International Management Fall 13/14
BOSCH GROUP IN INDIA
TRANSITION TO A TRANSNATIONAL ORGANIZATION
Enterprise Group
Mariana Silva 10737
Filipa Malheiro 11500
Fermín Ezcurra 1489
Mei Wei Chee 1613
Javier Resúa 1436
Daniel Chow 1558
CEO
Javier Resúa
Organization
Development
manager
Business
Development
Filipa Malheiro
Business Analysts
Fermín Ezcurra
Mei Wei Chee
Business
Development
Daniel Chow
Bosch Group in India
Business Analysts
Mariana Silva
AGENDA
• Bosch group
The beginning
Internationalization
Bosch group nowadays
• Organizational Structure
• New matrix structure in Bosch: Vertizalization
• Bosch group in India
Bosch organization in India
Verticalization process
• Challenges
Fragmentation of the organization
Confusion and conflict
Voice of the Region May Be Lost
Resentement Across Different Bosch Companies in India
• Conclusion
Bosch Group in India
Who established the firm?
The founder, Robert
Bosch (1861-1942)
Robert Bosch in 1886
• He was a pioneer and inventor
• He spent 10 years working around the
world which shaped the future directions
for Bosh
November 15, 1886
First 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
Internationalization
International sucess:
• First office outside Germany in 1898, in
London
• United States in 1906; South Africa, South
America and Australia in 1922
Global Company:
• 75% of its revenues generated outside Germany
• More than 350 subsidiaries across 60 countries
• Products are sold in around 150 countries
First Office abroad, London
Nowadays
• 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
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 ORGANIZATIONAL STRUCTURE
Phase 1
•No need for formal structure
•Interact with employees on personal basis
1886 to 1900
Phase 2
1900 to 1925
Phase 3
•Transit from craft to industrial production
•Functional structure
•Activities differentiated horizontally and vertically to obtain economies of scale
•Begin international activity
•Functional structure around assembly line system launched in 1925 due to the
after effects of WWI
•Begin diversification
1925 to 1960
Bosch Group in India
BOSCH ORGANIZATIONAL STRUCTURE
• Restructuring of the company due to WWII
• Three waves of diversification – Power Tools (1960), Packaging
Technology (1964) and Telenorma (1982)
Phase 4
1960 to 1990 • Adoption of product divisions
Phase 5
• Required matrix structure
• Primacy given to geographic structure
1990 to 2007
• Verticalization achieved by transforming global matrix structure into
transnational structure
• Global divisions, Corporate departments, Regional organization and
Phase 6
Global sales and marketing organization
2007 to now
Bosch Group in India
NEW MATRIX STRUCTURE IN BOSCH
Bosch Group in India
VERTICALIZATION
Global Matrix
Structure
Transnational
Structure
• 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.
Bosch Group in India
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 2011
Bosch Group in India
11
manufactoring
sites and 4
development
centers
In India, the
Bosch group
had about
25.000
employees
Revenues around
113.000 million
Bosch Ltd
India’s largest auto-component
manufacturer
Bosch Chassis systems India Ltd
Business
divisions
Business areas: actuation, foundation
and modulation of the braking systems
and produce hydralic brake for a wide
range of vehicles
Bosch Rextroh India Ltd
Focus 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
Automotive
Electronics India
Private Ltd
Joint
Venture
Bosch Electrical
Drives India
Private Ltd
MH Filter India
Private Ltd
Bosch Group in India
Implications of Verticalization For Bosch
Group in India
Genesis in poor North America
profitability were not too good)
performance
(sales
and
Recent changes:
• Link Indian operations to other countries
• Increase the set of product divisions
• Allows best practices, ensues consistency in
processes and facilitates balancing of production
• Produce more units at competitive prices
Bosch Group in India
manufacturing
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?
Bosch Group in India
Verticalization Process:
Opportunities
Greater visibility for
smaller divisions
New Career
opportunities
New opprtunities to
contribute globaly
Development of a
Global perpective
Bosch Group in India
BEFORE
Some of the
smallest divisions
were neglected
Limited carres’
opportunities
The interaction
betwee sectors
was limited
The opportunity
to understand
the Dynamics of
global industry
was unknown
AFTER
These smaller
divisions have now
the attention of
the top managers
Employees can
pursue careers in
the global
divisions
Indian
operations have
now the
opportunity to
participate
Indian bases are
now able to
develop a
global
perspective
CHALLENGES
1.
2.
3.
4.
Fragmentation of the organization
Confusion and conflict
Voice of the Region May Be Lost
Resentement Across Different Bosch Companies in
India
1. FRAGMENTATION OF THE
ORGANIZATION
Requires the approval of the
Global Product Group
Multiple reporting within India
and outside which causes
delays in resolving simple
issues
Difficult for
employee
mobility
Many units
instead of one
Profitability
became public
to every
employee
Conflicts
between units
Conflicts between divisions
that are supposed to work in
synergies because of different
goals and incentives
More profitable divisions are
reluctant to “subsidize” the
less profitable ones
Bosch Group in India
2. CONFUSION AND CONFLICT
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
Multiple
reporting
lines
Difficult to
adapt to this
new
method
Indian
culture
Personality
crashes
“We do not have the ability
to adjust. Some of us talk too
much”
Strong and assertive
personalities dominate over
the weak and submissive
ones
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.
Bosch Group in India