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Table of contents 1 Introduction………………………………………………………………………..... . 04 2 Company Profile………………………………………………………………......... 05 2.1 History and development……………………………………………….. 05 2.2 The foundation……………………………………………………………. 06 2.3 Size and Scope……………………………………………………………. 07 3 Mission Statement………………………………………………………………...... 08 3.1 Attitude and Commitment………………………………………………. 08 3.2 Values………………………………………………………………………. 09 4 Strategy………………………………………………………………………......... ... 09 4.1 Corporate Strategy……………………………………………………….. 09 4.2 Business Strategies……………………………………………………… 10 5 Organisational Structure…………………………………………………………... 12 5.1 Business Sectors…………………………………………………………. 12 5.1.1 Automotive Technology……………………………………….. 12 5.1.2 Industrial Technology………………………………………….. 13 5.1.2.1 Automation Technology…………………………….. 13 5.1.2.2 Packaging Technology………………………………. 14 5.1.3 Consumer Goods and Building Technology………………. 14 5.2 Organisational Structure and Hierarchy……………………………… 15 5.2.1 CEO……………………………………………………………….. 16 5.2.2 Heads of Sectors……………………………………………….. 16

5.2.3 Heads of Divisions………………………………………………

17

6 Employment…………………………………………………………………………. . 18 6.1 Performance and development discussions………………………… 18 6.1.1 The Performance Review Discussion (PRED/MAG)……… 18 6.1.2 The Individual Development Discussion (MEG)…………... 19 6.1.3 The Management Potential Review (MED)…………………. 19 6.2 Bosch employee motivation……………………………………………. 20 7 Analysis………………….………………………………….………….…………… ...23 7.1 Analysis of organisational characteristics.……………………………23 7.1.1 Level of centralisation…………………………………………. 23 7.1.2 Level of Bureaucracy……………………………………………24 7.1.3 Level of hierarchy………………………………………………..24 7.1.4 Level of authority and control…………………………………25 7.1.5 Level of labour organisation and complexity……………… 26 7.1.6 Level of Formalisation…………………………………………. 26 7.2 The SWOT Analysis………………………………………………………. 27 7.2.1 Strengths…………………………………………………………. 27 7.2.2 Weaknesses……………………………………………………... 28 7.2.3 Opportunities……………………………………………………. 29 7.2.4 Threats……………………………………………………………. 30 8 Conclusion…………………………….……………………………………............. 30 9 References…………………………….……………………………………............. 32

1 Introduction In the present paper, the company Robert Bosch GmbH will be presented. The target of this paper is to give a broad overview of the company‟s structure and to analyse its current situation and strategy. Starting with chapter 2, the reader will get an idea of Bosch‟s company profile. In this chapter the Bosch history and the company‟s development over time will be envisioned as well as the Bosch foundation. Chapter 3 will look at the company‟s mission, its attitudes and values. The next chapter will look at the company‟s corporate and business strategy, followed by Bosch‟s business sectors and its international structure described in chapter 5. The following chapter will give some information on employment at Bosch and employee motivation This will be followed by an analysis of this worldwide operating company, regarding the strengths and weaknesses as well as the opportunities and threats that Bosch might face in the future. Finally chapter 8 concludes the paper. Sources for this paper have been literature, the Annual Report 2003, further Bosch publications and internet sources.

2 Company Profile 2.1 History and development The company began as a “Workshop for Precision Mechanics and Electrical Engineering” which the founder Robert Bosch opened in Stuttgart in 1886. The company‟s international activities can look back on a long tradition: as early as 1898, only a few years after having found his company, Robert Bosch opened his first representative office in London. The next step towards internationalization followed one year later with the foundation of a second Bosch representative office

in Paris to provide the French and Belgian markets. Particularly important for the further development of the foreign organization was the opening of an agency in New York in 1906 and the commencement of production in the USA in 1910. In 1913 no less than 88 per cent of the company‟s turnover already were created abroad (today 71 per cent). Further important steps in the development of Bosch were the foundation of the “Fernseh AG” – to manufacture and produce television equipment - in July 1929 and the development of a new 3-D-Soundsystem by the Bosch-owned company Blaupunkt in 1954 which improved the sound quality of radio speakers. The same year marked the start up of production in Brazil and Australia. In 1979 the first cars with Bosch Motronic were sold. Motronic combined the control of ignition and gasoline injection in one central unit. In the same year, technical centers were founded in Schwieberdingen and Feuerbach to stay “ahead of the competition” . In the following years Bosch continued its expansion in many more countries around the world and launched further technical milestones like the navigation system Travel pilot in 1989 or the electronic stability program (ESP) in 1995. With sales of more than 36 billion Euros in the year 2003, Bosch is one of Germany‟s largest industrial enterprises with a significant international presence. In 2003 a total global workforce of some 229,500 was employed in three business sectors. Facts 1999 2000 2001 2002 2003 Turnover (in million €) 27906 31556 34029 34977 36357 Proportion of turnover outside Germany 66% 72% 72% 72% 71% Employees 194335 196880 218377 225897 229439 - of which inside Germany 96808 91110 98975 102685 105621 - of which outside Germany 97527 105770 119402 123212 123818 Investment in tangible assets (in million €) 1946 2111 2368 2006 2028 Research and Development (in million €) 1921 2030 2274 2487 2650 Annual surplus (in million €) 460 1380 650 650 1100

