This paper aims to provide a better understanding of project marketing and to contribute to the literature the perceived relationship between project marketing and project management.
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A research question can be asked to get a closer look at the entire dissertation, that is: how can project marketing be used to attain project success? We have also to answer the question related to this one, which goes: Is project marketing the same or a sub-category of project management?
In the age of intense globalisation, organisations are continuously experiencing phenomenal changes and innovations. The world of business is constantly facing new challenges, innovations and applications, thus organisations have to cope with constant change. Managing change is one of the priorities of the new global organisation because change is an opportunity for improvement.
Organisations have to adopt and continuously train and improve because of these changes. Adoption and improvement are significant here because outsourcing companies (or those who provide outsourcing services) are a source of competition. This means there is a strong competition when it comes to talents and capabilities and output.
Globalisation involves systems, technology and processes. Technology is a part and tool of globalisation which has affected even the smallest community.
Global business has penetrated the remotest areas of the countryside. Small organisations have become global organisations, or they operate in a global scale. With the advent of information technology, organisations have to introduce various changes in their business processes, marketing strategies, product orientation, employee management or human resource management, and other organisational strategies in order to be competitive.
Project management is as old as written history. Tracing back history, we can analyze its role and importance to man’s activities. From the time of management scientists and industrial engineers like Elton Mayo and Frederick Winslow Taylor to Henry Ford’s production-line manufacturing famous with Model T automobile, to Henry Gantt and his famous charts, we see project management present in every aspect of labour and production. This was further enhanced with the emergence of mainframe digital computers which made processing and updating of products faster and easier. (Lock, 2007, p. 3)
Man-made projects are not new: monuments surviving from the earliest civilisations testify to the incredible achievements of our ancestors. Modern projects, for all their technological sophistication, are not necessarily greater in scale than some of those early large projects.
Formal management organisation structures have existed from early times. But history can also tell us of the many projects that failed. The Standish Group says that failure is an effect of innovation and innovation is one of the factors for success. (Chaos: a recipe for success, 1999, p. 1)
Productions and operations are linked to operations management (OM) and is the process by which goods and services are created (Shim & Siegel, 1999, p. 2). This can be productive processes in all kinds of organised activities such as factories, offices, supermarkets, and hospitals. Management decisions are based on customer requirements, and decisions can be done in the course of operational processes.
Project management is now a major area of concentration in organisations; successful managers know what project management is all about. Project managers occupy a unique position within firms because they supervise special and regular projects or activities of the organisation. The key to the success of a project is the understanding of the particular project, coupled with teamwork and close coordination with the project management team, along the lines of organisational systems and framework.
Looking at the various projects and activities of organisations, we find project management to be interesting and something worthy to carry along as we pursue future endeavours and careers. Not only is the topic fruitful and important to project managers but to any member of an organisation or to anyone involved in a profession that involves diversity and a lot of projects and activities. Understanding the concept and methods of project management enables us to be a part of the success of any project.
In the 1970s, there was a rapid growth in information technology, or IT. Industrial project management continued as before, but with more project management software available and wider recognition of the role. However, the spread of IT brought another different kind of project manager on the scene.
These were the IT project managers: people who had no project planning or scheduling experience and no interest or desire to learn those methods. They possessed instead the technical and mental skills needed to lead teams developing IT projects. These IT project managers were usually senior systems analysts, and this profession is fast growing. (Lock, 2007, p. 3)
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Successful outcome of projects requires some investment on the part of the organisation; thus it is obligatory on the part of the managers to see to it that the project is well planned and executed. This is how important project management is to an organisation or a group implementing certain projects.
The major aim of this paper is to determine how organisations apply project marketing in relation to project management. Project marketing is seen as a primary organisational activity in large projects. Organisations see this in the context of organisational activity and not just an ordinary function. Project management is practiced by organisations as a regular part of organisational activities.
Project management involves managing a certain activity, and this can be about a project at work, at school, or at home. The term project management can be anything, or can even be a case study, but in this paper, we deal with large scale projects of organisations.
Project management is about processes and how to be able to successfully carry out a task up to the end of its schedule set up by the project manager as required by the customer. Practically, no organisation operates without a project or activity, and this project has to be managed by a well-trained manager, who knows how to act in situations that require immediate and precise decisions.
This essay deals with some guidelines for the project manager, and other relevant aspects of project management. It also touches on project management as applied to Information Technology, and other studies made by authors and experts in the field of project management. Project marketing applied to project management is another important part of this paper. This is drawing up case studies that may be of help to the understanding of the related subjects.
In examining the historical evolution of organisations, we are faced with interesting trends. First, organisational forms emerged in waves, and second, once these forms were established, others remained applicable to the present situation and stay there for a considerable length of time while others evolve and change into some form. (Aldrich, 2008, p. 177)
The situation in this second trend is that the environment is changing giving advantage to some organisational forms at particular times. These organisations established during a particular period have technologies and structures available during that time. Organisational forms are dependent on the resources and technology available in a given situation.
Other factors include the state’s resources and role, the development of the economy, the political development, technological advancement, and similar other forces. Emergence of organisational forms also depends on three factors: 1.) technological advancement with a corresponding social structural support; 2.) power and wealth available in a given situation; and 3.) the development of labour markets. (Aldrich, 2008, p. 177)
Large incumbent firms are not really keen on adapting innovations because of their organisational structure. Burns and Stalker (1961 cited in Swann and Gill, 1993, p. 15) mentioned two forms of organisations: the organic and the mechanistic organisations.
Mechanistic firms had a well-defined organisational structure and could easily adapt to stable and predictable market forces for which they could easily take hold of. The organic form, on the other hand, adapts to rapidly changing conditions specifically when problems and requirements could not be easily met. Old organisations cannot easily adapt to rapidly changing conditions and thus cannot enforce innovations.
Project marketing and project management
Project marketing and project management must go together. Project management has been in existence since 4500 years ago when the great pyramid of Egypt was constructed as one of the earliest of projects. This means that the application of project management from that time on has not changed dramatically.
A research group known as the International Network for Project Marketing and System Selling (INPM) defines the term project marketing as related to purchasing and selling in organisations. This means the term refers to external marketing. INPM researchers have not focused on the internal marketing of projects within the organisation.
Instead, projects classified as multi-organisational and international fall under the heading contract operations. This is opposed to operations based on exports and considered foreign direct investment. (Skaates & Tikkanen, 2002, p. 504)
According to Soudain, Deshayes, and Tikkanen (2009), the INPM argument on project marketing states that it is not enough to consider a project between one firm or a group of firms to another firm or group of organisations as a mere project management. Instead, the whole process should be considered as a multi-firm project network served by individual firms. Moreover, there are two levels of relationship management in the context of project management.
First, there is the management of relationships and networks considered for the individual projects from start to completion. Then, there is also the company level for the project which encompasses relationships between organisations for some time in their multiple project cooperation ‘in a broader economic, social, and political business network (or milieu)’ (Tikkanen as cited in Lecoeuvre-Soudain et al., 2009, p. 36).
Project operations have sub-classifications, like: partial projects, turnkey projects and the last one which is turnkey plus projects. Partial projects may refer to partial system deliveries. A turnkey project refers to the delivery of a complete system. Turnkey plus projects refer to a complete system delivery plus additional services, in the form of personnel training or facilities management, are given. (Skaates & Tikkanen, 2002, p. 504)
A market project refers to ‘a transaction concerning a functioning whole’ which is intended for a buyer (Holstius as cited in Skaates & Tikkanen, 2002, p. 504). The transaction involves ‘a discrete package of products, services and other actions designed to create (capital) assets for the buyer for a certain period of time.’ (p. 504)
Researchers of the marketing groups IMP and INPM emphasise the role of relationships in business-to-business marketing, and as such a conceptual framework was created which provided comparison on special characteristics in project marketing and systems selling with characteristics found in business-to-business marketing situations.
