Strategic management and choices of business models in SME project portfolio management
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Strateginen johtaminen ja valinnat liiketoimintamalleissa osana PK -yrityksen projektiportfolion hallintaa
This Master’s thesis investigates the phenomena of business models, competitive strategy and competitive advantage in the context of project business. The objectives of the study were to investigate the linkages between business models, competitive strategy and project business, how these influence the performance of a business, and how dynamic capabilities can help in the creation of sustainable competitive advantage in project business. The findings are based on a five-case study in a single Finnish small-to-medium enterprise. The data was gathered via participant-observation. Significant differences existed in between the cases, such as the scope of the projects themselves, the activity systems employed in the projects, the influence of competitive forces and marketplace dynamics and the profitability of the cases. The projects were delivered for five distinct customers in three different industries, containing components from four distinct business units of the case company. The concept of business model is directly linked to the competitive strategy of a business. Strategic decisions define what capabilities to build, execute and remove, while business models govern the execution of activities in creation of value. In project business, business models are often solution-specific activity configurations, driven by changes in customer needs, often combining both project and service components. Project portfolio of a business should maintain a balance in activities. Choices in business models and competitive strategy influence the performance of project business. The decisions to build capabilities are strategic in nature, and the profitability of project business is driven through the evolution of capabilities to respond to different customer needs. Choices in the execution of activities are choices in business models and have an impact on the performance of the business, and the performance in a given project results from the fit between the solution-specific activity system and the customers’ needs. A value system of a business evolves and can be influenced by the dynamic capabilities of the business. Business models can create sustainable competitive advantage if they result in new activities, cost advantage or improved activity configurations. Dynamic capabilities can help create sustained competitive advantage in project business. This happens as dynamic capabilities create new capabilities, resources and activities, enabling a business to perform better than its rivals. To realize these benefits, dynamic capabilities, including organizational learning, should be integrated into the management and measurement system of the project business.