International Management Fall 13/14

BOSCH GROUP IN INDIA

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

Mariana Silva 10737

Enterprise Group Filipa Malheiro 11500
Fermín Ezcurra 1489
Mei Wei Chee 1613
Javier Resúa 1436
Daniel Chow 1558
CEO Business
Javier Resúa Development
Filipa Malheiro

Organizatio Business
n Analysts
Developmen Fermín Ezcurra
t manager
Mei Wei Chee

Business Business
Development Analysts
Daniel Chow
Mariana Silva

Bosch Group in India

 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
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

 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

Bosch Group in India

BOSCH ORGANIZATIONAL STRUCTURE

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.

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 Bosch Group in India

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

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 BEFORE AFTER

Some of the These smaller

Greater visibility for smallest divisions have
smaller divisions divisions were now the attention
neglected of the top
managers
Limited carres’ Employees can
opportunities pursue careers
New Career in the global
opportunities divisions

Indian
The interaction operations have
New opprtunities to betwee sectors now the
contribute globaly was limited opportunity to
participate

Indian bases are

The opportunity now able to
Development of a to understand develop a global
Global perpective the Dynamics of perspective
global industry
Bosch Group in India was unknown
CHALLENGES

1. Fragmentation of the organization

2. Confusion and conflict
3. Voice of the Region May Be Lost
4. Resentement Across Different Bosch Companies in
India
 1. FRAGMENTATION OF THE
ORGANIZATION
Requires the approval of the Multiple reporting within
Global Product Group India and outside which
causes delays in resolving
simple issues

Conflicts between divisions

More profitable divisions are that are supposed to work in
reluctant to “subsidize” the synergies because of
less profitable ones different goals and
incentives
Bosch Group in India
 2. CONFUSION AND CONFLICT

The Head of the Division has

The importance of
to report to the MD of Bosch
command is no longer
in India and to a person in
there
the Asia region

“We do not have the ability

to adjust. Some of us talk Strong and assertive
too much” 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

INTERNATIONALIZATION CHALLENGES

• Firms which are primarily involved on the exports

of Indian merchandise or services to foreign
countries face challenges in terms of:

• Foreign Regulatory Environment

• Non Tariff barrier and Phyto-sanitary barriers
• Foreign Exchange conversion Rates
• Very high transportation costs
• Inspection and certification
• Visa related issues
• Taxation
INTEGRATION RELATED CHALLENGES

• Because of cultural difference, it is difficult to

integrate acquire firm fully in terms of workforce.
Also inexperience of Indian Managers in this area
is posing major challenges in fully integrating the
facilities the abroad and real benefits of
acquisition

• Indian firm had never been leaders in Innovation

and research, which is challenge to acquire firm
which are innovation centric
 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