2.2 The foundation

"It is my intention, apart from the alleviation of all kinds of suffering, to promote the moral, physical and intellectual development of the people." (Robert Bosch, 1935) The Foundation implements its founder‟s philanthropic and social aims in a way that fits for the modern society. Established in 1964, the Robert Bosch Foundation is one of Germany‟s major corporate foundations. In Stuttgart the Robert Bosch Foundation runs three medical care and research institutions: the Robert Bosch Hospital, the Dr. Margarete Fischer-Bosch Institute for Clinical Pharmacology and the Institute for the History of Medicine. The main areas supported by the Foundation are the following:     Science in society Health and humanitarian aid International relations and youth Education and civic society

The Foundation‟s international activities are focused on France, the USA and the countries of Central and Eastern Europe. To achieve the aims it wishes to promote, various schemes are applied. These include grant schemes, competitions, award and seminar trips. Its purposes are exclusively non-profit. From 1964 to the end of the year 2003 the foundation provided approximately 630 million Euros for project support.

2.3 Size and Scope In 2003 the Bosch Group generated approximately 71 per cent of its sales on

foreign markets. With subsidiaries and associated companies, the company is represented on every continent and in more than 50 countries. Bosch manufactures products at 236 locations, 179 of which are outside Germany. Bosch was again able to consolidate its market position as the world‟s second largest supplier of automotive technology in 2003.

Robert Bosch GmbH has common stock of 1,200 million Euros of which 92 per cent belong to the Robert Bosch Foundation GmbH. Voting rights are held by the Robert Bosch Industrietreuhand KG, a trustee company which has 93 per cent of the votes and a share of 0.1 per cent of the common stock. The Bosch family has 8 per cent of the common stock and 7 per cent of the voting rights. Dividends from Robert Bosch GmbH are allotted to the Robert Bosch Foundation proportionately.

3 Mission Statement 3.1 Attitude and Commitment During our research we discovered no explicit Bosch Mission Statement. However, the company formulates its basic intentions in a statement about attitude and commitment. Continuing innovation on the one hand - tradition, values and social responsibility on the other hand characterise the vision of the company‟s founder Robert Bosch. Combining the pursuit of economic objectives with consideration for social and environmental factors is a priority at Bosch. The „Public Spirit‟ is mainly expressed in the activities of the Bosch Foundation as described in chapter 2.2. Furthermore, the company has formulated eleven principles to clarify its understanding of social responsibility - especially in the context of Bosch‟s worldwide activities. The principles are:     Pay attention to Human Rights Equal opportunities among the associates Integration of handicapped people Free choice of jobs

 Rights of children (condemnation of child labour)  Relations with associates, representatives and their institutions (dealing constructive with trade unions)  Fair working conditions (comply with ILO standards and national provisions regarding working hours and vacations)  Occupational health and safety (workplace conditions not to be harmful to health)  Qualification (training skills and enhancing professional and specialist know-how)  Environment (tradition of commitment to preserving and protecting the environment)  Implementation of all these principles throughout the Bosch Group and incorporating them into the management system

3.2 Values The Value Statement of Bosch includes the following points:  Future and Result Focus in order to shaping changes in markets and technologies and to securing growth and financial independence  Responsibility for the interests of society, the safety of people, the economic use of resources and the environmental sustainability  Initiative and Determination in acting on own initiative and pursuing the company‟s goals  Openness and Trust as the best basis for a trustful relationship to associates, business partners and investors  Fairness by dealing with each other and with business partners  Reliability, credibility and legality in terms of promising only what can be delivered, accepting agreements as binding and respecting and observing the law  Cultural Diversity as an awareness of the company‟s cultural and regional origins and by regarding them as an asset and precondition of global success