The framework D-U-C was created with three distinguishing features of project provided, such as:
‘D, which stands for discontinuity of demand for projects
‘U, which stands for uniqueness of each project in the aspects of technical, financial and socio-political
‘C, which stands for complexity of every individual project when referring to the number of actors involved in the supply process.’ (Skaates & Tikkanen, 2002, p. 504)
According to this framework, discontinuity on relationships may be the result of lack of bonding, long-term mutual relationship or orientation beyond the project, although there is a substantial relationship interaction during the initial stages of the project.
In some cases, after the completion of the project, a so-called ‘sleeping relationship’ phase may occur. Firms have to use every possible way in order to have a post-project interaction with previous clients, thereby minimising the sleeping relationship scenario. (Cova & Salle as cited in Skaates & Tikkanen, 2002, p. 504)
In project marketing, the demand-related discontinuity, or the D in the D-U-C framework, is a major strategic problem. INPM studies have focused on discontinuity in multiple projects. Each individual project is regarded as distinct episode in the buyer-supplier relationship. The success or failure of individual projects will determine future buyer-seller relationships. Therefore, it is important that project marketers should focus on the success of single projects and develop significant relationships where individual projects are based. (Skaates & Tikkanen, 2002, p. 505)
The idea of milieu is an important aspect in the subject of marketing research. It has been described as a “sociospatial configuration” which has four elements: a territory; a network of actors brought together for a common cause within the territory; a representation by the actors; and the law related to the milieu which can be a set of rules and norms (Cova et al. as cited in Lecoeuvre-Soudain et al., 2009, p. 37). The business network concept can be used interchangeably with the milieu concept (Skaates & Tikkanen as cited in Lecoeuvre-Soudain et al.).
There are several definitions of project marketing that will be discussed in this section. A simple definition is that project marketing refers to business-to-business, or industrial, marketing transactions. A project, on the other hand, is an activity that aims to create a distinct product or service (Pinto as cited in Maurer, 2011, p. 143).
The American Marketing Association’s definition of marketing states that it is a ‘process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges that satisfy individual organizational goals’ (Boyett & Boyett, 2003, p. 2).
Marketing involves satisfactory exchanges through effective communication with customers and building relationships with them and with other stakeholders who could greatly affect organisational performance. (Boyett & Boyett, 2003, p. 3)
The definitions and common applications of project marketing and project portfolio management seem to overlap. The International Organization for Standardization defines a project as ‘a unique set of processes consisting of coordinated and controlled activities’ with beginning and end dates, and done with specific objectives. The project objective has some requirements to be delivered, applied with constraints like time, cost and resources.
Project management, on the other hand, refers to ‘the application of methods, tools, techniques and competencies to a project’. Project management is applied with processes and has several phases of the project life cycle. (“Guidance on project management,” 2011, p. 8)
The deliverables in a project life cycle are specified in accordance with the requirements set forth by the sponsor, customer and other stakeholders. (“Guidance on project management,” 2011, p. 9)
Moreover, project marketing emphasises the different marketing activities occurring before obtaining a contract. The contracts involved are large projects, like building construction and power stations. (Laurence & Patel, 2009, p. 50)
Project marketing involves a wide scope in the field of project management with project marketing re-defining the project in the wider field of project business. Project managers define project management as a process and project marketing as a task in project management. The project manager is responsible for project marketing.
Project management has to work closely with project owners to identify and define opportunities and focus on the risks involved in the projects within the customer’s business. Project marketing refers to development but is practiced occasionally, a reason why researchers face countless challenges in relating this with real life situations. (Laurence & Patel, 2009, p. 50)
There are two schools of thought in the understanding of project marketing. First is the concept of project marketing by project marketing researchers. Generally, we understand marketing as the promotion and selling of whatever products and services companies can offer. (Laurence & Patel, 2009, p. 51)
The first school of thought advocates the four-phase process in project marketing. These are: the pre-project marketing (project is not yet in existence, but the supplier identifies targets and opportunities, and informs the client); the start of the project (rules are set, supplier-client relationship is enhanced); ongoing project marketing (stakeholders proceed with the necessary activities, re-negotiation and follow-up up to the end of the project); relationship is further enhanced; marketing setting grounds for future projects (“sleeping relationship” is avoided), and preparing for future projects. (Laurence & Patel, 2009, p. 53)
The second school of thought in the understanding of project marketing is the definition of project marketing by project managers. This framework recognises project management as a social construction process. (Laurence & Patel, 2009, p. 53)
Philip Kotler (as cited in Laurence & Patel, 2009, p. 51) emphasises ‘the needs and wants’ of customers in the definition of marketing; while the Chartered Institute of Marketing focuses on ‘identifying, anticipating and satisfying’ the customers. (Kotler & Lane as cited in Laurence & Patel, 2009, p. 51) According to Boyett and Boyett (2003), Philip Kotler’s definition of marketing excludes selling. Kotler is a professor of International Marketing and author of 15 books on marketing.
Kotler argues that marketing and selling are not the same. Selling can be part of marketing but there are other activities in marketing. Peter Drucker added that the making of ‘selling superfluous’ is one of the aims of marketing. The reason behind could be that when marketing is very successful, you require only little selling. (Boyett & Boyett, 2003, p. 4)
The marketing concept states that an organisation should provide products that satisfy customers’ needs through organisational activities that also help the organisation to achieve its goals. (Jobber & Lancaster, 2003, p. 11)
Customer satisfaction is a major aim of the marketing concept. A firm has to find out what will satisfy customers. The organisation must continue to alter, adapt and develop products to keep pace with customers’ changing desires and preferences. The marketing concept stresses the importance of customers and emphasises that marketing activities begin and end with them. (Jobber and Lancaster, 2003, p. 15)
As Pinto and Colvin (as cited in Blomquist & Wilson, 2006, p. 215) said, project marketing in project management should have the right mix and the right market, or that the successful marketing has the right product, the right price at the right time, with an appropriate promotion, and in which the rightness of the elements is decided by the customer.
A marketing strategy can be likened to a recipe. The marketing functions can be referred to as the ingredients, and recipes vary according to the dish we want. Strategies would require different ingredients in the menu we desire. Success depends on the ingredients we apply. (Jobber & Lancaster, 2003, p. 14)
But marketing is not just providing products and services. It is also about delivering changing benefits to the customer’s changing needs. The American Marketing Association defines marketing as a set of activities and processes that focus on the delivery of products for the benefit and value of customers and clients, including all the stakeholders in the interconnected activities in business.
Project marketing researchers define project marketing as an activity that deals with the selling and marketing issues of projects. Project therefore is defined in the context of the marketing perspective; meaning, project involves a transaction about a package of products that aim to create capital assets to benefit the buyer over a certain period of time (Cova & Salle as cited in Laurence & Patel, 2009, p. 51).
According to these researchers, project concept should include the activities done before the start of the project to post-project phase. On the other hand, Maurer (2011) defines project marketing within the category of business-to-business marketing, which also includes industrial marketing.
The aim of project marketing is to integrate marketing to the activity of a project, and in business-to-business transactions, should take place at the very beginning, i.e. when the project has not been started yet (Lecoeuvre-Soudain & Deshayes, 2006, p. 103).
Project marketing identifies four phases in the project course: before the start of the project, an “upstream of the project” activity, during the course of the project, and “after the project” phase. Together these phases bring into play six variables, which are: collaboration, relationship, joining, training, trust, and communication (Lecoeuvre-Soudain & Deshayes as cited in Lecoeuvre-Soudain et al., 2009, p. 40)
The “pre-project” phase is the time where the marketing process commenced, i.e. to involve the partners in the managerial partnership, which leads to reorganisation and the formation of a managerial team to be led by a project manager. Other activities on this aspect include the implementation of a partnership and the piloting of the project.
