Detailed Value Chain Analysis of the ABB PBS Joint Venture

This report provides a detailed value chain analysis of the joint venture between ABB and PBS. It examines the primary activities, including inbound and outbound logistics, operations, marketing, and services, highlighting their strengths and weaknesses. The report also explores the support activities such as procurement, technology development, human resource management, and firm infrastructure. The analysis reveals that while the joint venture initially experienced success, it faced challenges due to factors like lack of support from parent companies, changing market demands, and employee adaptation to new technologies. The report concludes with recommendations for improving marketing strategies and employee training to ensure the venture's future success. The analysis uses tables to summarize the primary and support activities' strengths and weaknesses. The report also provides an executive summary, table of contents and references.

Running head: VALUE CHAIN ANALYSIS OF ABB PBS
Value Chain Analysis of ABB PBS
Name of the Student
Name of the University
Author note

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VALUE CHAIN ANALYSIS OF ABB PBS
Executive Summary
The aim of the paper is to analyze the value chain of the joint venture that took place between
ABB and PBS. The joint venture had a lot of strength in both primary and support activities.
The company grew at a faster rate in the first two years. However it faced challenges after
that due to lack of support from parent companies, lack of demand for boilers and lack of
ability of the employees to use new technologies.

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VALUE CHAIN ANALYSIS OF ABB PBS
Table of Contents
Introduction................................................................................................................................2
Value Chain Analysis of ABB PBS...........................................................................................2
Recommendation........................................................................................................................7
Conclusion..................................................................................................................................8
References..................................................................................................................................9

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VALUE CHAIN ANALYSIS OF ABB PBS
Introduction
ABB and PBS were different entity involved in the contactor business of turbines,
power plant, boilers and others. Both the business came into a joint venture when PBS agreed
with the ABB proposal in 1992. During the venture ABB owned 67 percent of the share and
PBS owned 33 percent of shares of the company. PBS on one hand contributed their land,
plants and employees in the joint venture, while ABB gave financial support and modern
technologies to the company. The joint venture included all kinds of boilers, turbines, power
plant and the plant of PBS in Mikulov that made turbine blades. The reason for choosing this
case study is the strong channel of the company after the venture was formed. Their
operations are unique as some of them are dependent on others while others are their own
functions (Gereffi & Fernandez-Stark, 2016). The report discusses about the value chain
analysis of ABB PBS after the venture. It further discusses about both the primary and
support activities in the value chain analysis.
Value Chain Analysis of ABB PBS
Primary Activities of ABB PBS
Inbound
Logistic
Outbound
Logistic
Operations Marketing
and sales
Services
Importance It is the raw
materials and
other
important
tools that the
company
It decides the
final quantity
of goods that
the company
is producing
and offering
It is important
because it
decides the
main activities
of the business
It helps in
generating
revenue and
increasing
brand value of
the company
It helps in
attracting new
customers for
the
organization
and retain the

4
VALUE CHAIN ANALYSIS OF ABB PBS
purchase for
producing the
final goods
for sale in the
market
existing
customers of
the business
(Olson, 2014)
Strength The joint
venture of
ABB PBS has
inbound
logistic of
external
services
division,
information
system,
physical
capital, land
and plant
equipment
Both ABB
PBS served
products as
outbound
logistic such
as power
generation,
turbines,
boilers,
internal
service
division that
offered
maintenance
and repair
service
business.
Export
accounted for
more than
quarter of the
The main
operation
were to
develop
turbines,
boilers, steam
line boilers,
and to offer
services like
maintenance
and repair
Was assisted
by the sister
company of
ABB in
offering sales
network
opportunities.
Owned a vice
president of
sale to carry
out all the
sales activity
and also an
export sales
team.
Offering
repair services
to the
customers and
providing
power to huge
industries
from its power
generating
plants