4 Strategy 4.1 Corporate Strategy Bosch‟s economic strategy corresponds to a common aim of the group for innovation, independence and integrity. The cornerstone of Bosch‟s corporate strategy is the maintenance of its innovative force which is based on the knowledge and competence of experienced employees. The aim is to be among the world market leaders and to be a major player in all of the company‟s business sectors. The strategy to achieve this goal is on the one hand strong marketing of new products and on the other hand ongoing investment in Research and Development to innovate continuously. The emphasis on innovation is underlined by the huge number of associates, working in Research and Development departments, in 2003 21,250 world-wide. Efficient sales and customer service also play a key role in Bosch‟s corporate strategy. Bosch is an unlimited liability company in order to stay independent of financial markets. By cash flow and by balancing the shares of business sectors the company tries to be less dependent on particular customers. Integrity is the third part of Bosch‟s corporate strategy. The company stands for a number of values to promote team spirit and to strengthen integrity and ethics with a concern for longterm performance. Care for environment, for example, is a priority on the same level as quality and profitability. In his introduction to the Annual Report 2003 CEO Franz Fehrenbach makes clear what Bosch‟s main future targets are: supporting growth and reducing costs. Therefore, Bosch is going to expand its manufacturing capacities in Asia and America which by long-term forecasts are presumed to be the largest growth markets for the company. To remain competitive and to meet the challenges in its environment the CEO announces great efforts to reduce costs, continuously improve processes in all areas and intensively utilise resources at all locations. These efforts will also be undertaken in order to securing as many jobs as possible at the existing locations. Furthermore, Bosch intends to meet these challenges of its own resources which depend on achieving adequate profits.

4.2 Business Strategies The different business strategies can proceed from what recent studies showed: the Bosch brand is known all over the world and people associate quality, reliability, innovation and financial strength with it. In its biggest business sector – the automotive technology –the strategy of Bosch has been for 30 years to built on the 3-S programme, to make cars safer, cleaner and more economic (all starting with an S in German: sicher, sauber, sparsam). Examples for products in this field are the Antilock-Braking-Systems (ABS) and the Electronic Stability Program (ESP). Such systems account for more than 50 per cent of Bosch's business in automotive engineering. Bosch is also targeting the growing market of diesel-driven vehicles which the company expects to continue in the next years. Diesel-injection systems and particle filters have been developed and Bosch is going to expand especially on the Chinese market which will develop into the second largest diesel market in the world. For diesel technology the company also expects significant growth potential in the NAFTA area and the eastern European market. In the Industrial Technology Business Sector Bosch‟s strategy focuses on growth as well – for example through the acquisition of the Buderus AG with its castings and steel businesses. Investment and expanding production capacities in the Asian market shall increase the market share significantly. The target is to act as a local supplier and to directly serve the demand in this important market. The Consumer Goods and Building Technology Business Sector faces strong competition. Furthermore, the demand for electronic household goods and heating equipment remained weak. However, this business sector is important for the strategy of strengthening activities outside the automotive sector. Therefore, further growth mainly in the thermo technology division shall help to remain the leader in the European heating-technology market. With its acquisition of the Philips video surveillance division the company also reinforced the Consumer Goods and Building Technology business sector. It remains the company‟s long-term goal to further increase the share of the

Industrial Technology and Consumer Goods / Building Technology sectors in the Bosch Group. In addition to that Bosch has several projects to secure the company‟s good position and continuous growth, e.g. Bosch will add 600 software engineers at its India software and engineering centre by August 2005. Robert Bosch India, a wholly-owned subsidiary of the privately-held German parent company for six years, currently has 1,800 professionals and is the largest of Bosch companies outside Germany. Bosch Power Tools, a division of the Robert Bosch GmbH, said in October 2004 that it aimed to secure 40 per cent share of the power tools market in India by 2006. 5 Organisational Structure ¬¬ 5.1 Business Sectors The company is divided into 3 Business Sectors:    Automotive Technology Industrial Technology Consumer Goods and Building Technology

5.1.1 Automotive Technology

The Automotive Technology Sector is the largest business unit within the Bosch group and employs a workforce of 143,600 people worldwide generating sales of 23.6 billion Euros in 2003. The input of 2.2 billion Euros into Research and Development enables Bosch to position itself on the cutting edge of technology and especially within the Automotive Technology Sector Bosch has a leading position in the market. The outcome of this sector makes the company the world‟s biggest independent supplier of automotive products. Bosch manufactures automotive technology at 117 locations on all five continents. The sector is subdivided into Divisional groups according to product categories such as:

      

Gasoline Systems Diesel Systems Chassis Systems Energy and Body Systems Car Multimedia (Blaupunkt GmbH, 100% Bosch) Automotive Electronics Automotive Aftermarket

5.1.2 Industrial Technology

Bosch‟s activities in the Industrial Technology Sector include automation technology and packaging technology. This sector employs a work force of 32,900 employees and generated sales of 4.3 billion Euros in 2003. The input into Research and Development amounted to 216 million Euros and the investments into that sector to 195 million Euros.

