1.4. Research strategy, approach and methodology

The strategy is to find solutions to the research task presented in the previous chapter. The thesis proposes the implementation of an integrated corporate level system to manage product profitabilities. This will be called the design to profit procedure. Compared to the earlier studies, this work suggests a combination of advanced costing methods, product life cycle analysis and multidimensional data processing to be used in constructing the system. The system can be constructed on a commercial SW platform. The customers of the system are the people who work in product programs and corporate management. Managers can also use the system to follow product profitability in an after-sales mode.

Arbnor and Bjerke have presented a simple classification for the methodolgy for creating business knowledge. They illustrate three main methodologies: The analytical approach, the systems approach and the actors approach. The analytical approach represents clearly explanatory knowledge (positivistic approach), that assumes the reality is objective. The actors approach assumes that the reality is a social construction. This is also called understanding knowledge (hermeneutics). The systems approach assumes the reality is objectively accessible and is positioned between positivistic and hermeneutic approaches. The system approach oprerates with analogies in which the ground for comparing cases is based on similar structures. (Arbnor & Bjerke 1997.) According to this classification the systems approach is used in this thesis. Existing theories have been applied within new contexts and the relationship of the design to profit procedure and employees is considered in the scope of the thesis.

The research approach is also constructive (Järvinen 1999, Olkkonen 1993). The starting point consists of the four profitability problems. These questions will be reformulated after the literature review in Chapter 2 and presented in Chapter 3 as the requirements for a product profitability control system. The solution of the research tasks is normative: The thesis introduces a new system to improve business profitability. The system is based on existing knowledge and processes of the case company, but the combination of methods and techniques is unique. No new theories have been introduced or formulated. Some heuristics has been applied to solve practical management problems. This system has been specified, constructed and verified in practice in the telecommunications case environment (Chapter 4). The system has been used in a multi-site cellular mobile phone company as a global database for product profitability calculations since 1997. The system results have been considered in everyday work with the program, and the results have been connected with the other activities of the company. Further development of the system will mainly involve wider use in business analysis and the generation of better business forecasts. The results will be discussed in Chapter 5 using empirical case studies to validate the system properties (Eisenhardt 1989).

The positivistic approach would have required a quantitative analysis of the system, which would be very difficult to accomplish without disclosing some confidential business information. An arbitrary database would have moved the focus to the system itself, ignoring the importance of implementation. The aim of the thesis has been to demonstrate a successful instance of implementation. This requires some hermeneutic research, which can be quite easily included in the empirical part of the constructive case study (Olkkonen 1993). The discussion of the organizational effects of the system resemble the action-analytical approach. On the other hand, the action-analytical approach would have been too abstract in view of the research task at hand. The solution to the problems is a concrete system, which can be analyzed, most of whose results are quantitative, the solution is verified in practise and an effort to generalize the solution has been made (Takala & Helo 2000). These features motivate the constructive approach.

The decision-methodological approach is close to the constructive approach (Olkkonen 1993). There is some analytical deduction at the beginning of the thesis. Some existing, verified processes and calculation methods have been selected to constitute the design to profit procedure. It is assumed that the methods can be extended logically to generate this model. Further enhancements have not been demonstrated and remain as recommendations. On the other hand, the empirical part verifies the solutions with real case examples and considers the management aspects of the validity of the solution, which is more closely related to the constructive approach. The model construction, i.e. the actual combination of methods, is also more heuristic than analytical.

Most of the references to product life cycle analysis have been made in view of marketing, strategic planning and environmental analysis. In this study, the product life cycle is used as the backbone of the system. The following is a short presentation of the main methods: