisions were put into place separately.


CONCLUSION

• Steady transition from a functional structure to a transnational organisation through the verticalization process.

• Verticalization presents beneficial opportunities for India, but challenges must be met to facilitate the needs of the Indian market.

Documents

TRANSITION TO A TRANSNATIONAL ORGANIZATION BOSCH GROUP IN INDIA International Management Fall 13/14 Mariana Silva 10737 Filipa Malheiro 11500 Fermín Ezcurra