5.1.2.1 Automation Technology Bosch Rexroth AG is one of the leading suppliers in the world market for Industrial Technology. Bosch Rexroth AG plays a significant role for the Group; this division produces Automation Technology in 43 locations in Europe, America and Asia. In the area of factory automation, the company is involved in the following fields of work:      Industrial hydraulics Mobile hydraulics Pneumatics Assembly and linear-motion technology Electric motors and controls



Service

5.1.2.2 Packaging Technology The Packaging Technology division has become a much diversified technology provider. This part of the company is also active internationally. Some 83 per cent of its sales were generated abroad in 2003. The division manufactures and develops its products at 13 locations world-wide. There are sales branches in China, Russia, Singapore, Mexico and the United Arab Emirates. Its range of products is rounded off by a wide variety of service packages. These range from:  Project planning for Electric Motors and Controls  Service  Packaging Technology  Packaging machines and lines for the food, confectionery and pharmaceutical industries  Chemical-technical and cosmetics industries  Entire production lines to on-site training for employees Bosch is the market leader in packaging machines for the pharmaceuticals industry – both for filling injection solutions and packing capsules.

5.1.3 Consumer Goods and Building Technology

This sector employs a workforce of 47,500 employees and generated sales of 8.5 billion Euros in 2003. The input into Research and Development amounted to 249 million Euros and investments in that sector amounted to 265 million Euros. Bosch manufactures consumer goods and building technology at 78 locations in

21 countries.

The divisions of that sector are the following:      Power Tools Thermo technology Household Appliances Security Systems Broadband Networks

5.2 Organisational Structure and Hierarchy Organisational structure is considered by many to be “the anatomy of the organisation, providing a foundation within the organisation functions”. Thus, the structure of an organisation, similar to the anatomy of a living organism, can be viewed as a framework. To illustrate the organisational structure of the company, it is described on a hand of a family tree starting with the top management level and going down to a product manager level.

5.2.1 CEO Since 1st July 2003 the industrial engineer Franz Fehrenbach has been Chairman of the Board of Management of Robert Bosch GmbH and a limited partner of Robert Bosch Industrietreuhand KG. He is directly responsible for business planning, for leading managers, for buildings and for the Division Packaging Technology. His corporate responsibilities include Corporate Planning and Communication, Senior Executives, and Real Estate and Facilities. He is also a member of the Managing Board of both the VDA (German Association of the Automotive

Industry) and the VDMA (German Engineering Federation). His Deputy Siegfried Dais who has been Chairman of the Board of Management of Robert Bosch GmbH since 1st January 2004 is responsible for the divisions Car Multimedia and Bosch Rexroth, as well as for the corporate areas of Research and Development, Advanced Engineering, Technology Coordination and Information Technology.

5.2.2 Heads of Sectors The first breakdown within the company structure is according to the nature of product groups where we can find three different business sectors within the Bosch group:    Automotive Technology Industrial Technology Consumer Goods and Building Technology

Each sector is under the responsibility of one “Head of Sector” who controls different divisions. The various divisions are designated by one of the following:    The nature of the product (i.e. Power Tools, Household Appliances) Individual companies (i.e. Blaupunkt, Bosch-Rexroth) or Tasks (i.e. Automotive Aftermarket)

5.2.3 Heads of Divisions Divisions are responsible for the worldwide coordination of their business. In practice that means that they control the development, production, distribution, supply and sales of products. From an organisational point of view, the distribution net is divided into regions. Each region compromises a group of different countries according to its

geographical location. In the example taken, the headquarter of the division Automotive Aftermarket coordinates all strategic decisions. This covers the invention of new products, sales and marketing concepts, the building of corporate identity and the worldwide distribution of workshop equipment. This process also includes technical information, training and consulting. In the Global Distribution Centre in Karlsruhe, located in the south of Germany, more than 110,000 different items are stocked in the central warehouse and shipped to regional subsidiaries, agencies or customer service partners in 132 countries. Bosch supplies an extensive range of products to meet the needs of the automotive aftermarket. These include spark plugs, wiper blades, oil filters, fuel and air filters, batteries, drive belts, starter motors, alternators, parts for diesel-injection systems and gasoline management systems, brakes, headlights and many more.

