ABB faces issues managing its key account with Caterpillar including unclear roles between the GAM and BUs, lack of coordination and focus on relationships. To address this, the document recommends that ABB 1) implement a Global Customer Management program to better coordinate management of the Caterpillar account globally, and 2) adopt a network-oriented perspective led by the GAM to foster joint value creation through collaboration with Caterpillar.

1. ABB and Caterpillar Key Account
Management Case
Group Assignment
Group 5:
AvinashSingh(GSEP13CMM023)
KautilyaTyagi (GSEP13CMM026)
PrajaktaTalathi (GSEP13CMM031)
VihaanChaudhary(GSEP13CMM037)
5/12/2014

2. ABB and Caterpillar Key Account Management Case
B2B Marketing – Group 5 Page 1
Table of Contents
Background...................................................................................... Error! Bookmark not defined.
Company Analysis......................................................................................................................... 2
SWOT Analysis.......................................................................................................................... 2
Strength................................................................................................................................ 2
Weakness............................................................................................................................. 2
Threat...................................................................................................................................3
Opportunity.......................................................................................................................... 3
Customer Analysis ........................................................................................................................ 3
Key Issues ....................................................................................................................................3
Strategic Options.......................................................................................................................... 4
Fulfil All Customer Demands......................................................................................................4
Steering Committee.................................................................................................................. 5
Customer Asset Management....................................................................................................5
Relationship-OrientedPerspective ......................................................................................... 5
Network-Oriented Perspective............................................................................................... 6
Recommendations and Justification............................................................................................... 6
Implement Global Customer Management (GCM) Program......................................................... 6
Network-Oriented Perspective to manage Key Customer Accounts.............................................. 7

3. ABB and Caterpillar Key Account Management Case
B2B Marketing – Group 5 Page 2
Situational Analysis
Company Analysis
ABB, a $20.7 billion Swiss – Swedish engineering group, was a worldwide leader in power and
automation technology supplying utility and industrial customer with product and services. It
operated in more than 100 countries and employed 104,000 people worldwide. ABB has five
business divisions namely:
 Power Products
 Power Systems
 Automation Product
 Robotics
 Process Automation Division
SWOT Analysis
Strength
1. Cutting Edge Technology: All products of ABB are technically very superior. Customers are
very much satisfied with the performance of the products.
2. Well Trained Employees: Employees of ABB have good knowledge about their products.
Theyknowinand out aboutthe product.It increasesthe respectfor the employee in front of
their customers and strengthens the position of ABB.
3. Global Presence:ABB operatesinmore than100 countriesaroundthe world.Itincreasesthe
reliability on the company and provides advantage to handle customers on global level.
Weakness
1. UnclearRole: People inthe organizationare notveryclearaboutroles andresponsibilities of
the Group Account Manager and Business Unit.
2. Lackof Coordination: Because of unclearroles andresponsibilities, coordination within the
company is missing.
STRENGTH
- CuttingEdge Technology
- Global Presence
- Well Trainedemployees
WEAKNESS
- Unclear Rolesand
reaponsibilities
- Lack Of Coordination
- Disconnectwithcustomer
THREAT
- Overdependence oncaterpillar
- Caterpillardevelopingtheirown
Turbocharger
- Big Accountat the verge of
movingout
OPPORTUNITY
- Clearlydefine&Integrate GAM
role withBU
- Steeringcommitteeheadedby
Paul

