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
Bosch Group in India
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 Group in India
Bosch Group in India
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 Group in India
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
Bosch Group in India
NEW MATRIX STRUCTURE IN BOSCH
Bosch Group in India
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
Bosch Group 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
Bosch Group in India
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
Bosch Group in India
Bosch Group in India
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
Bosch Group in India
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.
Bosch Group in India
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
Bosch Group in India
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
Bosch Group in India
CHALLENGES
1. Fragmentation of the organization2. Confusion and conflict3. Voice of the Region May Be Lost4. Resentement Across Different Bosch Companies in
India
Bosch Group 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
Bosch Group in India
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”
Bosch Group in India
3. VOICE OF REGION MAY BE LOST
• Target responsibility has final authority in case of conflict.
• Other markets might be more attractive than India.
Bosch Group in 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.
Bosch Group in India
4. RESENTMENT ACROSS DIFFERENT BOSCH COMPANIES IN INDIA
•Due to verticalization.
•Human resources decisions were put into place separately.
Bosch Group in India
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.