In the study of Lecoeuvre-Soudain et al. (2009) over two companies, this phase required great vigilance, and general directions of the two firms when the project was implemented in other countries. (Lecoeuvre-Soudain et al. 2009, p. 40)
The “start of the project” phase focuses on the evaluation of the reliability or competences of the two firms’ resources on the context of management. It is also in this phase where specification and conditions for an invitation to tender are co-written by both sides. Future aspects of project management are also discussed and agreed upon in this phase. People involved in management and those in marketing cooperate and negotiate but they remain separate and distinct.
For example, in Lecoeuvre-Soudain et al.’s study, project marketing actors were from Company X, while actors tasked for managerial dimension came from Company Y. Company X conduct of relation marketing led to a cooperation for the writing and subsequent agreement of the conditions of purchase and the future agreement to tender. The managerial aspect is very precise in this phase. Actions of coconstruction and codevelopment among actors form in this phase.
The relation between the two companies is present although in a different way, i.e. around the same idea (or aim of the project). This is the transition from a mere idea to a concrete realisation of the project. The project is agreed and signed, leading the way for the “during the project” phase. The milieu now is being concretized or realized (the territory, the network, the representation, and the rules. (Lecoeuvre-Soudain et al., 2009, p. 41)
“During the project” phase begins with the installation of a project team. The project manager is tasked to: control the project, manage and conduct managerial reporting to the head office and to the customer or client, and conduct relational marketing with the other actors constituting the project team and other trade partners, the company staff and the customer.
Another part of this phase is the centering of the project team to improve the role of management and marketing. Finally, this is taking control in the context of management and of marketing from the beginning up to the realization and the start of the sale of the project. (Lecoeuvre-Soudain et al., 2009, p. 41)
“After the project” phase is the conduct of the management and relational marketing for the conclusion of the project, and dissolution of the teams. The project is being assessed of its success. Other activities include future offers of projects and “solution selling”. (Lecoeuvre-Soudain et al., 2009, p. 41)
Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP)
The subject on customer relationship management (CRM) is about maintaining positive relationships with customers, focusing on customer loyalty, and adding value to the relationship. (King & Burgess, 2007, p. 421)
CRM is about marketing and an analysis of customer behaviour (Kotler as cited in King & Burgess, 2007, p. 422). Chaffey (as cited in King & Burgess) suggests a three-stage model of CRM in managing customer relationships. First, customers can be acquired through a clear communication in a value proposition.
Customer loyalty can be attained by way of good service (which means quality service), and the relationship can last for a long time if the products or services are delivered according to customer requirements. CRM uses information and communications technology to acquire data, creating a personal interaction with the customer (Swift; Brohman et al.; Pan & Lee as cited in King & Burgess, 2007, p. 422).
Enterprise resource planning (ERP) became popular in the 1960s with the introduction of a computer software. Production systems were integrated with the other internal functions, like purchasing, human resource, financial, and so on. ERP uses a database linking the various tasks and inputs from different departments.
It can be configured to make the departmental functions simplified. The departments have to be adopted and reengineered. Information is shared as transactions accompanied by voluminous data and information are integrated into the system. The role and functions attributable to ERP are vast and the areas covered encompass tasks in planning, accounting, financing, human resource, the many aspects of management and human resource management. (Ash & Burn, 2002, p. 33)
CRM and ERP make use of information from a database. Information is important in organisations because without it, it is nearly impossible to arrive at well-informed decisions. Risk is a part of business decisions, but good information can help minimise risk and uncertainty in business. (McKee, Cox, Housden, & Parkinson, 2009, p. 3)
CRM and ERP both involve large-scale technologies. An effective CRM provides valuable information that will enable the organisation to analyse customer behaviour and preferences. CRM needs technology to be effective. Bose (as cited in King & Burgess, 2007) defined CRM as an ‘integration of technologies and business processes’ to gain customer satisfaction (p. 422).
CRM and ERP are somewhat similar. The difference is that ERP is focused on back-office staff while CRM is used for sales and marketing, which is known as the front-line staff. ERP is for supply and demand while CRM’s aim is to gain insight about the customers.
Because of the introduction of information systems in organisations, different functions and roles have to be reorganised. New paradigm shifts also emerged. Out of this, business analysis has to be defined to link the traditional and the ‘new age’ system. Without business analysis, managements and employees in organisations would not know how to work effectively and use the different technological tools that have been introduced.
The field of IT involves hardware and software. Hardware refers to computers, laptops and servers, and other related equipment, while software refers to operating systems and other applications for various functions. A combination of hardware and software is called IT infrastructure. This infrastructure needs a support staff or people to man the equipment and operate the different functions. The support staff is called the IT support organisation which is responsible for implementing, operating and supporting IT.
An organisation’s IT infrastructure is supported and operated by employees and procedures that will build and operate the IT. These systems allow the firm to meet its primary objectives, such as acquiring profits, minimising unnecessary costs, improving functions, enhancing customer loyalty, and fast tracking supply chain. (Reynolds, 2010, p. 17)
ERP is about internal management; it uses technology to integrate and simplify the different departmental functions. It is an information technology used for processing and effective communication. (Nah, Zuckweiler, & Lau, 2003, p. 5) Through ERP, data can be shared from a common database, enhancing internal problem solution technique. (Reynolds, 2010, p. 22)
CRM focuses on customer interaction, on knowing what customers need and want so the firm can provide appropriate products and services. ERP focuses on routine internal processes. CRM has more challenges, and one of these is to introduce culture change.
CRM involves selecting customers through identification of market segments; acquiring customers through promoting and advertising; retaining customers through providing quality products and services and making casual customers become rabid fans; and growing relationships with customers through gaining their trust and confidence. (Kaplan & Norton, 2004, p. 7)
The internet is one way of enhancing CRM. Customers can log on to company websites, air their views and suggestions or complaints, and even make an order of the company’s products. Many firms offer their products by way of online shopping. They also offer 24-7 service wherein customers can post comments.
This provides a positive interaction with customers, starting a long-term relationship. (Álvarez, Martín, & Casielles, 2007, p. 454) Paper billing is minimized through online billing. Firms’ websites provide customer service by answering their calls and complaints, or if the customers want to suggest something about products and services. Organisations who want to attain customer satisfaction and loyalty offer 24-hour service, seven days a week over the internet.
Additionally, the internet has become a source of information for customers about company products. Marketing executives know that the more information they acquire about customers by way of the internet, the more they can provide quality products that suit to customer specifications.
Through the internet and the company website, customers receive individualized treatment. Individualized treatment means a firm’s ability to provide products, services, and transactions to each individual client. Schrage (as cited in Álvarez et al., 2007) indicated that websites are assessed of their effectiveness ‘according to the variety they provide and their capacity for personalization’ (Álvarez et al., 2007, p. 454).
The worldwide web (www) is one of the most important technological discoveries which have influenced activities of people, countries and organisations.
Businesses use this to promote and advertise, to expand and to improve their business, to acquire more data and information for their databases, and for research and development or to build more products. Most companies, especially the global ones, have their own websites connected to the web. Customer and business interaction with the use of the Internet is common business activity.
Today’s marketers have the world as their marketplace. It is a bigger place to introduce and sell products but also a wider place to analyse and deal with. Before, marketers could only focus with consumer insight of a particular place and community, now they have the ‘global village’ to deal with. It was in 1992 when marketing could be done through one-to-one approach. But now with the popularity of the internet and the information revolution, “mass customization” is becoming a trend.
A question that always seems to linger in the marketer’s mind is: What do consumers think and want? This question cannot be addressed to one group of consumers but to the world. Global organisations, or businesses, think of more appropriate terms and strategies in this new, exciting or challenging marketplace. There is more than one way to kill a cat, and marketers have to be flexible and creative in “killing the cat”.