5
VALUE CHAIN ANALYSIS OF ABB PBS
total orders
Weakness Failure after
two years as
external
service
division
started
functioning as
a separate
business.
Technology
advancement
lead to
inability of the
employers to
perform their
task
efficiently.
Huge
competition
and losing
share of repair
services.
Increase in
cost due to
high
competitions.
Orders for
boilers
reduced
gradually after
two years of
venture
Failed to
perform their
services
gradually after
two years of
the venture.
External
service
division failed
with the aim
of functioning
as a separate
business.
Did not carry
out any strong
marketing and
advertising
activities to
increase their
brand name as
a joint
venture. it
sales team
also started to
decline its
services after
two years of
successful
operation
Failed to offer
all kind of
service to the
customers
after two years
of operations
because of
lack of
support and
service
generation
came below
10 percent of
the set goals.
Table 1: Primary Activities
Source: (Darmawan, Putra, & Wiguna, 2014)
Support Activities of ABB PBS

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VALUE CHAIN ANALYSIS OF ABB PBS
Procurement Technology
development
Human
Resource
Management
Firm
infrastructure
Importance Helped the
company in
setting a new
business
successfully by
procuring the
services and
facilities from
each other
Important for the
organization to
generate services
efficiently and
also to compete
successfully in
the business.
Helps in hiring
employees for the
business to carry
out work
efficiently for
every division of
the business.
These are the
capital, finance
and others that
helps in carrying
out the functions
of the business
efficiently and
support long term
growth (Alcacer
& Delgado, 2016)
Strength ABB PBS has
procured the
value of land,
employees and
equipment from
the PBS and
ABB offered
financial support
and technologies
to the business
ABB contributed
the technologies
to the business
and the joint
venture always
played a
significant role in
technological
development.
The joint venture
benefitted on
some ground
The human
capital
restructuring of
ABB PBS
included training
the already
existing
employees about
the new
technologies
rather than hiring
new employees.
The business had
a very strong
financial
performance for
the two years.
Export revenue
increased more
than quarter of
expected
earnings. It also
had a strong
infrastructure in

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VALUE CHAIN ANALYSIS OF ABB PBS
from the merger
from the
development of
the new steam
turbine lines. The
joint venture also
benefitted on
various other
variables such as
productivity and
inventory due to
advanced
technology
Training the
employees about
the technology
and English
language
innovation and
new technology
adoption.
Weakness The business
failed to procure
sufficient amount
of employees
from the ABB
sister company.
Most of the
employees of
PBS did not join
the joint venture
The company
failed to realize
the importance of
technology till
the mid-1996 and
the technology
development was
very slow till
then. There is
also a lack in the
number of
engineers to use
However, the
company started
losing employees
due to problems
in human
resource such as
longer time of
pay of incentives,
profit sharing
was low for some
workers and low
bonus to some
The financial
strength of the
business fell after
the two years and
the company also
started to lose its
expertise on
external services
and information
system. Finance
also decline due
to lack of demand

8
VALUE CHAIN ANALYSIS OF ABB PBS
the advanced
technology. This
made it difficult
for the business
to hire new
technology
easily.
bonus-worthy
employees.
for boilers.
Table 2: Support Activities
Source: (Casadesús, 2016)
From the above analysis the Value Chain analysis of ABB PBS that showed all its strength
and weakness depending on its various activities such as inbound logistics, outbound logistic,
marketing, operation and services (de Souza & Márcio de Almeida, 2013). However the
condition of these factors depends directly on the support activities of the business such as its
procurement from the joint venture, human resource management, and technology condition
and infrastructure development.
Recommendation
From the above analysis it can be seen that the joint venture that took place between
ABB and PBS was successful for the first two year and slowly started to decline thereafter.
This was because some of the lack of support from the parent company of ABB and PBS.
The company should also conduct a better marketing strategy to market its new venture and
create maximum brand value. This will help them create a better brand recognition of the new
venture and also help them attract better investors, technology and better customers.
Moreover it is also important the company hire some educated and trained employees that
can use new technologies rather than training the existing employees.