RESEARCH ON BUSINESS

STRATEGY AND PERFORMANCE

EVALUATION IN COLLABORATIVE
DESIGN

Yi-Chen Lin*, Magnolia Yulan Hsing and Yi-Chuan Wang

Graduate Insti tute of Technology Management Nati onal University of Tainan

Tainan (700), Taiwan

 INTRODUCTION

In today’s globally competitive market, companies must collaborate and communicate with
customers, suppliers, and partners in a complicated and temporary product supply chain, which
provides them with a number of challenges. Design is a complex process usually requiring
information and knowledge from diverse sources to be worked on simultaneously by a team of
designers during the product life cycle. Up to 80% of all components produced by original
equipment manufacturers (OEM) are outsourced to external suppliers. During collaborative
design, it is most important to resolve design specification conflicts early in the design process
and create design knowledge to share many designers and users. This can lower both the product
development lead-time and manufacturing costs greatly.
To satisfy delivery requirements, companies must rapidly become familiar with the processes
and systems of new partners, and collaborate flexibly. Effective management of diversity within
an evolving supply chain can reduce product design cycles, strengthen supplier and customer
relationships, and respond more quickly to market changes. Using these market forces to form
new business models and better serve the customer can mean that companies perform better than
those that lack this flexibility. In an era of knowledge-based economy, many major businesses
outsource design, R&D, manufacturing and other tasks through virtual integration, in order to
satisfy the increasingly higher standards requested by the customers and to cut down costs to win
more orders. These businesses, aside from facing a huge amount of complex information, need to
communicate with their upstream and downstream partners more frequently as well as more
closely, which can be achieved best by using collaborative design. When a business thinks about
an applying collaborative design mechanism, its main consideration is what competitive
advantages this mechanism will bring about. The purpose of this research can be divided into the
following three points.
1. Propose a structural analysis of how collaborative design influences the business operation.
2. Discuss how enterprises and their partners can share experience via collaborative design and
how it changes business operations.
3. Develop a performance evaluation method for the collaborative design mechanism to explore
how it can be effectively applied and serve as a reference for other industries.
 TABLE OF CONTENTS

INTRODUCTION.....................................................................................................................................2
LITERATURE REVIEW.........................................................................................................................3
2.1 Collaborative Design.........................................................................................................................4
2.2 Business Strategy...............................................................................................................................4
RESEARCH DESIGN...............................................................................................................................4
3.1 Case Studies......................................................................................................................................5
3.1.1 Case company A.........................................................................................................................5
3.2 Structure of Research.........................................................................................................................6
RESEARCH RESULT..............................................................................................................................8
ABOUT THE AUTHORS.......................................................................................................................11
REFERENCE..........................................................................................................................................12

Table 3. 1Data about the interviews in Company A........................................................................3

Table 3. 2 The importance of collaboration.....................................................................................4

Figure 3. 1 Structure of the case study analysis..............................................................................7

Y

Figure 4. 1 Research structure.........................................................................................................8

 LITERATURE REVIEW

2.1 Collaborative Design

Electronic commerce is a traditional supply chain structure in many industries which can
lower the costs of tightly integrating buyers and suppliers [ CITATION McI03 \l 1033 ].[ CITATION
Kog88 \l 1033 ] summarized three main motivations driving collaborative commerce: firstly, high
transaction costs resulting from small-number bargaining; secondly, strategic behavior aimed at
enhancing a firm’s competitive position or market power; and thirdly, a quest for organizational
knowledge or learning when one or both partners desire to acquire some critical knowledge from
the other. Therefore, collaborative commerce, as well as optimizing the combined competencies
of the partners to reach their goals, should also provide solutions to meet customer and
stakeholder needs. The mixing of the different organizational cultures can cause conflict in the
management of the project during collaboration [ CITATION Dav99 \l 1033 ]. In these
circumstances, extended enterprise collaboration is a route for individual companies, in
association with other companies, academia, and government, to increase the success rate of
transition to environmental fit through collaboration with other companies [ CITATION Tea97 \l
1033 ].

2.2 Business Strategy

A business strategy focuses on a certain business field and identifies a proper approach to
establish an advantageous position to compete. Another explanation of a business strategy is it
focuses on a certain business unit and studies how to enhance its competitiveness, such as
choosing a more attractive segmented market. From the perspective of business operations, there
are different levels of strategies. Generally, academia categorizes strategies into Corporate
Strategy, Business Strategy and Functional Area Strategy. The formulation of a business strategy
requires taking the business objective, business capability, opportunities and threats of the
market into consideration. The objective of this research is to discuss the relationships among the
business environment, business strategies and the people.[ CITATION Por80 \l 1033 ] divided
business strategies into three kinds: differentiation strategy, low-cost strategy and focus strategy.
 RESEARCH DESIGN