Marketers have to refocus and find new ways of collecting and analyzing market data and information because of the new forces and trends in globalisation. Information is the key; there are vast amounts of information about consumers out there that have to be collected and analyzed.
This new wave of information needs broader and creative ‘geniuses’ to arrive at fresh insights for the consumers’ needs and wants to be met. Moreover, what is needed is “insight” and a careful study of the vast information acquired from the literature and from the field collected by sales people.
There is another trend in marketing and that is, ensuring that the customer longs and wants for a ‘remake’ of the product. The strategy is to aim for customer satisfaction. But customer satisfaction does not necessarily mean loyalty on the part of the customer. Many authors suggest that having continuous communication with the customer is one step to loyalty. (Stone, Abbott, Foss, McDaid, & Morrison, 2004, p. 228)
Customers have to be asked to rate the importance of particular attributes and performance levels of the product/s. They have to be asked about their willingness to repurchase and to recommend the products that they had bought and their reasons for preferences. These steps can lead us to the concept of customer loyalty.
Understanding customers is critical to their satisfaction and loyalty. In order to address this problem, firms realise that product innovation is one of the solutions. Supply chain learning should be a part of the firm’s strategies to address customer satisfaction and loyalty. This is also the main objective of market orientation – customer satisfaction through superior performance of products (Singh, 2004, p. 3).
Case studies: significance of project marketing
The project marketing approach states that a broader perspective of the business orientation of companies should be applied and not on mere individual projects. This means greater attention should be applied to the overall strategy and operation of firms. (Skaates & Tikkanen as cited in Blomquist & Wilson, 2006, p. 2006)
Another emphasis is that project marketing must be a function in the firm and not a mere orientation. The case studies presented by Blomquist and Wilson (2006) centred on the question, ‘How do multi-project firms in these industries adapt their internal structure to their respective external environments?’ (p. 206)
Background of the case studies
Artto and Wikstrom (as cited in Blomquist & Wilson, 2006, p. 207) stated that project marketing should be placed within the context of projects as business because it is a business orientation. Their study suggested that project business did not just come from project management discipline, but is contextually related with the business environment. The study also focused on looking for business sources instead of project literature.
Artto and Wikstrom (as cited in Blomquist & Wilson, 2006) focused on the organisation and not individual projects. Lawrence and Lorsch (as cited in Blomquist & Wilson) suggested that no particular project management is best suited for all situations. There is a contradiction between project based objectives and organisational learning processes. Project-basing can limit a firm’s innovative potential (Dubois and Gadde as cited in Bresnen, Goussevskaia & Swan, 2004, p. 1535).
Simon (as cited in Blomquist & Wilson, 2006) stated that complex organisms, to include organisations, tend to adapt to their environments. This is applicable to both theory and practice. Kotler (as cited in Blomquist & Wilson) also indicated that there are several ways in which a firm may direct its marketing strategy, but successful ones opt for customer-oriented marketing. Lawrence and Lorsch (as cited in Blomquist & Wilson) indicated that effective organisations always adapt to their external environments.
In this age of globalisation, meeting customers’ needs and wants is a business trend. It aims to lower cost of production while keeping customer loyalty. Firms use strategies in meeting those needs and wants. Experts suggest that the best way in marketing is customer focus leading to customer satisfaction. Products and services are geared towards customer focus, and customer satisfaction is a goal in a value added supply chain. Supply chain management focuses on value added and customer satisfaction at the same time.
Another company strategy is to apply constant innovation. Firms introduce changes in organisational strategies which aim for talents, technologies and customer focus and loyalty (Venkatraman & Henderson, 2008, p. 258). Organisations have to keep in touch with customers, and look for ways to satisfy their needs and wants. Good customer relation is an important business strategy (McColl-Kennedy & Schneider, 2000, p. S884).
To get closer to the customers, businesses have to work as cohesive organisations, using tools and technology (Gulati & Oldroyd, 2005, p. 92), and focus on knowledge-based economy, slowly moving away from the industrial economy. Identifying and working out to strengthen customer satisfaction, supply chains can help in having good relationship with customers, and reduce costs; mostly, it points to the area of marketing (Smith, 1991).
Marketing involves creating ideas for the good of the customers (Levitt, 1983). Supply chains are not only about ‘production and distribution mechanisms but also as important competitive weapons’ (Hult, Ketchen, & Nichols, 2002; Hult, Ketchen, & Slater as cited in Villena et al., 2009, p. 636).
In creating value, an important factor to consider is customer relationship management (Chan, 2005, p. 32). Kotler et al. (cited in Blythe, 2006, p. 5) includes the idea of value in the definition of marketing, which is ‘the relationship between what is paid and what is received, and can be increased or reduced by marketing activities’ (Blythe, p. 5).
The practice of customer-oriented approach can be understood as the organisation’s openness to the customer, or the organisation being “accountable to the customer” (Cäker, 2007, p.144). This practice of being customer-oriented is now incorporated in the organisations’ management accounting (Vaivio; Guilding & McManus as cited in Cäker, 2007, p.144).
Organisations around the world compete to gain more customers, and one way of gaining more customers is to gain their trust, answer and meet their needs and wants, to make sure that they come back. It is not enough that they buy the company’s products; it is important that they come back. Customer satisfaction should be able to gain customer loyalty. A lifelong partnership between the company and the customer should make the company last for a long time.
Marketers have reformatted the way they collect and utilise market intelligence. They need more information and are redefining goals to suit to the present trend of intense globalisation.
Customer closeness is one of the requirements for customer focus and loyalty. It is important in demand-oriented capabilities and performance. Customer closeness is associated with responsiveness to customers and customisation. Supply chains can also be aimed at customisation. It is a strategy that combines operational excellence with customer closeness. (Cäker, 2007, p.144)
Flexibility is another important factor in having customer closeness. Flexibility refers to being able to change and react to customer demands, or requests. A flexible organisation reacts to quick changes in the product mix. Flexibility has other ‘flexible’ connotations, such as financial performance.
There are many questions that managers and marketers ought to answer about the customer when looking for customer focus and loyalty. A study should be made on how customers behave, how they react to the product, and how they experience the product. Some questions that need to be answered by the marketer are:
- Do customers like the product or service and why?
- What attract customers to my product?
- How do customers receive the information in advertising and commercials?
- When is the appropriate time to convince them to buy the products?
The Gantt chart and other tools in project management
Projects in different industries or sectors vary. For example, Turner (as cited in Blomquist & Wilson, 2006) indicated that projects can be classified according to how well methods and goals are described and applied. In engineering, projects can be well defined by describing the methods and goals of the project.
These successful projects are planned according to quality, cost, and timing. In contrast, organisational change projects have a high degree of failure. It is therefore recommended that in this kind of project, a soft systems approach is applied wherein judgments are applied at key points whether to continue or to abort. (Blomquist & Wilson, 2006)
Because of these realities, various models have been used in the planning and conduct of projects on a case-to-case basis. Projects use the basic “Gantt-chart” method, which states the tasks and milestones of the project and provides the timing and a degree of certainty forecast.
There are also other approaches that have evolved from this method, such as the “state-gate” (Cooper), “waterfall”, “spiral”, and “helix”. State-gate is applicable for projects involving lots of product development, but the others are important in the planning and implementation of IT projects. (Blomquist & Winston, 2006, p. 208)
Case study: Enerco
Enerco is an engineering company providing services to large projects in the engineering sector. Its customers are large power producers and those involving power grids. A usual project for Enerco has a budget well over US$100 million, which has to be handled properly and systematically because if it fails it involves large losses.
