Abstract

The case describes a situation faced by the Starter Motor and Generator (SMG) Division of Bosch Limited in India as a consequence of the global restructuring of the Bosch Group in 2007. The SMG division had not earned profits for 22 years since its inception, but was ‘‘accommodated’’ as part of the India operations of Bosch Limited as other divisions ‘cross-subsidized’ the division. However, after the restructuring, the division became part of the global product division which had no incentives to ‘‘tolerate’’ the continuation of a loss-making division. The local management was forced to make strategic and operational changes to make the division viable to avoid the harsh decision of closing down the operations of the business. The case briefly describes the operational changes that were implemented to improve profitability, and then focuses on the strategic decision related to choice of a new business model which had consequences for the organizational structure that was adopted.

Learning Objective (Maximum of 500 Characters): Briefly describes teaching goals of case.

The objective of the case is to examine the challenges faced by large multinational corporations as they adjust to a globalized world, particularly in the context of their divisions involved with mature technologies. Divisions of multinational organizations dealing with products based on technologies at late stages of their life-cycle experience declining markets in their home markets and see growth opportunities in low-income economies such as India. Among the many issues they face as they adjust to the changed demands, they are required to re-examine the value chain to decide what they should continue to make internally and what to source from partners. They are also required to decide on the nature of relationships with the external partners to have a sustainable network form of organization.