Relationship Between Organizational Strategy and Project Strategy : Case Studies at German-Hungarian Affiliated Firms

Abstract

The paper focuses on German-Hungarian international companies. It aims at investigating the relationship between organizational strategy and strategy of projects executed at the Hungarian affiliations as well as at analyzing how decisions on these projects are made. Four German-Hungarian companies were selected and interviews with CEOs and Heads of PMO were carried out. The selected companies represent four different industries German-Hungarian firms predominantly operate in Hungary: automotive (manufacturing), automotive (supplier), mobile (operation and service), mobile (IT R&D). The results show that the project strategy is strongly aligned with the strategic orientation of the investigated firms. In order to determine a firm’s strategy, the extended EPRG model of Perlmutter was used. The project strategy was identified on the basis of Artto’s typology of project strategies. At projects characterized by the obedient servant strategy, the parent organization is the most important stakeholder in the environment. The project purpose is defined by the parent organization. Project success depends on the extent of meeting the parent organization’s expectations. Ethnocentrism as a strategic orientation enhances this obedient servant project strategy. Projects with independent innovator strategy prefer innovative and independent operations. The success of such projects can be measured through the number and newness of products and the degree of increase in organizational efficiency. Polycentrism as strategic orientation is a typical frame for independent innovator project strategy. Projects characterized by the flexible mediator strategy define their purposes taking into account several strong stakeholders’ goals. The expectations of these stakeholders have to be taken into consideration when defining the project purposes. Egocentrism as a strategic orientation prefers to apply the flexible mediator project strategy. Projects with a strong leader strategy create a culture characterized by strong independence and a feeling of the importance of making successful projects. This means that the goals are established by the project in its stakeholder network. The ultimate success of the project is measured by the overall impact of the project on its environment and society. Geocentrism as strategic orientation is aligned with a strong leader project strategy. The results highlight the importance of the relationship between organizational strategy and project strategy. Although they are limited to the selected four cases of GermanHungarian international companies, understanding the connection between firms’ strategic orientation and determination of project strategy helps decision-makers to create the strategic project portfolio that is fully aligned with the firm’s strategy.