But the firm has been involved on projects and well-conceived project management. It spends a lot for training of personnel and provides a clearly defined career path for managers and employees, from deputy site manager to site manager, to project director, and so on. Enerco’s project managers are usually at the age of 40 and up, who handle one project each annually, and other activities like pre-project preparation and marketing programs for new projects. (Blomquist & Wilson, 2006, p. 210)
The firm sells similar product to its customers and activities are almost the same from project to project. Differences among projects can be on matters pertaining to financing the project, the power capacity involved, and the different versions of software used to control the system.
What should be critically planned and managed are the design phase, building phases, and the delivery of equipment from the plant to the sites. The Gantt chart is especially useful and similar across projects. But the Gantt chart has to be adjusted in accordance with the size of the project.
The researchers conducted interviews on several managers involved in the project. One of those interviewed was the project director who said that he had to reduce the design loops in management, which meant they had to redesign, for example, when they ran into an environmentalist group that opposed the project. The project also had to consider the main points – ‘time, cost, performance, quality, and the environment’ (Blomquist & Wilson, 2006, p. 215).
Contract agreements usually take time because they involve political components of governments, added with environmental components. The sales process includes a pre-qualifying step with firms offering their tender for a period of 60 to 90 days. Enerco has an advantage with its competitors because it has an expert knowledge of energy transfer with minimal losses.
Relationship building is important and this Enerco is quite good at. Continuity of staffing from sales to final delivery is provided. The manager responsible for sales becomes in charge of the operational phase of the project. (Blomquist & Wilson, 2006, p. 210)
Crane Inc. has a different kind of product – loading and unloading equipment for ports and ships. It has a special know-how for this kind of technology, which is an advantage to other firms. The technology can handle bulk commodities, for example, sand, cement, coal, etc. It can load and unload ships without waste and ambient dust. Crane can handle several projects at the same time. Sales, inquiries, and tenders are the responsibility of the sales department.
The sales offer is conducted by the sales personnel, cost engineers, and the engineering personnel; these three work as a team. The negotiations are for the cost, functionality, timing, and other financing issues. When Crane wins the tender, the project is passed on from the sales manager to the project manager of the contracted project. (Blomquist & Wilson, 2006, p. 210)
Again, the Gantt chart is utilized in the operation of the project, with the ‘phases of engineering, manufacture, shipping, building, testing, and hand over’ as primary parts of the project. The chart is used from project to project and Crane sees it as essential to quality service.
Com Inc. has been involved in the telecommunications business for decades now. It started with selling equipment but rose to become a supplier of systems adapted to customer and market demands. Com customers are telephone operators; it has worked with telecom firms from many nations all over the world, and has built a strong relationship with these companies, a phenomenon known as alliance partnership. (Blomquist & Wilson, 2006, p. 211)
Com has a different sales process. Sometimes, it uses a system but in some instances, the company is able to introduce equipment and apparatus. Com is sometimes invited to offer tender, and the firm provides a model of the system and demonstrates to the client how the system works. Clients are given the chance to use the system and test it to work in their own operations.
While still in the offering stage, Com sets up the requirements, installs the sets of hardware, and shows to the client the services the system can offer. In large projects, the project manager is tasked to be involved in the early stages and fill in the requirements. The services and systems involved include both software and hardware. There are also instances that Com is asked to manage and maintain the system installed.
So, multiple tasks are carried along with the contract that includes maintenance, system upgrading, and other management functions. Com Inc. has set up a world class project management procedure that focuses on business and clients’ requirements; the organisational culture of the workers who are working with the project; a project organisation with different functions that produce results for the stakeholders; and a project process with different activities and control and goals fulfilled.
Com also sets a strategy wherein the interest of the client and supplier are fulfilled. The built relationship is founded on trust and understanding. (Blomquist & Wilson, 2006, p. 211)
IT Inc. is one of the largest IT firms in northern Europe with an employee population of 14,000. Its vision is to be the number one IT provider. IT Inc. is a niche producer expanding to many countries allowing it to produce more capabilities and innovations in IT-solutions for various industries. Products and services are IT-solutions such as: IT software, IT systems, and IT solutions for the various functions of the organisation.
The firm has a different sales procedure in that it is supported by project management procedures. The whole organisation bases its operation on the project management, including marketing. The staff is focused on development, training and advancement of the procedure. The company also collaborates with other providers so a support process is built. This process of the group has made it strong through the years that it has been operating. It has made the firm hold together. (Blomquist & Wilson, 2006, p. 211)
Project management procedures are encapsulated in a document that is sometimes adapted to the changing times. It is termed a stage-gate model. This model is a constant procedure but it states how the firm acts and how it introduces changes after a project has been completed.
The material is contained in a manual which is published, and the descriptions are provided. The long process is explained in the manual so that the managers and workers and their clients understand the expectations, the problems and the solutions offered. (Blomquist & Wilson, 2006, p. 211)
Christian Koch’s article on consulting engineering
This is a fascinating outlook of team and teamwork, group work, and other aspects of knowledge and information sharing – this is all about project management to the fullest. The article’s aim was to discuss how the companies cope with the dynamics of the projects in balancing various tensions around project teamworking.
Koch’s case study discusses the intersection between management efforts and knowledge production teams: first, through three types of corporate management framing the knowledge production: organisational, human resource efforts and office design; and through two case examples of project teamwork processes.
Consulting engineering depends much on project teamwork; knowledge is important to delivering professional service products. Engineering practices and knowledge are for knowledge-intensive professions like civil, mechanical and electrical engineering, and for project and construction management. Teamworking has to be effective while under continuous pressures in these engineering works. (Koch, 2004, p. 277)
The consulting engineering companies play a central role in knowledge production in the construction sector, and are often described as knowledge-intensive business service firms. Teamwork in project is emphasized as the all-dominating form of organisation.
Consulting engineers operate as service providers for customers who are owners of the proposed building. Consulting engineering is part of a broader business service sector (Larsen; Løwendahl as cited in Koch, 2004, p. 279). The consulting engineering companies’ core competencies comprise multidisciplinary engineering, project management, construction management, structural engineering, electrical, mechanical environment and energy engineering.
In Koch’s observation of the engineers, ‘lack of time is often employed as an explanation for insufficient knowledge-sharing and use of IT systems’ (Dunford, 2000; Magnusson et al. as cited in Koch, 2004). In other projects, time is of the essence. But this is precisely the role of project management: to manage time and see to it that projects are completed successfully on schedule.
In teamworking studies, manufacturing templates continue to dominate. In the workplace, one can distinguish between strong and weak teams (Kuch and Buhl as cited in Koch, 2004, p. 283) ‘where strong teams denote the quality of working life reforms at shopfloor level, where the employees are empowered, and experience enhances decision latitude’ (Koch, p. 283).
Weak teams are the management-driven type of teamwork organisation, which are not independent or cannot decide alone, little skill enhancement and an implementation process crudely characterised by top-down approaches.
Observation on the case studies
The firms mentioned in the case study have different customer bases, therefore their project characteristics and the many aspects of project management varied. Enerco and Com have years of advance knowledge of upcoming projects, while the other two work their projects in shorter times. But the four companies have their own resources to respond to opportunities anytime. Crane has external agents while Com depends much on relationships with clients or alliance partnership.
The case studies cannot produce generalisations but they can be used to identify important variables in “real” cases (Yin as cited in Blomquist & Wilson, 2006, p. 212). Case analysis can assist in the development of project marketing concepts. As we compare the four companies, we can deduce that there are some similarities, for instance, the offer or the tender provides a promise to produce results contained in the contract. Trust and confidence have to be developed in the ability of the supplier company to deliver the services stipulated in the contract. Customers provided the trust and were committed to a long-term partnership. (Blomquist & Wilson, 2006, p. 213)
But there were contrasts noted on the case studies. The pre-operational activities were different for the two industries. The engineering firms considered the activity as a sales activity, that’s why during the early negotiations and the offer of tender, sales people were involved. In the Crane case, the project management team only took over when the agreement had been reached.
