Global product development strategy at electric-hydraulic market

Master's Thesis, 2011

113 Pages


Table of content

II Table of figures

III Abbreviations

IV Content

V Acknowledgements

1 Introduction and General overview
1.1 About Bosch Rexroth (BR)

2 Literature review
2.1 Product-Life-Cycle
2.2 Boston Consulting Group Matrix
2.3 McKinsey Matrix
2.4 Stage-Gate-Model (Cooper)
2.5 Product development process by Bosch Rexroth (BR-PEP)
2.6 Product/Market Grid (Ansoff)
2.7 Customer-Relationship-Management (CRM)
2.8 Key Account Management (KAM)
2.9 Customer Segmentation – Motivation

3 Summary of the literature review

4 Research design
4.1 Research philosophy
4.2 Research approach
4.3 Research strategy
4.4 Data collection methods
4.5 Requirements on research findings
4.6 Time horizons
4.7 Research Ethics

5 Data collection and analysis
5.1 Data collection for internal analysis
5.1.1 Product-Life-Cycle – Analysis
5.1.2 BCG Matrix Analysis
5.1.3 McKinsey Matrix
5.1.4 SWOT Analysis of the Bosch Rexroth Product Range
5.2 Data collection for external analysis
5.2.1 Porter’s five forces
5.2.2 PEST(EL) (Johnson/Scholes)
5.2.3 Critical Success Factors (CSF) in the electric-hydraulic market
5.2.4 Forecast
5.2.5 Product/ Market Grid
5.2.6 Customer-Relationship Management (CRM) at BR
5.2.7 Key-Account-Management at BR
5.3 Summary of the data collection and analysis

6 Strategic choices and strategic decisions
6.1 Strategic choice: Further development of the BR portfolio
6.2 Strategic choice: Strategic partnership
6.3 Strategic decision

7 Critical evaluation of strategic decision

8 Conclusion and recommendations

9 Appendices
9.1 Research Ethics Checklist - Form RE1
9.2 Gates business consultancy
9.3 Vocatus AG – Market Reserach
9.4 Tier 4-Abgasnorm
9.5 Research summary
9.6 Table of important interview partner at this dissertation
9.7 Interview questions at Mr. Dülk and Mr. Klinger
9.8 Questionnaire
9.9 Interview questions at Mr. Müller
9.10 Interview questions at Mr. