Project Business Exam Questions

Definitions

Project deconstruction/reconstruction

From a constructivistic perspective, the aim is to deconstruct and recreate the project during the bidding phase. The supplier, who is in a weak position, starts by deconstructing the demand expressed by the client (and often constructed with a competitor) in terms of perceived risks. He then reconstructs it, directly or indirectly with the client, based on his expertise in the client’s problem expressed in terms of incurred risks. It is based on this progressive reconstruction of demand that the supplier can construct his offer at the same rhythm.

Milieu

● A network of proximity (spatial and cultural)

● Business network

● A milieu is characterized by:

● A territory

● A network of actors (business, non-business/organizations /individuals)

● A representation constructed and shared by these actors

● A set of laws and norms (”rules of the milieu”)

Negotiated Competitive Invitation

Used when the object of transaction 's hard to define (high technology, sophisticated services, etc.) Invitation to tender is send to companies on a list that has been drawn up internally from non-disclosed criteria (bidding list).

● Send invitation to bid

● Select companies by criteria (”best offer”)

● Negotiations/refining

● Selection

Efficient frontier (in project negotiations)

A set of optimal portfolios that provides the highest expected return for a defined level of risk or the lowest risk for a given level of expected return.

Optimal portfolios that comprise the efficient frontier tend to have a higher degree of diversification than the sub-optimal ones, which are typically less diversified.

Stakeholder salience

“The stakeholder view of strategy is an effective theory of the corporation, integrating both the resource-based view as well as the market-based view, and adding a socio-political level. This view of the firm is used to define the specific stakeholders of a corporation as well as examine the conditions under which these parties should be treated as stakeholders (the descriptive theory of stakeholder salience).”

Non-business actor

The government can also put pressure on firm through regulations and is considered the first non-business actor that strongly influences a business’s behaviour.

Complexity (as a characteristic of project business)

Most projects are characterized by an extremely technical, financial, political and societal complexity. Complexity is due to the extremely large variety of technical elements involved in the design, organization and execution of the technical solution for the customer.

Sacrifices made by customer

They have to “give up” (price, costs, other sacrifices) (Zeithaml 1988). Customer sacrifices include the monetary costs that customers invest to acquire the service or to maintain a relationship with the supplier (Lapierre 2000). Sacrifices may also be non-monetary, such as the invested time and effort, or the risk associated with the offering or the supplier (Ravald & Grönroos 1996).

Lead market

Lead market is a country in which the diffusion process of an innovation first takes off. A lead market can also be a country in which innovation was invented, in which a subsidiary of a multinational company takes over global product responsibility, for instance as global coordinator of marketing activities, or as a mixture of all.

Lead market is a regional market with specific attributes that increase the probability that a locally preferred innovation design becomes internationally successful as well.

Invitation open to the best offer

Largely used in public markets to compensate the best bidder (lowest price) by quality to price ratio criteria. Uses multi-criteria analysis grids.

Project network

Project network is a temporary inter-organizational network of firms set up for the shared purpose of delivering a project to its client.

Key characteristics of project networks

● Limited temporal duration

● Both composition and functioning affected by experiences of history

● Both composition and functioning affected by future expectations of actors

● There is both a goal shared by all participating actors and the individual goals and interests of each individual actor (which may conflict)

● Complex and interdependent tasks are organized into several sequential phases

● One actor often assumes the role of a systems integrator

● • Boundaries of the network are ambiguous and cannot be controlled by any single actor

● • Participating actors typically highly heterogeneous

● Many interconnected via inter-organizational relationships

● • Power often unevenly distributed in the network

Industrial services

Covers service to customers engaged primarily in a process which either involves the extraction of raw materials from the earth, or a change of raw or unfinished materials into another form or product.

Invitation restricted to better price

Supplier will send a pre-selection file to customer. Customer makes his initial selection based on the file using criteria as references, financial solidity, and technical expertise. An invitation to tender is then sent to this list of selected companies. Then following up with a normal procedure.

Entry mode

An international market entry mode is to create the possibility by arranging company’s products, technology, human skills, management or other resources to enter into a foreign