To conduct this analytical framework, the case study research methodology was chosen. The
case study is suitable for researchers to answer questions as ‘‘how’’ and ‘‘why’’. In particular,
pointed out that multiple cases strengthen the results by replicating the pattern-matching, thus
increasing confidence in the robustness of the theory. We considered that it is appropriate to use
the case study methodology in order to describe the implementation in the case company of its
collaborative process.
Table 3. Data about the interviews in Company A
Objective of Position Number Places of Interview
Review of
Interview
General Manager 9
Vice R & D Dept. Manager 8  Meeting Room
Company A Design Dept. Development 7  Discussion Room
Manager
Information Dept. Manager 9
Project Manager 12
Consultation of Vice General Manager 4
Information Director/ Chief Manager 8  Meeting Room
System Consultant 4  Discussion Room
Program Designer 3
Consultant 9  Meeting Room
Consultant of  Discussion Room
Outsourcing Manager 4  Seminar Room of
Consultant

The case study reports on the activities at a leading panel manufacturing company, a leading
computer case manufacturing company and a leading golf equipment manufacturing company in
Asia. Data collection was performed by a series of personal interviews conducted with various
groups, including managers and employees, within the organization. We had many meetings
with many higher executive managers of the case companies. They included the CEO, general
manager and employees from the R&D department and the MIS department. That is actually a
two-year project of collaborative design for these three companies. We also organized a focus
group to interview higher executive managers more effectively and get the effective information
or data which would be helpful to our research (as shown in Table 1 to Table 3).

3.1 Case Studies

3.1.1 Case company A
Taiwan is one of the world’s largest suppliers of thin film transistor liquid crystal display (TFT–
LCD) panels, second only to Korea. In 1998, Taiwan began its aggressive output in the TFT–
LCD industry with abundant capital, great vision, and a comprehensive industry chain. As a
result, Taiwan now plays an important role in the global TFT–LCD industry, and into the future.
This case company is a leader company in the visual display market in both Taiwan and China.
The primary business is STN-LCD and CSTN-LCD manufacturing which is applied in medical
equipment, Consumer Electronics etc. Besides STN-LCD, the case company also develops
application of TFT-LCD, OLED etc. With the keen competition in 3G and large size TFT-LCD,
the small size LCD companies have been forced to change their companies’ operation.
Therefore, the small size LCD companies have entered the color flat-panel display market and
developed the related technologies to fit in with customers’ needs. The case company has
developed various advanced technologies of LCD actively. It has launched a strategic alliance to
collaborate with up-steam companies and take advantage of technologies, concentrated resources
and vertical specialization in order to expand into the small size TFT-LCD and mobile phone
markets.
Table 3. The importance of collaboration
Short- term Medium- term Long- term
Market Create new value of Reduce risk of patent Develop markets
(Product product infringement and customer
Diversification) effectively
Suppliers Integrated Create knowledge- Enhance image
(Product technology and based community
Customization) resource
Technology Ensure the value of New direction in Sustaining
(Product Sustaining technology technology technology
Innovation) _ development innovation

As Japanese companies have many patents in many countries and the Korean companies spend
large resources on technology innovation, the case company has to take design seriously.
Consequently, the case company has developed the collaborative IP management model to avoid
patent infringement and ensure the value of design technologies. In this study, we analyze the
importance of the collaborative IP model in three stages (Table 4).
3.2 Structure of Research
In the case study analysis, the paper evaluates and analyzes the operation, the strategies and the
performance of the businesses after the collaborative mechanism is applied, with the aim of
exploring a beneficial collaborative business mode between each company and its suppliers in
this case study, as well as the future collaborative trends. This research mainly used interviews to
conduct the analysis, but these were also supported by information provided by the case
companies. The research was divided into two stages. The first stage gathered literature about
product collaborative development and business performance evaluation, with a wide range of
references and in-depth discussion, to establish the research purpose, scope and method. The
second stage of case analysis started after this research structure was created.
Major analysis dimensions of this research include the following three dimensions: business
operation strategy, interaction between the business and its collaborative firms, and
product/service performance. Please see Figure 1 for the structure of the case study analysis.
 Figure 3. Structure of the case study analysis

(1) Business operation strategy

Industry analysis helps the business realize its current challenges and the speed with
which it needs to apply the collaborative design mechanism. The research emphasizes
marketing segmentation, technology advantages and operational cost-down in the markets to
find out how collaborative design may change the operational strategies of the business.
After the business decides its operational strategy, it must find out how to interact and work
together with its partner companies when it applies collaborative design. This will be the
analysis focus in dimension 2.
(2) Interaction between the business and its collaborative firms
The application of collaborative design in a business will definitely influence its
cooperative relationship with its partner companies. Among all, simplifying the product
development process and applying collaborative design modules are the most influential
factor in building closer and more convenient communication and cooperation with partner
companies. In this step, the research analyzes how product development processes can be
simplified, and what functional modules should be applied to serve as the bridge for
communication with the partner companies after the business installs collaborative design
software. This can help discover how the business should interact with its partners. The
application of the collaborative design mechanism changes the way the business works with
other companies in the same supply chain and the way it operates. The operational
performance indicators that the business attaches the most importance to will be covered by
dimension 3.
(3) Product/Service Performance
The reason why the business applies collaborative design is because it wants to improve
business performance. Hence, the research at this phase discusses what the main performance
indicators are, how similar or different they are, and how they will affect operational
strategies and even alter future strategies.
This research aims to discover the key reasons for a business to apply the collaborative
design mechanism by discussing successful cooperation modes with partner companies in a
collaborative mechanism. Main issues to consider are as follows:
a. Whether the business is unique in the collaborative system.
b. Whether there is a specific business objective to support the decision of applying
collaborative design.
c. Whether the performance evaluation before and after application remains consistent.
d. Whether the performance evaluation and business strategies are correlated.
e. How to use the experience of the case businesses in applying collaborative design to
indicate considerations that have to be made during application and to find out the
key factors that lead to success.