6 Employment 6.1 Performance and development discussions

“There are things we can do by ourselves and things we cannot do by ourselves – because we lack the ability or because we lack the time. The main thing is to find the right people who can do the work for you.” (Robert Bosch) “Having the right employees in the right places is crucial for the success of our company.” In the following section we view employment at Bosch and motivation for its employees. Bosch‟s philosophy has always been to promote trust, creativity and innovative thinking, as well as create space for people to act independently. Employees are expected to be actively involved in the achievement of corporate

objectives by forwarding their own ideas. Employees are expected to be flexible and to have a broad range of experiences to adapt to technology changes, lean structures, flat hierarchies and continuous improvement of the company. The basis for the employee‟s development regarding support and supervision is laid out in structured discussions and in setting long-term development objectives.

6.1.1 The Performance Review Discussion (PRED/MAG) The performance and review discussion is an open dialogue between the employee and his or her supervisor. The discussion is done once a year. In the review, goal achievements in assignments and projects over the past twelve months are discussed. The specialist and personal development potential of the employee plays a part in this dialogue, and the employee is also expected to show initiative and involvement. The two parties agree on goals for the coming year and define measures designed to support the employee in achieving the goals and enhance the employee‟s performance. If these goals change before the year is over, the MAG can be repeated as often as necessary. This agreement is an example for Bosch‟s idea of co-operative leadership and delegation of responsibility.

6.1.2 The Individual Development Discussion (MEG) The individual development discussion is only done upon request of the employee, a supervisor, or the HR department. The MEG can be held every two to three years. This discussion is devoted to the professional development goals of the employee. In that discussion the employee has the possibility to present his personal career goals over the next three to five years and discuss them with the other participants. There, they find out how and when the goals can be achieved. If possible, this discussion aims at putting the employee‟s self-assessment and the evaluations of the supervisor and HR department on common ground. From this analysis of the employee‟s goals, strengths, and growth potential, participants have the chance to build up further development objectives. Together with recommended development activities, these objectives are recorded. These activities can be the

transfer to a new functional group or department, acquiring a new task, career growth or identifying long-term development needs.

6.1.3 The Management Potential Review (MED) Once a year, supervisors of a given operating unit and the HR departments are meeting for the management potential review. In that meeting, the participants focus on the assessment of personal and specialist potential across the departments of the operating unit. They are co-ordinating development goals and measures and recommend admissions to the Manager Development Plan. The results of MAG and MEG discussions between employees and supervisors provide the basis for the MED consultations. The participants identify individuals capable of taking on more demanding positions and advancing their careers. This ensures that qualified specialists and managers are promoted within the company. Through these methods they can make sure that they have the right people in the right place at the right time.

6.2 Bosch employee motivation In order to motivate their employees, Bosch offers a wide range of benefits to its staff. Although salaries are not in the upper region, employees are attracted to the company by incentives such as:  Subsidised staff restaurant Offering hot and cold meal at lunch time as well as breakfast in the morning  Employee kitchen and relaxation areas Every department has its own kitchen area where employees can have lunch in a kitchen equipped with microwaves, fridges, freezers, dishwasher, a coffee machine, newspapers and magazines  Free chilled drinking water and tea available for all employees

 Staff shop Offering the regular Bosch product range at discounted prices, or close to manufacturing price for end-of-run models. Products are also available from Bosch cooperation partners (e.g. Bosch has a partnership with WMF Germany, a cutlery producing company)  Company gym & fitness studio The company offers a proper fitness studio inside the building where employees can do sports after work for free  Social club A social club organises company events such as raffle nights in the company bar, trips to the theatre or flower shows

 Works committee The works committee enables employees to have a say on general company decisions and to bring in their ideas on improvements  Training courses Various advanced professional training is offered to all employees at no monetary cost to the employee Employees may be required to participate on a certain number of training programs depending on their position, or may take part according to their own initiative. There is a certain amount of freedom in the courses that one chooses, and many are on broad offer on the company‟s intranet site. Training covers areas such as foreign language, training according to professional tasks, presentation or rhetoric courses, IT courses etc  Internal recruitment One big motivational factor for employees is the fact that Bosch often recruits internally. At a management level Bosch focuses on advancing its employees within the first two years after finishing their studies. These employees are then kept within the company and trained continuously, moving onto higher levels via internal recruitment. This means that the employee turnover rate at Bosch is very