4. ABB and Caterpillar Key Account Management Case
B2B Marketing – Group 5 Page 3
3. Disconnectwith Customer: AlthoughABBisprovidingsuperior quality product but they are
not engaged properly with the customers.
Threat
1. Overdependence on Caterpillar: For the turbochargers business, 30% of the total volume
produced by ABB is consumed by Caterpillar. This increases the risk of the business.
2. Caterpillar developing their own Turbochargers: Air system group of Caterpillar is
developing its own turbochargers designs. This has created lot of conflict between ABB and
Caterpillar. Also Intellectual Property (IP) matters have been raised.
3. Big Accountat the Verge of MovingOut: Caterpillarisone of the biggest accounts for ABB.
Due to this disconnect created by ABB, Caterpillar started looking for the replacing ABB as a
supplier.
Opportunity
1. Clearly Define and Integrate GAM Role with BU: ABB is facing lot of friction because of
unclearroles andresponsibilities.Itultimatelyreducesthe efficiency of ABB. Integrating GAM
role withBU increasesthe efficiencyof ABBasa whole andstrengthensitspositionin market.
2. Steering Committee Headed by Paul:Dan Ahren (GAM) hasdeveloped goodchemistrywith
Paul. Now ABB can work in close coordination with Steering committee to increase the
engagement with Caterpillar and repair the earlier damage.
Customer Analysis
 Sales and Revenues of Caterpillar is about US$ 36.3 billion
 Worldleading manufacturer of construction and mining equipment, diesel and natural gas
engines and industrial gas turbines
 Has 3 segments:
o Machinery
o Engines and
o Financial Products
 Represents overUS$67 millionin Revenues for ABB. Over $40 million come from supply of
Turbochargers
 ABB’s top three customers in terms of volume. 30% of Turbochargers produced are sold to
Caterpillar
 Uses Turbochargers for 2 plants at Lafayette, Indiana and Kiel, Germany
 Caterpillar Motoren GmbH @ Co. in Kiel was a world leader for four stroke medium speed
diesel engines used in ships for main propulsion
Key Issues
 Initially individual BUs were responsible for dealing with the account and took care of the
requirements of the customers, but these units weren’t ready to accept the direct
involvement of the GAMin the key decisions making concerning those accounts.
 ABB’s dictating terms while deciding price, delivery times, and quantity. There was no
concernabout maintainingagoodrelationshipandproviding the best of the services to the
customer.The Business Unitswere hardpressedondecidingtheirownterms andnot on the

5. ABB and Caterpillar Key Account Management Case
B2B Marketing – Group 5 Page 4
customer’s expectations. They were not valuing the importance of building a value
relationship with the customer.
 Nonfamiliarityof the changestakingplace inthe organizationamongstthe variousBusiness
Units.There was clearlack of communicationbetweenthe management and the Units. This
was visiblefromthe factthat the Units resistedthe GAM’smakinganynew decisionsfor the
existingcustomersandwantednointerference fromtheminto their business deals. Lack of
trust and Coordination within the BU’s and the GAM’s on key accounts.
 Managementnegligence intryingtobuildrelationshipandflexibility between the units and
the GAM’s. Managementhad to make sure that both these parties understand clearly each
other’s roles and responsibilities and support each other in building a strong clientele
 Lack of transparency from the customer’s side in not informing key plans and internal
building up of similar designing for the Turbochargers.
 Lack of understanding of the customer-supplier relationship, their structure, culture and
business practices with no emphasis on customer relationship management.
 Lack of effortinstrengtheningthe relationshipwiththe customer.The customer(Caterpillar)
as well asthe supplier(ABB) bothlookdisengagedandtherefore there hastobe a bridge for
bothof themto communicate clearly,tryandsolve critical issuestogether,understand each
other’s working style and form a long-term relationship which work in favor of both and
benefits them in the long run.
 Lack of trainingof the existing BUmembersandinstillinginthemthe importance of working
together as one unit with the GAM’s for the overall interest of the company.
 Lack of flexibility and transparency in the culture of the company in dealing with key
customers like Caterpillar.
Strategic Options
In today’s tough global competition, companies in B2B Markets need to rethink the way they
manage theircustomerportfolio and interact with their customers. Customer-centric leadership is
required to manage strategic customers as assets. Different strategies can be adopted for asset
management based on its scope and depth and on value creation and risk management.
Few Strategic Options are:
Fulfil All Customer Demands
Mend strained ties with Caterpillar by fulfilling their demands of better delivery support and
enhanced collaboration.