For the Enerco case, the sales person responsible in the initial phase followed the project up to the planning and implementation. On the other hand, the IT firms were concerned of building a mutual understanding with their clients. There were feasibility studies involved and a number of changes were introduced; a discussion ensued after which the agreement was reached.
We can conclude that there is a commonality when firms within an industry conduct project management and project marketing. For the engineering firms, the commonality was noted in the planning and control: they used a Gantt chart for their projects. There were clearly defined situations in the engineering firm projects and because of this, it was possible to separate the sales and project operations. Crane used agents outside the company to solicit proposals.
When the contract was won, the project started with the responsibilities passed on from department to another. Enerco had little separation between the departments, but their project managers were involved even during the pre-project work and in the marketing activities. Enerco’s projects are large projects and their engineers are affected by these large and complex projects.
In the case of the IS/IT firms, project marketing and project management were observed similar. At IT Inc., a project management approach was provided in the marketing activity. Customer needs were met through the capabilities and resources of the company. Com Inc. had a close partnership with its clients.
This partnership became the basis for the agreements reached. IT Inc.’s project management skills provided the company the competitive edge over other IT firms. Moreover, the two IT firms used the “stage-gate” approach to project management. The explanation for the term is that the firm ‘would get a certain stage’, obtain a meeting with the client and then proceed with the rest of transactions, perhaps make decisions based on those meetings. (Blomquist & Wilson, 2006, p. 214)
A study on the role of the project manager in the implementation of Information Resources Project Manager (IRPM) was conducted by Jane Johansen and Sharlett Gillard in a paper titled Information Resources Project Management Communication: Personal and Environmental Barriers, in which the authors emphasised of knowledge as more than a set of information but a task of contextualising it to change the processes in a corporation. (Johansen & Gillard, 2005, p. 91)
Present project managers have sophisticated roles. They now find themselves revolutionising the concept of what information management means to the organisation. Project managers lead multi-departmental or multi-organisational ad hoc projects. They also are drivers of organisational learning. They have the responsibility to help their organisations make sense of their interpretation of the environment. IRPM must be fully aware of the barriers to effective communication. (Johansen & Gillard, 2005)
Johansen and Gillard provided a brief theoretical review of communications barriers that serve as a checklist for the IRPM whose attention must be directed more heavily to audience and the “humanness” of communications. Workers in the information world, those who create new languages and means of locating and storing information, must now be the messengers of the new age’s understanding about information. What is important is the knowledge created from the information. (Johansen & Gillard, 2005, p. 91)
The Southwest Airlines story
Based from the case studies above is a business strategy success story, that of Southwest Airlines. Southwest Airlines has a coherent business strategy which includes low costs allowing it to enter markets which others cannot. The structure includes a high degree of decentralized management, permitting high morale of employees and also allowing them to be creative.
It has introduced corporate gimmicks like unusually painted airplanes and antics introduced by CEO Herbert Kelleher. Everyone inside the plane including pilots cooperate to make the customers feel at home and happy. Low costs enable the company to be free of other airlines’ price war. Customers feel valued while competitors cannot easily copy their strategy. (McAfee, 2002, p. 49)
The management of Southwest is good at motivating employees, making them enthusiastic about their job, and allow them to get involved in managing and providing service to customers. (Freiberg & Freiberg, 1998, p. 3)
The employees are well motivated into making their own decisions and doing things which are not the ordinary. They hug, kiss, cry, or do comical things, which make customers laugh and enjoy while they are flying. This is another unique brand of customer service, a kind of company strategy making it on top of all the others.
From 1990 to 1994, the airline industry was losing but Southwest was profitable each during the period, and was the only airline to earn a profit every year since 1973. The airline also maintains a considerable amount of debt and uses internally generated funds, making it not to worry too much of outside debts.
Knowledge management: an organisational framework
Knowledge management is an important phenomenon in organisations entering the age of the information revolution, information systems, the internet, and globalisation.
How do organisations conduct KM strategies? This was one of the main objectives of the Henley Knowledge Management Forum – to examine whether firms of different orientation and objectives agree or vary in their approach to knowledge management. (Truch & Bridger, 2002)
Technological advancement and continuous innovations have motivated organisations to react to changes in the global competition. Organisations have to reorganize, re-evaluate and reprogram outdated functional programs and activities, and realign them to the present trends for improvement and competition.
The challenges of globalisation are so immense for organisations of the 21st century. Continuous changes in the workplace, mostly involving technology, knowledge, and their effective implementation, are the emerging regular activities for managers and their staff.
In the age of globalisation, knowledge is both a product and resource. Organisations are now focused on knowledge-based economies, and are more concerned with the knowledge people possess, or what is termed ‘people-embodied knowhow’. Firms invest much on intellectual capital. (Rodriguez and de Pablos, 2002, p. 174)
Organisations are now focusing on intangible assets, i.e. creating sustainable value by putting more weight on intangible assets, e.g. human capital and employee capabilities, organisational knowledge, customer relationships and brands, other capabilities, and so on. (Kaplan & Norton, 2004a, p. 3)
Knowledge and knowledge management are significant developments in the new globalising environment. There are various kinds of organisational knowledge but the most common forms are tacit and explicit. Knowledge management and the creation of knowledge are phases or steps very much present in the study of organisational forms.
Knowledge management in the context of the physical place of an organisation draws one’s attention to the philosophy proposed by the Japanese philosopher Kitaro Nishida (Nonaka and Konno, 2008, p. 40). “Ba” is a Japanese term which means “shared space” that serves as a basis for the formation of individual and collective knowledge. Knowledge can be acquired through experience and when these two are separated, it becomes information.
A review of the literature on knowledge management provided an initial background that organisations have less KM strategies. KM strategy is not a regular organisational requirement, nor a part of long-term planning. Mintzberg (as cited in Truch & Bridger, 2002) conducted a study on strategy formation in organisations, in which he identified at least ten formations, and concluded that dealing with only one process can be overwhelming. The success of a strategy, according to Mintzberg’s study, depends on the way it was implemented.
The Henley Knowledge Management Forum (as cited in Truch & Bridger, 2002) focused on knowledge management practices in organisations, instead of the KM strategy. Miles and Snow (as cited in Truch & Bridger, 2002) found in a study four strategic categories of organisations that dealt with knowledge management. These are:
- Defenders – These are organisations with limited product-market targets. The managers in this organisation are experts in their area of operation but do not look for new ways to expand. Because of this, these organisations, their managers and their stakeholders, do not have to create and provide major innovations and adjustments in their technology infrastructure and organisational structure. They devote their time to promoting and improving what they have in their existing operational strategy. (Truch & Bridger, 2002, p. 909)
- Prospectors – are organisations that continuously look for market opportunities and conduct tests to emerging trends. These organisations introduce change and encounter risks and uncertainty, forcing their competitors to respond. Nevertheless, these organisations are more concerned with product and market innovation, making their operations not too efficient. (Truch & Bridger, 2002, p. 909)
- Analysers – are organisations that are wise to operate on two types of market segments, one stable and the other continuously changing. In their stable field, they use a formalised and systematic structures and processes. But in their unstable areas, their managers observe the environment and their competitors, looking for new ways and ideas, and then they adopt some of those ideas that can provide a promising strategy. (Truch & Bridger, 2002, p. 909)
- Reactors – are organisations in which their strategists perceive change and uncertainty in the industry but are unable to act accordingly effectively. With this, the organisation does not have a consistent structure to react to immediate changes, and cannot adjust so rapidly according to the changing times. (Truch & Bridger, 2002, p. 909)
Materials, labor, and other resources are used to produce goods or services, at the same time adding value to the project. The project life cycle is given life by three key players, namely: the customer, or the client, who is also known as the buyer; the contractor, who is responsible to the customer for carrying out the project task; and the project manager, who is employed by the contractor to plan and manage the project activities from start to finish.