small compared to similar companies. An impressive example on a German homepage of Bosch was of a job requiring management skills. The indication was that external applicants would require a diploma, whereas Bosch employees without diploma, but with trained skills and good experience in their job would be considered. That means that a worker has the opportunity to reach management level if he is willing to get there, and his or her progress will be supported by the company  Pension scheme Bosch offers a pension scheme to all employees where the employee decides which part of his salary he is willing to pay in on a monthly basis. Bosch will then also contribute a portion to the pension on the employee‟s behalf. This scheme gets more and more important, especially in Germany. According to surveys one of the big fears of employees is the pension, the social pension scheme offered by the government in Germany is expected to collapse soon due to the age structure of the society where a reducing number of young people will have to support a multiple number of elderly people born in the after war baby boom. When Bosch set up its pension plan in 2002, the company was one of the first companies in Germany to set up its own pension fund. With state support, employees can invest in their own contribution to their retirement pension in this fund  Bonus program The bonus program is an end of the year reward. The employees can be rewarded with a maximum of four per cent of their annual salary depending on their personal performance within the last year and another five per cent of their annual salary depending on the whole company‟s performance • Material incentives Other various incentives are given according to the employees level within the company such as company cars or mobile phones. These benefits are task of personal negotiation • Inclusion of employees in operational decisions Employees are quite often included in operational decisions. For example, a new slogan for advertising has been found by a competition within the company. Only

the product description was given and employees could send their ideas, of which the best idea was chosen by a committee. It was rewarded with a red letter day (the winner had the choice between several types of activities, for example a day with a car of his desire on a racing track or a parachute jump) To conclude this section, it can be seen that by the Bosch employee motivation scheme, the company is definitely considered as an attractive employer. Recent surveys in Germany confirm this. Out of all the German companies, Bosch could place itself as one of the most attractive employers in the country.

7 Analysis 7.1 Analysis of organisational characteristics 7.1.1 Level of centralisation “Centralisation refers to the location of the decision making authority in the hierarchy of the organisation. More specifically, the concept refers to delegation of authority throughout the job positions in the organisation. Typically, researchers and practitioners think of centralisation in terms of (1) decision making and (2) control. But despite the apparent simplicity of the concept, it can be difficult to apply. The difficulty arises from 3 sources. First, people at the same level can have different decision making authority. Second, not all decisions are of equal importance in the organisations. For example, a typical management practise is to delegate authority for routine operating decisions (i.e. decentralisation), but to retain the authority to make strategic decisions (i.e. centralisation). Third party individuals may not perceive that they really have authority even though their job descriptions include it. Thus, objectively they have authority, but subjectively they do not.” The company is quite strongly centralised by the headquarters in Germany. Referring to the division of power seen on the organisational chart in chapter 2, the location of decision making authority and control in the hierarchy is mainly on upper management levels based in Germany. The headquarters keeps things firmly

under control. Strategic departments such as Research and Development, Corporate Identity, Production, Purchase and External affairs are based in Stuttgart and dictated to the worldwide subsidiaries. Decentralised are only operational departments like Personnel, Sales or Accounting. Furthermore, decisions given to responsibility of subsidiaries are mostly of operative quality.

7.1.2 Level of Bureaucracy Modern officialdom functions in the following manner: I. There is the principle of fixed and official jurisdictional areas, which are generally ordered by rules, that is, by laws or administrative regulations. II. The principles of office hierarchy and of levels of graded authority mean a firmly ordered system of super- and subordination in which there is a supervision of the lower offices by the higher ones. III. The management of the modern office is based upon written documents which are preserved in their original or draught form. Bosch is considered to have a relatively high level of bureaucracy. In practise there are a high number of reporting systems, and procedures are vastly formalised. This might be due to either size and scope of the company where bureaucracy is inevitable, or to the culture of the founder where bureaucracy again is regarded as being a typical German characteristic.

7.1.3 Level of hierarchy Referring to the organisational chart mentioned above, Bosch has defined levels of hierarchy and is definitely marked by a tall structure with both high vertical and horizontal diversification. CEO

Board Members Head of sectors Head of divisions Divisional Directors Head of Departments Managers 7.1.4 Level of authority and control “Authority is the character of a communication (order) in a formal organisation by virtue of which it is accepted by a contributor to or “member” of the organisation as governing the action he contributes; that is, as governing or determining what he does or is not to do so far as the organisation is concerned.” The fiction of superior authority is necessary for two main reasons: (1) It is the process by which the individual delegates upward, or to the organisation, responsibility for what is an organisation decision – an action which is depersonalised by the fact of its coordinate character. This means that if an instruction is disregarded, an executive‟s risk of being wrong must be accepted, a risk that the individual cannot and usually will not take unless in fact his position is at least as good as that of another with respect to correct appraisal of the relevant situation. (2) Most people are disposed to grant authority because they dislike the personal responsibility. The practical difficulties in the operation of an organisation seldom lie in the desire of individuals to assume responsibility for the organisation action of themselves or others, but rather lies in the reluctance to take responsibility for their own actions in the organisation. Bosch significantly drives a directive leadership style where supervisors enjoy a high degree of authority. The leadership style would mostly resemble an autocratic style where “leaders solve the problems or make the decisions themselves, using

information available to them at the time. They obtain the information required from their subordinates, then decide on their own. They may or may not let their subordinates know the nature of the decision problem. Subordinates are treated solely as information givers, not as generators of alternative courses of action or of solutions.”

