The Business Analysis Process of New Product Development

Master Thesis Spring semester 2008 Supervisor: Gert-Olof Bostr?m Authors: Luis Barrios

Jonas Kenntoft

The Business Analysis Process of New Product Development

- a study of small and medium size enterprises

PREFACE

PREFACE

When we started this thesis journey we did not have any idea of where we would land. Now after 10 weeks we have landed this, and we are pleased with the result. It has been a lot of fun but also hard work involved in completing this thesis. Last but not the least we learned a lot about both our subject and how to conduct research on this level. During these 10 weeks we have gotten help from a lot of people but most of all from our supervisor Gert-Olof Bostr?m. We would like to thank him for helping us completing this journey. We would also like to thank all the people that we have interviewed, without you there would not have been a thesis.

We hope that this thesis will get you interested in the many small and medium size enterprises in our world, and to not neglect their importance of the global economy.

Ume?, April 2008

Jonas Kenntoft

Luis Barrios

ABSTRACT

ABSTRACT

The world is a very competitive place, every day companies from all over the globe try to be on the edge of their fields in order to keep a good distance from competitors. They have found in the new product development process or NPD the leverage they needed to build up that differentiation required to get ahead over competitors. When looking inside the NPD we decided to focus on a very critical and interesting stage, the business analysis process. The purpose sought with our research is to provide a better understanding of how small and medium size enterprises (SMEs) carry out their business analysis stage in the process of new product development (NPD), this purpose was first obtained by stating a main problem and to facilitate the answer to this main problem we proposed two research questions that were later used to review all of the related literature, which resulted in a conceptual framework 2employed to guide this study's data collection. We decided to use the inductive approach and the use of primary data collected with the help of interviews with companies representing SMEs using a qualitative case study approach through all interviews. It is important to mention that the interviews were also designed with the help of the research questions.

The results allowed us to develop a model that shows how the business analysis process looks like in the companies studied as well as to highlight the most relevant factors for the two companies studied when performing the business analysis. Finally the research let us establish some suggestions for future researches regarding the business analysis process such as the differences between small and medium enterprises and larger firms, and the cross-functional activities involved in a business analysis process in larger firms.

TABLE OF CONTENT

TABLE OF CONTENT

1. INTRODUCTION........................................................................................ 1 1.1 BACKGROUND.................................................................................... 1 1.2 PROBLEM DISCUSSION..................................................................... 2 1.3 PROBLEM STATEMENT ..................................................................... 4 1.4 PURPOSE AND RESEARCH QUESTIONS.......................................... 4 1.5 DELIMITATIONS ................................................................................. 4 1.6 DISPOSITION ...................................................................................... 5

2. THEORY METHODOLOGY..................................................................... 6 2.1 CHOICE OF SUBJECT......................................................................... 6 2.2 THEORETICAL AND PRACTICAL PRECONCEPTIONS..................... 6 2.3 EPISTEMOLOGICAL CONSIDERATIONS........................................... 7 2.4 SCIENTIFIC APPROACH..................................................................... 7 2.5 RESEARCH APPROACH ...................................................................... 9 2.6 CHOICE OF THEORIES....................................................................... 9 2.7 SECONDARY DATA COLLECTION ..................................................... 9 2.8 CRITICISM OF SECONDARY DATA COLLECTION ......................... 10

3. THEORETICAL FRAMEWORK ............................................................ 11 3.1 SMALL AND MEDIUM SIZE ENTERPRISES ..................................... 11 3.2 NEW PRODUCT DEVELOPMENT..................................................... 12 3.3 DEFINE CONCEPTS .......................................................................... 13 3.4 NEW PRODUCT PLANNING PROCESS ............................................ 17 3.5 BUSINESS ANALYSIS ......................................................................... 17 3.6 CONCEPTUAL FRAMEWORK........................................................... 23

4. PRACTICAL METHODOLOGY............................................................. 26 4.1 CHOICE OF DATA COLLECTION METHOD ................................... 26 4.2 CHOICE OF RESPONDENTS ............................................................ 27 4.3 ACCESS AND COLLECTION OF EMPIRICAL DATA ....................... 28 4.4 INTERVIEW GUIDE AND QUESTIONS USED DURING THE INTERVIEWS ............................................................................................ 28 4.5 CRITICISM OF PRIMARY SOURCES ................................................ 29 4.6 ANALYSIS OF THE EMPIRICAL DATA .........FEL! BOKM?RKET ?R INTE DEFINIERAT.

5. EMPIRICAL FINDINGS AND ANALYSIS ............................................ 31 5.1 INTRODUCTION OF RESPONDENTS............................................... 31 5.2 GENERAL BUSINESS ANALYSIS AND FORECASTING.................... 31 5.3 SALES FORECASTING....................................................................... 36 5.4 PROFIT PROJECTIONS..................................................................... 40 5.5 COST ESTIMATION............................................................................ 41 5.6 RISK ASSESSMENT ............................................................................ 42 5.7 CANNIBALIZATION OF SALES ......................................................... 45

TABLE OF CONTENT

6. CONCLUSIONS ........................................................................................ 48 6.1 WHICH ARE THE IMPORTANT FACTORS FOR SMEs IN THEIR BUSINESS ANALYSIS? ............................................................................. 49 6.2 HOW DOES THE BUSINESS ANALYSIS PROCESS LOOK LIKE IN THE TWO SMEs STUDIED? .................................................................... 50 6.3 PROBLEM STATEMENT ................................................................... 51 6.4 SUGGESTIONS FOR FUTURE RESEARCH ..................................... 51

7. CRITERIA OF TRUTH ............................................................................ 53 7.1 VALIDITY............................................................................................ 53 7.2 RELIABILITY ...................................................................................... 54

LIST OF REFERENCES .............................................................................. 55 SCIENTIFIC ARTICLES ........................................................................... 55 BOOKS...................................................................................................... 57 ONLINE SOURCES................................................................................... 58 RESPONDENTS........................................................................................ 58

APPENDIX A ................................................................................................. 59

LIST OF FIGURES AND TABLES FIGURE 2.1 THE DYNAMICS OF INDUCTION AND DEDUCTION ................... 8 FIGURE 2.2 THE LOCATION OF INDUCTION AND DEDUCTION DURING RESEARCH ................................................................................................... 8 TABLE 2.1: DIFFERENCES BETWEEN QUANTITATIVE AND QUALITATIVE RESEARCH APPROACHES .............................................................................. 9 TABLE 3.1: SMEs DEFINITION ............................................................. 10 FIGURE 3.1: NEW PRODUCT PLANNING PROCESS .......................... 16 FIGURE 3.2: INCLUDING CONCEPTS IN THE BUSINESS ANALYSIS STAGE .. 17 FIGURE 3.3: MODEL OF THEORIES .................................................... 24 FIGURE 5.1: V?STERBOTTENS KURIRENS LUMPY DEMAND........... 35 FIGURE 6.1: FINAL MODEL ? THE BUSINESS ANALYSIS PROCESS IN SMEs . 47

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