Virtual organizing in global shipbuilding - A case study of Ulstein Design and Solutions
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The shipbuilding industry is characterized by fierce competition on cost and quality. The last decades, low-cost actors in Asia have taken the lead position in the industry, and many ship designers have started using these low-costs actors to introduce their designs to the market. Due to high information complexity in designs, ship designers and shipbuilders need to have tight relations in the supply chain, which is difficult to obtain for geographically dispersed actors. Ulstein Design and Solutions (UDS) has followed the trend of selling designs to low-cost shipbuilders, but they find it difficult to control the geographically dispersed relations with the shipbuilders. Therefore, the authors of this master thesis have looked at this business case by investigating how UDS can apply virtual organizing to achieve control over its Asian partner yards. The research for the master thesis is pursued by means of doing a single case study, investigating how UDS controls its partner yard relations and what literature says about virtually organizing inter-organizational relations. The findings from the case study are matched with the literature findings resulting in a UDS-specific framework for how they can use virtual organizing in its partner yard relations to achieve control in a global market context. The thesis has revealed that virtual organizing of inter-organizational relations can take place in a structure called Virtual Organization Breeding Environment (VBE). A VBE is a pool of organizations that have both the potential and the interest to cooperate with each other, through the establishment of a base long-term cooperation agreement. In these VBEs, the member organizations can form what is called Virtual Organizations (VOs). The VOs are temporary collaborations, or projects, between two or several organizations that are established to create value in the shape of a product or service. Use of virtual collaboration through the use of ICT tools is an important part of these type of inter-organizational cooperations. It is concluded in this thesis that a VBE and VO structure for cooperation may suit the engineer-to-order (ETO) characteristics of the shipbuilding industry in which UDS operates. The main outcome of this thesis is a final UDS-specific framework for how the company can virtually organize its partner yard relations to achieve control in the supply chain. The authors of this thesis conclude that virtually organizing the partner yard relations is possible for UDS, but that a gradually implementation, using a stepwise approach, is required to virtualize the relations. Gradual implementation means that parts of the relations between UDS and the partner yards can be virtualized, but due to the partner yards immaturity, a full implementation is not possible at the time of research. Further, the authors emphasize two implications that virtual organizing of the partner yard relations will entail for UDS. First, the implementation will lead to a formalization of UDS partner yard relations. Second, UDS must take the lead in implementing the required changes that virtual organizing entails. Both these aspects are currently in opposition to the wanted strategic direction of UDS, as UDS seeks to avoid responsibility and minimize its risk and commitment in the relations towards partner yards. Therefore, the authors of this thesis do not recommend UDS to virtualize its partner yard relations before assessing whether the company is willing to formalize the relations and take on a stronger lead position. For practitioners, this study might give a broader understanding of how actors in the shipbuilding industry can virtually organize its relations with other actors, and how such organizing can contribute to achieving greater control in the supply chain. For researchers, the most important contribution is the empirical testing of a VBE and VO management framework and the investigation of how virtual organizing can be applied in inter-organizational relations in the shipbuilding industry.