The International Organization for Standardization provides strict guidance for competencies of project personnel. Project personnel should be able to successfully manage projects. They have to be encouraged to develop these competencies so that goals and objectives are achieved. The project team should have competent individuals who can expertly apply their knowledge and experience in order to deliver the necessary results. (“Guidance on project management,” 2011, p. 12)
Project management should be able to manage stakeholders. Management and plans for stakeholders should be developed. There might be stakeholders who oppose the project because of the impact of the project. In this case, diplomacy and tact are needed in negotiating stakeholders who oppose. If matters don’t get resolved, it is important that the project organisation consult a higher authority, or acquire the services of external individuals in resolving the issue. (“Guidance on project management,” 2011, p. 24)
Case study: Toyota
One of the global firms who have successfully made use of knowledge management applied to project management is Toyota, a world leader in car manufacturing. Toyota has an effective project management with an efficient and competitive workforce. In the 1950s, Toyota started car making with 18,000 vehicles per year.
Toyota introduced a unique production system, unique in the annals of car making. The Toyota production system is a Japanese way of mass producing cars but with small volumes. Toyota exported its cars and began to open manufacturing plants in many areas including the United States. (Lynch, 2008, p. 772)
Toyota has survived through the years. Its programs, strategies, and plans of the future are as strong as ever. The past can build a future for Toyota. Its management is institutionalized as well as the personalities behind the founding and operations. Toyota is a long tradition of management from its original founder down to a long line of car builders and business innovators. To mark it all, Toyota has not recorded operating loss since the 1940s.
Toyota’s strength springs from its operational and production strategies and the people behind the system. Its workforce is composed of well-trained engineers and technicians who are trained inside not outside the company thereby maintaining their unique way of building cars. Toyota does not believe in firing employees; it trains its own work force and not in a university or from other outside sources. This could be one of the reasons why despite the Prius problem, management has maintained that quality has always been a Toyota trademark.
The continual improvement concept is, in fact, continuing and commendable. The company went international and established manufacturing plants around the world. Toyota has maintained its workforce, making sure they remain in the company for longer period even during economic crisis, such as the Prius problem.
Another concept used by Toyota workforce is the kaizen, which is to mean continual improvement. Toyota’s experienced project managers follow a pattern in manufacturing cars. Other innovations also were for an increase of market share: dealer networks and cheap car finance for customers. Through outsourcing and a good relationship with its suppliers because of an effective communication network via the internet and Information Technology, the company was able to minimize surplus inventory and lower cost of parts and products.
Planning a project involves establishing calendars or milestones. The project has to rely on some calendars established for each project. Work time has to be set for the team members and make a resource calendar for those activities.
An application of a unique project management was applied on one of Toyota’s significant projects, the production of the hybrid car Prius. Prius was known as the car of the future. It started as a mere idea and innovation of other Toyota cars to a contribution of inputs and knowledge from Toyota’s database and expertise of Toyota engineers.
The project was a promise fulfilled by Toyota to help reduce materials detrimental to the environment and to see to it that manufacturing plants are environmentally friendly. The decision to push through with the project was motivated by Toyota’s desire to help in minimising global warming, and the need for low-emission vehicles.
The project gave Toyota an opportunity to break old technical systems with revolutionary, environmentally friendly technologies. Toyota has been into the program of Zero Emission Vehicle, and one of Prius’s features is its being fuel efficient. (Lynch, 2008, p. 773)
Prius was a combination of an engine and a motor. Its engineering program was done almost entirely in-house. It was then mass produced, the first hybrid car to be mass-produced.
The in-house strategy was effective. Aside from economic returns, the technique of embedding knowledge in Prius provided internal knowledge for Toyota technicians and engineers. The company’s R&D introduced a lot of innovations. R&D people made suggestions and concepts for product development from its database of knowledge. Prius was intended to be the global car of the 21st century.
It can be concluded that Prius is a product of expert knowledge management reinforced with data and information from a database of experiences and expertise of a dedicated work force working as a team for Toyota. Knowledge management played a great role in the decision to pursue the Prius project.
Mapping business strategies
As mentioned, firms are focusing on intangible assets. This is a trend, a new business strategy, which is itself a phenomenon. Normally, a company’s intangible assets may comprise about 75 percent or more of the company’s market value, while about 25 percent represent the tangible assets. Kaplan and Norton (2004a) have introduced a powerful management tool, the balanced score cards.
A strategy map describes the important components of how value is created within the organisation. It emphasises on themes that focus on strategy dynamics. With this, a new framework is formed for describing, measuring and enhancing human capital, information, and organisational capital. A strategy map presents four perspectives, which are: ‘financial, customer, internal, and learning and growth’ (Kaplan & Norton, 2004b, p. 2).
A strategy map guides a company from strategy formulation to strategy execution. The strategy should provide concrete perspectives about price, quality, service, brand formulation, and other significant parts of the marketing mix and business.
The Balanced Scorecard describes the company’s value formulation and measurement. Important aspects include identification of the jobs, the systems used, the working climate, the organisational milieu, and how all this supports the value-creating internal structure. (Kaplan & Norton, 2004b, p. 4)
An example of a positive outcome of strategy map is provided in Gray-Syracuse, a manufacturer of precision casting parts. By formulating its strategy map, it was able to reduce expensive job by minimising reworks. Precious time of workers was cut in half. It also improved quality and customer satisfaction.
Strategy maps enhance outstanding performance in operations management, customer relationship, innovation, and regulatory and social perspectives.
Operating processes are about production and delivery of products. Operational excellence will help in strategic execution. Operations management includes: developing financially strong supplier partnerships, produce quality products, deliver products to end users, and reduce risk. (Kaplan & Norton, 2004, p. 5)
Operational processes can be improved through activity-based management (ABM) and total quality management (TQM). Through ABM, managers can get good results with reduced costs. TQM is all about improving quality in a product or service, and introducing quality in a company’s activities.
Organisational strategies are based on an organisation’s mission, vision and policies. Projects are the means in which organisations attain their goals.
A value creation framework is shown in Figure 1.
Strategic goals provide a framework for the creation of opportunities. Opportunities should be selected based on the benefits gained and management of risks. The project goal is the measure for chosen opportunities. The project objective adds more meaning to the project goal by providing the deliverables. When the benefits are realised, project goals are accomplished. This requires time as the objectives are already set. (“Guidance on project management,” 2011, p. 9)
Majority of companies in the industrial sectors, like the automobile sector, the manufacturers and suppliers evolve within the framework of a strategy. They have to position themselves in a multidimensional complex environment. In their interaction, the companies form a network of two or more companies, with the network characterized by relations of exchanges between individuals or groups. (Lecoeuvre-Soudain et al., 2009, p. 34)
There is now the relationship between the manufacturer and a supplier including the subcontractors who suggest what customer needs and that these needs should be met. The manufacturer then becomes involved from the start. Another situation is codesigning, a network wherein the supplier is involved in the design of the product. The manufacturer and the supplier become partner in this instance. In this situation, management and marketing have to mobile their resources to do a project. This is known as the “fourth phase” of project management, which is to integrate marketing parameters, to gather in project ideas. (Lecoeuvre-Soudain et al., 2009, p. 35)
Organisations have capabilities by which they can develop a list of opportunities. Opportunities have to be evaluated so that top management can decide and identify feasible projects that will benefit the organisation. Some examples of opportunities may address a problem for a new market demand, an organisational requirement, or a legal requirement.