7.1.5 Level of labour organisation and complexity Complexity is the direct outgrowth of dividing work and creating departments. The concept refers to the number of distinctly different job titles, or occupational groupings and the number of distinctly different units of departments. The fundamental idea is that organisations with many different kinds of jobs and units create more complicated managerial and organisational problems that those with fewer jobs and departments. Complexity then relates to differences among jobs and units. Therefore, it‟s not surprising that differentiation is often used synonymously with complexity. Moreover, it has become standard practice to use the term horizontal differentiation to refer to the number of different units at the same level; vertical differentiation refers to the number of levels in the organisation.

7.1.6 Level of Formalisation Formalisation refers to the extent to which expectations regarding the means and ends of work are specified, written, and enforced. An organisation structure described as highly formalised would be one with rules and procedures to prescribe what each individual should be doing. Such organisations have written standard operating procedures, specified directives, and explicit policy. In terms of the four decision, formalisation is the result of high specialisation of labour, high delegation of authority, the use of functional departments and wide

spans of control. The Level of Formalisation according to this definition at Bosch is high. The amount of rules and procedures to prescribe what each individual should be doing is enforced by specific directives. Tasks are definitively prescribed and the degree of formalisation very much matches a German organisational style, where each employee has prescribed tasks with a definite end. 7.2 The SWOT Analysis 7.2.1 Strengths A significant strength of Bosch is its very good overall reputation in terms of quality, punctuality and reliability. The firm stands for the term “Made in Germany”. Today the company is the biggest independent automotive supplier and deals with many different business sectors like electronics, household appliances, security systems and many more. The broad product range minimises the risk of serious problems for the whole company if one business sector faces a decreasing market. This strength of stability is underlined by the fact that since its foundation 119 years ago Bosch has only had six different leaders. Furthermore, its turnover and profit have been increasing for years. Despite the economical weakness of the last couple of years the financial situation has been stable. The hierarchical, centralised structure and the authoritarian leadership style facilitate easy control over the company‟s worldwide activities and employees. Competences as well as responsibilities and decision making are clearly defined. Consequently, employees know exactly whom to contact for specific tasks and in addition to that they can develop a certain expertise in their jobs, as departments are a lot more specialised. A further strength of Bosch is the strong international alignment. Due to its numerous agencies and production sites all over the world the company is able to reach new markets and react very quickly to changes in the external environment. An example for this is Bosch‟s established presence on the fast growing Chinese market. Moreover, Bosch invests a lot of money into Research and Development. In 2003 the company spent at total of 2.7 billion Euros on R&D which is equal to 7.3 per cent of its entire turnover. The results are remarkable: in 2003 patent applications were made for 2,748 inventions.

7.2.2 Weaknesses Weaknesses mainly can be found in the company‟s structure and culture. A high level of bureaucracy and formalisation slows down procedures and therefore it is very time consuming. As a consequence this causes additional costs for the company. As Bosch is an industrial enterprise working in different industrial sectors and offering a broad product range, the level of complexity is by nature very high. This as well as the high level of labour organisation might harm the internal communication and flexibility. In high complex organisations such as the Robert Bosch GmbH the communication between departments might suffer due to the size and separation of tasks. The strong hierarchical structure of the company might cause conflicts on an international level. Being a German company the leadership style has developed in a typical German way, in which due to the culture of the nation, leaders enjoy a high degree of authority and respect. With this culture being exported in foreign countries which have different acceptances of leadership, unavoidable personal conflicts arise especially on an inter-human level. Especially because of the strict hierarchies and bureaucratic workflow, Bosch is far away from the so called modern leadership. Due to the fact that employees are highly controlled and responsibility diminishes considerably further down on the hierarchical pyramid conflicts in human relations and a lack of motivation can easily arise. On the other hand if the decision making process is faulty, the employee will not be corrected or will not get any feedback, which may have negative consequences. Another weakness might be the level of centralisation. As Bosch strongly centralises its business, the adaptation may fail and foreign subsidiaries often face the conflict of adapting their business according to the market, hence opposing the instructions of the headquarters. Regarding the product range, weaknesses can be determined in the Industrial Technology Sector which shows losses of 221 million Euros due to strong competition from low-wage countries. Bosch‟s manufacturing

