With reference to the operations of the ABB Group discuss the functioning of matrix form organizations

Answer 1

The ABB produces and sells five major product lines worldwide. The company produces transmissions and switchgear for electric utilities (the Power Products Division), sells engineering services for transmission systems (the Power Systems Division), produces lower-voltage transmissions and electronics for large power users (the Automation Products Division), designs control and energy management systems (the Process Automation Division), and makes robots for manufacturers (the Robotics Division).

ABB is doubly divisionalized into superimposed M-form organizations. It is called a "matrix organization," or sometimes an "MX-form.".The matrix form has advantages and disadvantages and is more likely to be found in firms that produce diverse goods that are sold in diverse markets. As an example of its potential benefits to ABB, many of its electrical equipment customers are utilities that are operated or regulated by governments. A country unit can use its accumulated experience to reduce the costs of dealing with government for all of ABB's products sold there. Likewise, all of ABB's product divisions can use a country unit to manage risks denominated in that country's currency. If several product divisions manufacture in a country there may be advantages in procuring inputs for them jointly. (For example most of ABB's divisions use copper wire, and copper is subject to great price risks that are cheaper to hedge as a unit.) ABB's MX-form also has potential advantages when broken down by product. If it produces and markets a certain good in several countries, the various plants may be able to share innovations or learn better operating practices from one another.