Global product development strategy at Bosch: Selecting a development site for the new low-cost ABS platform Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

ABSTRACT

This paper takes an overview of the Bosch Group’s strategy regarding global product development. Stefan Tammler, head of the chassis systems control division and Dr. Klaus Wanger, member of the management board at Bosch and responsible for CC were discussing to make a decision about the location for the development of the new anti-lock breaking system (ABS) platform for the low-price vehicle segment (LPV) to serve, first and foremost, the Chinese market but also in the long run other developing markets in Asia Pacific, South America, and even Africa.

While the Chinese division of CC (CC/CN) was in favor of developing the new low-cost ABS platform in Suzhou, there were also a lot of reasons to bring the development to Japan, where a technical center of the division had already been operating successfully for more than 20 years.

This paper presents a brief introduction of the Bosch Group, the introduction of the product portfolio and the introduction of the product under consideration for this case which is Anti-Lock Breaking System (ABS).

The next section discusses the culture at Bosch where innovation is the core value . Then the R&D strategy at Bosch was discussed.

Then the feasibility of the execution of these strategies is discussed. Finally, the role of leadership was discussed in the implementation of these strategies.

INTRODUCTION

The Bosch Group is a prominent international supplier of technology and services in the diverse fields including automotive technology, industrial technology, consumer goods and building technology.

The Bosch Group comprised of more than 300 subsidiaries and regional companies in over 60 countries. Including its sales and service partners, Bosch was represented in almost 150 countries.

The Bosch product portfolio comprised;

Electronic brake-control systems such as ABC, traction control system (TCS) and ESP
Sensors (including; wheel speed, steering angle and yaw-rate sensors)
Electronics for occupant and pedestrian safety (e.g. airbag control unit and crash sensors)
Driver assistance systems based on radar and video-sensor technology (including adaptive cruise control ACC and night-vision)
Networked system solutions for safety (CAPS- combined active and passive safety) and agility (VDM- vehicle dynamics management)

The chassis systems control division is assigned with the responsibility of developing components, systems and functions in the fields of vehicle safety, vehicle dynamics and driver assistance.

The product under consideration of this case is Anti-Lock Breaking System (ABS). It is one of the basic products within the Bosch product portfolio. Research and Development of ABS system already started in the early 1970s. In 1975 Bosch introduced the first completely electronic four-wheeled multi-channel ABS in the Mercedes-Benz S-Class. There are four main components in an ABS system:

speed sensors
valves
pump
controller

CULTURE

Innovation has always had a long-standing tradition at Bosch. At Bosch, thousands of employees from all over the world developed new products and systematically improvised and innovated those that were already developed. They had a record of having applied for record number of patents in a particular year. One of the reasons for this performance was the presence of internationally dispersed development centers. Bosch is the only organization having a culture of developing products such as breaking and safety systems like ABS and Electronic stability programs along with new technologies for cutting pollutant emissions were born and were being continuously improved by new patented developments.

Since its inception Bosch has always been an international organization. It is a technology intensive company, that’s why it has an established and a Global R&D network. They had a traditional approach of carrying out the majority of R&D activities near the headquarters in their home country.

The culture of innovating only near the head office is now changing as Bosch wants to tap the emerging potentials around the globe. Bosch wanted to establish a presence at an increasing number of sites to access new knowledge and to absorb new research results from foreign universities and competitors into their own organizations.

The second reason of the changing culture is that businesses competing in the international arena must move new products to market at an ever more rapid pace (Refer to figure 2).

The lead plant was in charge of optimizing the manufacturing process and served as a source for improvements of the regional manufacturing sites. However, for most products and systems there was a lead development center, which was located in Germany. But there took place constant discussion about shifting more autonomy to regional development centers to strengthen Bosch’s global presence. An important consideration for increased autonomy was a development center’s technical and project management competence.

Normally, German managers ran newly formed regional development centers but in later stages local mangers gained more control. In general, the more customization a regional development center provided for its customers, the more independent it became.

Bosch also has the culture of producing only high-quality and extremely reliable products. High quality is defined first of all by high performance of the product but even more by extreme its reliability. These products were produced in hundreds of thousands or even millions and had to be exactly the same regarding the product’s lifetime. There is a strong system in relation to the quality standards and approval of the OEMs. But in order to target the Chinese market they have to shift their focus from high-quality and reliable products to shorter response times and high flexibility.

STRATEGY

There were three significant level of strategy while new product development was being pursued at Bosch (Refer to figure 1). Those were;

Corporate Development at Headquarters
Central divisional development
Local development

Corporate research is responsible for developing the basis of innovation at Bosch for exploiting new technologies. Headquarters at Bosch generally followed a technology push strategy. Particularly, technologies that can be exploited across several divisions and products would be developed here.

Divisional level R&D is involved with the task of developing products that deliver the functions required by the market. These products are generally platform developments that did not take into consideration all the prerequisites of the individual customer (OEM), however they were more concerned with functions desired by the ultimate user. Standardization in platform development was the key to make sure efficient economies of scale was obtained during later series of the production process, however at the same time it had to provide some degree of freedom to be able to adapt the product to various customer desires later on.........

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by Martin Kupp Source: ESMT - European School of Management and Technology 10 pages. Publication Date: September 6, 2012. Prod. #: ES1301-PDF-ENG