6. ABB and Caterpillar Key Account Management Case
B2B Marketing – Group 5 Page 5
Steering Committee
Create a steeringcommitteecomprisingof ABBandCaterpillar’sdecisionmakingexecutives to work
on issues in a systematic manner. The focus should be on negotiating on the points of contention
rather than accepting whatever they need.
Customer Asset Management
The customer asset management perspectives are:
Relationship-Oriented Perspective
Relationship-OrientedPerspectiveputsbusinessrelationshipfirst; ABBmanagershouldbehave asan
advisor and apply consultative techniques to develop comprehensive, tailored value proposition
with Caterpillar. Partnership built on mutual trust to do continued business.
The immediate risk of
loosing the customer will
be removed.
Future prospects of
getting more business
will be enhanced.
Client could become
more demanding in the
future.
Pros
Cons
Customer will take it as a sign of
commitment from ABB and might
reconsider the decision to switch.
BU will have confidence in ABB
management because of their
involvement in the negotiating
process.
Negotiations if not done
properly could lead to
the same results as right
now.
Pros
Cons

7. ABB and Caterpillar Key Account Management Case
B2B Marketing – Group 5 Page 6
Network-Oriented Perspective
Network-Oriented Perspective defines, explores and creates value within the supplier-customer
ecosystem. ABB Managers should act as “Intrapreneur” who orchestrates value creation and risk
reduction.
Recommendations and Justification
Implement Global Customer Management (GCM) Program
There is clear lack of co-ordination between the GAM and the Business Unit team of ABB. The BU
doesn’twantGAMto be interfering how to manage the key issues like prices and deliveries of the
Caterpillaraccount.Therefore toincrease the co-ordinationamong these teams internally and with
the clientCaterpillar, ABB should implement the Global Customer Management (GCM) program to
manage this account.
Customersatisfactionand
loyaltyresultsinto
relationshipsuccessand
partnership
Projectspursuedin
collaborative fashion
Longertime horizon
Significantco-investment
and deeperlinkingof joint
processesisrequired.
Absence fromone party
will fail togive results
Pros
Cons
Sharedgovernance
GivesRelationship,
Economic,Knowledge
and Leadership
Advantage
Investmentcostsfrom
bothparties
Employeesneedtobe
managed,staffedand
trainedpropoerly
Pros
Cons

8. ABB and Caterpillar Key Account Management Case
B2B Marketing – Group 5 Page 7
ABB seemstohave aspiredtoimplementsome essence of GCMbecause the newlyappointedGroup
Account Manager (GAM) Dan Ahern is responsible for Caterpillar account globally rather than
regionallywhichwas the earlier norm. But clearly there are problems in the conceptualisation and
implementation of this change because the BU is not clear on the roles and responsibilities of the
newly created GAM position. Therefore our recommendation is that the program should be
implemented properly with serious commitment from top management.
Reasons to implement GCM:
 Attracting,retainingandnurturingglobal customersisacomplex taskthat goeswell beyond
traditional customerrelationshipmanagementprograms(CRM)
 A global clientmightrealize thatthere isservice variabilitybyasupplieracrossgeographic
boundarieswhichcanbecome asource of contention.
 There mightbe price differencesbetweengeographiesforwhichthe suppliermightnothave a
justifiable reason.
 The clientmightfeel the requirementforbetterdeliverysupportfromthe supplieranda
bettercoordinationwiththem.CreatingaGCMprogram will fosterthis relationshipandshow
the supplier’scommitmenttothe customer.
Research suggests that companies which implement GCMhave a significant improvement in their
customersatisfactionandrevenuesandincreasestheircompetitive position in their market. In this
particular case implementing GCM with proper corporate commitment, dedicated task force, full
time GAM’s and training programs supported by IT infrastructure will remove the ambiguity about
the GAMposition form the perspective of BU and increase their co-operation.
Network-Oriented Perspective to manage Key Customer Accounts
Dan should incorporate Network-oriented approach and gain the below advantages for ABB:
• Relationship – to form joint value creation with Caterpillar
• Economic– to devise measures tolower total costs, address hidden costs and value drivers
• Knowledge – to seek knowledge-based value that can be translated into high impact
activities in the network of ABB
• Leadership –to motivate andcoach cross-function,cross-unitandcross-geography teams of
ABB and help them understand roles and responsibilities of GAM
On implementingNetworkperspective approach,it can be leveraged by ABB with the help of three
key dimensions:
 Mind-set – to drive value creation and risk management in co-creation business
relationshipsinclose collaborationwithinternal andexternal stakeholders of both ABB and
Caterpillar
 Context – to specify responsibilities, key performance indicators, competences and
collaboration at ABB-Caterpillar interface
 Competence – to possess skills like Relational, Commercial, Knowledge Management and
Leadership skills