RESEARCH RESULT

After the collaborative design is applied, it is expected that the innovated operation mode
of the business and better performance will stimulate more energetic communication between
the business and its partners. The process of product design, research and development and
production can be shortened, which enables the products to enter the market at the earliest
time and therefore enhance business competitiveness. This section discusses the five
questions about research process raised in Figure 1. Along with the analysis of the case study
interviews, the result of this research is generated at the end.

Figure 4. Research structure

 Question 1: The business applies the collaborative design mechanism because of
influence from its collaborative partners
The researcher interviewed three case companies and found out the following difficulties
faced by current businesses:
a. Higher complexity of product
b. Lack of information capacity, which has adverse influence on the product development
process
c. Lack of real-time communication
d. Product technology needs improvement
e. Customer-oriented service
Based on the abovementioned challenges faced by businesses, this paper explains the
responding strategies of company A. illustrates the business strategies of the three companies
in response to the five challenges. In terms of product complexity, companies A are in
different industries and therefore have different needs in product development. So, even
though they are all participating in fierce competition, each of them has come up with their
own measures. The main product of company A is consumer electronics. So, with rising
product diversity, company A established footprints across multiple industries to satisfy
diverse demands of customers. Company B manufactures computer cases, so it decided to
transform itself to produce products with higher added value and embark on a new course of
horizontal diversification. Company C is a golf gear manufacturer. Since customers tend to
have high demands concerning gear design, the company put emphasis on improving
materials and design technology to fulfill customer needs.
 CONCLUSION

The authors did interviews with some managers, consultants and employees in these three
case companies to verify the results of the study. The conclusions can be summarized as
follows:
(1) The application of collaborative design is not merely a technical feasibility but a choice
driven by market competition
Collaborative design has been drawing more attention because of the rapid advancement of
information technology in recent years. Customers demand more from quality products and
efficient R&D, forcing the business to understand their demands better and work with
upstream and downstream partners on product development.
(2) When implementing a collaborative design mechanism, the overall business condition
must be taken into consideration
Based on the interviews, we found out that what makes case companies commit to putting in
resources is its aspiration to not only manufacture products but participate in product
development at an early stage to cut down cost, reduce change of design, and make products
available more quickly.
(3) Factors that drive the growth of collaborative design
a. Customer demand
The traditional production-oriented market has turned into a customer-oriented
market. Businesses have to provide products or services with better quality and
availability. To achieve this goal, improving the product development process and
having real-time communication with customers and suppliers is one of the most
effective approaches.
b. Competition
Businesses participate in product development to cut down costs and increase
competitiveness. In the future, the ones who can sharpen the collaborative mechanism
and benefit most from it first will enjoy the strongest competitiveness.
c. Information and communication needs
In product development, share all information is a basic contributor to success.
Nowadays, products and technologies are increasingly complicated, so a collaborative
platform allows the business to communicate with the customers and suppliers in
time.
(4) The research lists steps to implement collaborative design successfully according to
the case study
a. Clarify current business strategies
b. Clarify the role and purpose of the business in product development
 c. The president and high-level managers should formulate solutions based on
business strategies and feasibility
d. Review and redesign the processes and responsibilities of business activities
e. Establish a specialized coordination team
f. Break the barriers among businesses to encourage willingness to share
information
g. Formulate solutions that can integrate upstream suppliers and downstream
customers
h. Establish benefit indicators and performance evaluation methods; evaluation
targets should be jointly decided by the business and its partners and regarded
as important reference standards at all check points.
i. Offer timely training to partner companies
j. The implementation of collaborative design involves many aspects; it is more
important to accumulate experience than describe success and failure.

ABOUT THE AUTHORS

Yi-Chen Lin received her Ph.D. degree in management from The University of Hull U.K.
She is an associate professor and the director of Graduate Institute of Technology
Management in National University of Tainan, Taiwan. Her research interests include
Customer Relationship Management (CRM), Integrated Marketing Communication, and
Collaborative Commerce.
Magnolia Yulan Hsing received her Ph.D. degree in public policy from George Mason
University. She is an assistant professor in Graduate Institute of Technology Management,
National University of Tainan, Taiwan. Her research interests are Policy Analysis; Industrial
Development; Technology Policy; Innovation System; Internet Economics and Internet
Technology Application.
Yi-Chuan Wang is a graduate student of Technology Management at National University of
Tainan and has research interests in the area of Customer Relationship Management (CRM)
and Integrated Marketing Communication.
(Received November 2007, revised March 2007, accepted May 2008) View publication stats
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