Initiating business relationships in South Korea - A Case Study of Norwegian Marine Equipment Companies' Projects with South Korean Shipbuilding Companies
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The increasing amount of the major shipbuilding and offshore contracts awarded to South Korean shipbuilding companies is expanding the South Korean market for Norwegian marine equipment companies supplying equipment to these projects. Projects within these industries receive little academic attention despite its size and importance both in Norway and worldwide. An understanding of the processes involved in the initiation and development of project relationships offers a perspective that sheds light on why and how contracts are awarded. It also contributes to the understanding of how Norwegian marine equipment companies with subsidiaries in South Korea should operate to develop healthy and profitable relationships. This is the background for the purpose of this project to investigate initiation and development of project relationships between Norwegian marine equipment companies located in South Korea and South Korean shipbuilding companies. Through a literature review covering the relevant research into this research field, models were developed to aid a case study on three project relationships between three Norwegian marine equipment companies and two South Korean shipbuilding companies. The following research question was answered: How is the project relationship between the case company and the client initiated, and how does the relationship develop before and during the projects? This thesis shows that project relationships between Norwegian marine equipment companies and South Korean shipbuilding companies evolve through states in a complex, iterative and frequently non-linear way. The initiation of the project relationships is a long and gradual process beginning in the early idea phase of the project owner or some other third party. A supplier will typically leverage and develop relations with the project owner and possibly a third party in order to secure a place on a maker s list. The client s bid for the construction project with the project owner prompts a contact between the marine equipment company and the shipbuilding company. When the client is awarded the project, an inquiry from the client to the supplier, and a round of technical clarifications and commercial negotiations follow. All of these processes are influenced by differing business culture, certain distance factors, as well as strong competition, and can result in conflicts such as delays. Factors such as previous experience, importance of project and pre-project service act in a positive way to resolve these conflicts and drive the development forward. Managers from marine equipment companies located in foreign markets are advised to: (1) Engage with third parties such as ship owners and oil companies and build a network with as many as possible of these, and (2) Consider subsidiary expansion in order to take a dominant market position, enabling the company to influence and tackle changes caused by globalisation. Finally, the conclusions of the research suggest further research into: (1) A further development of the initiation models, with a focus on the processes between the recognition and considerations statuses, and (2) The phases that are identified in the initiation, specifically for the marine equipment industry, and what factors and processes that influence the success of initiation efforts.