sites in high-wage countries in Western Europe and especially in Germany have caused very high production costs. 7.2.3 Opportunities As mentioned above, the Chinese market is a fast growing automotive market. This offers attractive business opportunities for the automotive supply sector by which Bosch‟s well established market position is most likely profitable. The automotive technology business sector as the largest internal contributor to sales might profit furthermore from the high rate of including ESP as original equipment in vehicles as well as from the growing demand for diesel-injection technology. Considering this, mass production of diesel-particle filters is planned to start in 2005. In the area of car multimedia Bosch has entered cooperation with the Japanese automotive supplier Densa to develop a hardware and software platform for a new operational navigation system worldwide. Moreover, the company is going to expand not only on the automotive market but also on its other business sectors as well as on new branches. For example with the acquisition of the Buderus AG, the Industrial Technology Business, Bosch is going to grow in the castings and special steel businesses. A positive trend in thermo technology applies to the previous Bosch Thermo Technology Division. Regarding its structural weaknesses in the internal environment the management states in its Annual Report 2003 „further progress in optimising structures and procedures‟. The aim is to encourage individuals at all levels to think for themselves and make their own decisions on low level issues within the organisation. This is certainly a shift away from the traditional German organisational structure and may open new opportunities through an encouraged more motivated workforce. With new production sites in low-wage areas like Hungary and China Bosch hopes to master the competitive situation in the household appliances market. Further progress is expected in high level quality of software development by implementing the new CMM model in order to measure the maturity of development processes. Finally, the management sees good opportunities for a continuous overall-growth in the expected economic improvement in North America and Western Europe as well as in the continuing growth in Asia.

7.2.4 Threats As a result of the determined weaknesses in structure and culture a great threat could be Bosch‟s troubles in adapting and changing quickly. The company‟s difficult economic situation could have been caused by its rigid structures. Although the spirit of Robert Bosch might have been revolutionary some decades ago, it has a counterproductive impact on the current company‟s situation. In its external environment the company is faced with several different threats. The German economy has been more or less stagnant for a few years. Differences in the currency exchange (the Euro‟s strong value increase) lead to a weak growth in overseas sales. The war on Iraq overshadowed the world wide economic climate in the first half of 2003 and the sales figures could not benefit from a slight improvement in the second half of the year. The competitive environment in all business sectors becomes more aggressive and results in increased price pressures for nearly all products - especially in the automotive sector. Furthermore there was no growth in the automobile production in the most important markets which are North America and Western Europe. Strong competition comes from suppliers in low-wage countries in Far East that are lowering sales in power tools and household appliances.

8 Conclusion When we started with this presentation, we had not been aware of how “German” Bosch is working and it was quite interesting to find out about the various advantages and drawbacks such an organisational structure can have. Nevertheless, especially on an international level this structure provides opportunities for employees. After studying this intense and massive structure of Bosch, we finally came up with the question: Does a company of that size have the choice to organise itself differently? In other words we think that a certain scope leads a company to

inflexibility in its choice of organisational structure. Various processes demand to be organised in a specific way. Regarding the current strategy of ongoing growth it might be more useful to enhance flexibility and quick decision making rather than growing bigger and bigger. Moreover, the company might not be able to avoid dismissals in the future which might cause a bad reputation for a company. Therefore strong efforts are necessary to reduce costs and to increase the workforce skills and flexibility. Concluding, we think that Bosch has lots of things to improve in order to adapt to today‟s changes in business and to keep its position as a leading industrial enterprise. Changes will be difficult to create and maintain because established patterns of behaviour and established practises tend to become institutionalised and resistant to change. Anyway, in its overall performance and strategy Bosch seems to be on the right track.

8 References

Books  Organizational Behavior and Management, 5th edition, John M. Ivancevich, Michael T. Matteson, Irvin McGraw-Hill, Boston, 1999  Classics of Organizational Behavior, Walter E.Natemeyer / J. Timothy McMahon, 3rd edition, Waveland Press 2001 – taken from Max Weber, Essays in Sociology, ed. and trans. H.H. Gerth & C. Wright Mills, trans.  Management & Organizational Behavior, 7th edition, Matteson/ Ivancvich, Irwin/McGraw-Hill 1999  Managing Organizations, 2nd Edition, McGraw-Hill Publishing Company, 1999 Robert H. Rosenfeld & David C. Wilson

Internet     http://www.bosch.de http://www.bosch.com http://www.economictimes.indiatimes.com/articleshow/895134.cms http://www.economictimes.indiatimes.com/articleshow/913250.cms

Others   “Manager Magazine”, article by Karsten Schmidt Boschheute2003_DE / Boschtoday2003_EN

 Geschaeftsbericht2003_DE / Geschaeftsbericht2003_EN (Bosch Annual Report 2003)

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