Some organisations require the services of a project sponsor in articulating goals and benefits. The process may also require a justification wherein management may obtain an approval for investment. The evaluation process provides criteria for financial investment appraisal techniques, and some form of qualitative criteria that may include strategic alignment, environmental impact, etc. It may differ from one organisational project to another. (“Guidance on project management,” 2011, p. 9)
Some factors on the project environment that will affect the success of the project include:
- Factors beyond the control of the organisation, for example, socio-economic, geographical, political, technological, etc.
- Factors considered within the organisational boundary, for example, strategy, technology, availability of resources, organisational culture. (“Guidance on project management,” 2011, p. 9)
The project organisation includes the project manager who leads the activities until its completion; the project management team which provides assistance to the project manager in the project activities; the project team which also contributes to the project success. (“Guidance on project management,” 2011, p. 12)
Lack of Project Management
What will come out if there is no skilled project management? This section will tackle the question of lack of appropriate project management on a project.
The Standish Group International, Inc. reports that failure in application software development for corporate America accounts to about $275 billion each year on about 200,000 software projects.
Project failure in IT development has been described as legion. Various situations or scenarios could be some of the reasons, and one of these is the lack of skilled project management. Project managers lack enterprise-wide knowledge and control and tracking tools. Many don’t even have enough knowledge to comprehend the entire system. One of the major reasons is underestimating project complexity. The Standish Group described it as lack of software project management. (Chaos: a recipe for success, 1999, p. 1)
IT development has proved to be not so simple. In 2005, it was estimated that the amount involved in the development of IT hardware, software, and services worldwide reached $1 trillion. And from this amount, about 5 to 15 percent did not reach its full potential because they were either abandoned or did not fully respond to the needs of the clients or customers.
Failures in IT programming and implementation could be attributed to many factors, but analysts have a big role to play in these so-called IT failure. It is also believed that this happens in most organisations who have implemented IT in their business functions. (Dennis, Wixom, & Roth, 2008, p. 6)
The roles of individual analysts and managers are not clearly defined, or they do lack the appropriate skill. The system analyst has an important role in System Development Life Cycle (SDLC). The ultimate objective is to create value for the organisation and increase profits.
Like the business analyst, the system analyst analyses the business situation, looks for business improvements, and incorporates these into the information system for implementation. Systems failed because the business analyst failed to fully understand his/her role in building a system. The analyst misunderstood by building a wonderful system instead of making it support the organisation’s objectives and functions. (Dennis et al., 2008, p. 6)
A table of IT failures is presented in the table below.
SOURCE: System analysis and design, by Dennis et al. (2008, p. 7)
Wasted resources and distorted reputation for the IT department or organisation are one of the results of IT failures. It was reported that the primary causes of failure are organisational issues, lack of skilled project management, and not technical causes. (Dennis et al., 2008, p. 7)
According to the website ZDNet, the cost of IT failure has reached $3 trillion. (ZDNet, 2012, para. 1)
There are many reasons that can be cited here but the ultimate one cited in the literature is lack of skilled project management. Project management is a process that starts from inception to end of the project wherein the finished product can be delivered to the buyer or customer. But it appears that many of the IT development software could not be delivered and others were abandoned. Project management must be a collaboration of the entire team. No project has been successful without teamwork.
It’s not all negative. According to the Standish Group report, in 1994 16% of the application development projects were considered successful. This meant the projects were completed on time and delivered to the clients with the necessary requirements or specifications.
The Standish Group classified the projects into: successful (completed on time with all the necessary requirements); challenged (completed but the project exceeded the budget, and not on time, and not all requirements were fulfilled); and failed (the project was not completed and abandoned).
The Standish Group pointed out the three factors that affect a project’s success: the project size, the size of the team conducting the project, and the required time for completion. Bigger projects have less chances of success. Stats from the Standish Group revealed that projects with less than $750,000 budget were more successful than the large budgeted ones. (Chaos: a recipe for success, 1999, p. 3)
The Standish Group provided the “ingredients” for a recipe for project success. The three major factors can be user involvement, management support and clear project objectives. When these factors are brought together, they account for about 50% chances of success. (Chaos: a recipe for success, 1999, p. 4)
But the most influential factor for a project to succeed is user involvement. Users or clients have to be actively involved in the project development, from start to finish. They should be involved in the design and testing and subsequent implementation of the software.
The Standish Group formulated the Chaos Ten formula for project success. First is user involvement, an allocation of 20 points; executive support, 15 points; clear business objectives, should have 15 points; experienced project manager, must also have 15 points; small milestones, with 10 points; firm basic requirements, to have 5 points; competent staff, another 5 points; proper planning, ownership, and other, 5 points apiece. (Chaos: a recipe for success, 1999, p.4)
Total Quality Management (TQM)
TQM was first introduced in manufacturing operations in the 1950s. When it was proven effective, it was then applied to other sectors, including the construction industry. TQM is used to apply continuous improvement on the product, including processes and people, identifying client requirements and how the process can be achieved.
The principle behind TQM is that it must be adopted across the whole organisation. It should include the different functions, like customer service, production and manufacturing, marketing, and so on; otherwise, it will not be effective. (“Project quality management,” n.d., p. 7.3)
With TQM, the organisation will have an enhanced HRM with employees involved in the process. Employees, ranging from top management to the workers, are motivated and committed to work for the organisation. There will be improved team work and management because of improved communication and understanding of the internal processes and activities.
Another important contribution is increased customer satisfaction and customer retention as a result of better understanding of customer specifications. Product and service costs are also reduced due to enhanced development cycle, improved team coordination, shorter time lines and better inventory of products and services. (“Project quality management,” n.d., p. 7.4)
Methods and methodology are two distinct subjects. A method is a technique or procedure in collecting and analysing data. Methodology includes other aspects of the research design and choice of particular methods, including justification for the research objectives.
Surveys are popular for researchers. In fact, most interchange the words survey and research. Surveys are often conducted to know the opinions of a great number of people on a particular issue or topic. In conducting surveys, the researcher asks a number of questions to gain a number of answers on the topic at hand. (Fraenkel and Wallen, 2006, p. 397)
There are features in survey research which are applicable to this dissertation. Survey research is more of a quantitative research than qualitative. The latter involves participant observation and unstructured interviewing which is conducted to acquire as much information and opinion from the participants. Quantitative is regarded as ‘sterile and unimaginative’, but can provide ‘factual, descriptive information’, the so-called hard evidence (De Vaus, 2002, p. 5).
There are three major characteristics of surveys:
- Surveys contain information from a group of people that describes the people’s opinion, attitudes and beliefs;
- Surveys use questions to acquire the information, and the answers to the questions become the data of the study;
- Surveys extract the information from the participants of a sample that is representative of the population, and not from the entire population. (Fraenkel and Wallen, 2006, p. 397)
Reliability and Validity
Reliability and validity are a form of measurement, by which without it, the survey research hardly makes sense. A researcher has to have a ‘high degree of reliability’ on a survey before he can have validity (Alwin, 2007, p. 290). Internal validity is not a problem to survey research because surveys do not allow cause-and-effect relationships (Dumont, 2008, p. 29).
Validity refers to the problem of whether what was the result of the data collection reflects the true picture of the units of analysis, or what is being studied. The data collected should not be a product of the research method but of what is being studied. (McNeill and Chapman, 2005, p. 9; Groves, 2004, p. 3)
A research must have a research problem. The purpose of this paper is generally to collect data and information on an important subject known as project marketing and its relation to project management. After collecting the desired data and information, the researcher formulated a hypothesis, analysed the data and arrived at a new knowledge based on the data and information.
The dissertation also analysed the hypothesis with the literature and collected data, and formulated a conclusion and recommendation. This, in a sense, is the final purpose of this paper: how to attain project success with the application of project marketing.
Project managers can save a lot of efforts by making decisions before they begin a task or resource data. The first is to establish calendars or milestones. The project relies on some calendars that are established for each project and for some project resources. This process is aided by the vast amount of information from the organisation’s database.
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