Business level strategy analysis of ABB Essay
- By : Admin
- Category : Free Essays
Business level strategy analysis of ABB
There's a specialist from your university waiting to help you with that essay.
Tell us what you need to have done now!
order now
ABB operates in the following business lines:
1) Power Products: These refer to the key components in the transmission and distribution of electricity. This division incorporates manufacturing network for power transmission and distribution components like transformers, switchgear, circuit breakers, cables and associated equipment. It also offers services aimed at enhancing product lifespan and ensuring product performance.
2) Power Systems: This business division offers turnkey systems and services for power transmission and distribution grids and power plants., with substations and substation automation systems being the focus areas.
3) Automation Products: This division manufactures drives motors and generators, low voltage products and power electronics with an aim to improve customers’ energy efficiency and productivity.
4) Process Automation: ABB provides its customers with integrated solutions for control, plant optimization, and industry-specific application knowledge aimed at providing customers with improved asset productivity and energy savings.
5) Robotics: ABB is a leading supplier of robotics solutions, supplying customers with robots, robot software, peripheral equipment, modular manufacturing cells and service for tasks such as welding, handling, assembly, painting and finishing, picking, packing, palletizing and machine tending.[1]
These business lines are a consequence of the organization restructuring carried out in 2006. The reorganization was done as part of ABB’s overall strategy to enter and become a big player in the knowledge space and aimed at providing its customers integrated solutions packages in all of the afore-mentioned business domains.
Strategy for Robotics business line
ABB has clearly demonstrated the intent to invest in and develop its operations in Asia. This is one strategy that could pay rich dividends. Asia is on an industrialization spree and the industrialization so far had been based on the low labor cost strategy. However, the manufacturing industry in Asian countries (especially China and India) is constantly looking for technological advantages to help in improving quality of production and drive down costs.
ABB stands to make a difference here with its expertise in robotics solutions (as opposed to being just another supplier of robots). ABB’s strategy of providing integrated robotic solutions that reduce operating costs, improving product quality and consistency, increasing production output rates, etc. works as a differentiator in an overcrowded market. ABB’s expansion in Asia, designed to take advantage of the region’s rapid industrialization and growth is designed at gaining market leader status in some of the most important developing economies in the world.
Strategy for Power Systems and Process Automation
ABB has been investing heavily in developing consulting expertise in the Power Systems and Process Automation domains. It has been recruiting software engineers and power industry experts in an effort to implement successfully its new strategy of supplying IT-driven intelligent solutions for discerning customers. ABB has indeed managed to position itself as a Power Systems and Process Automation solutions provider and not just another equipment vendor. Its recent customer wins in the form of supplying control technology for two new power stations in Brazil and supplying turbine control systems for the Terga power station, Algeria merely underscore this fact.[2]
ABB internally stresses on the following key levers to drive its Automation business:
· Operational Excellence: ABB constantly tweaks logistics , design and marketing processes to improve operational efficiency.
· Core Competencies: ABB focuses more on core competencies and does not consider market share to be the all-important criterion. Indeed, 60% of its automation revenues come through its qualified partners such as Systems Integrators, Distributors and OEMs.
· Strategic marketing: Automation conferences , brand advertising in respected media channels and customer-win showcasing form the thrust of ABB’s marketing strategy.
· People power: ABB manages its talent well and has implemented excellent performance compensation programs and rewards and recognition programs for its employees.[3]
Strategy for Power Products and Automation products
Inspite of its new image of a solutions provider, ABB has taken care not to stray from its core competency of producing innovative, high quality power products.
ABB has maintained a focus these domains to take advantage of a power industry in the grips of rapid deregulation. It has however, diversified some of the risk it faces in these markets through strategic alliances and Joint ventures with companies like Alstom. Some of the key points of this strategy are:
a) ABB can maintain a strong presence in markets which showcase its core competencies
b) ABB can take advantage of the deregulation of the power markets as and when it happens
c) The risk of excessive exposure to this market is reduced because of the partnerships and alliances ABB has formed with other industry leaders like Alstom
d) Solutions providers need to have strong underlying products around which solutions can be built. Therefore, ABB has to focus on its basic product offerings and keep innovating its basic product line.
[1] http://www.ABB.com
[2] In_Control,an ABB customer publication, Issue November,2008
[3] Automation.com, March 2006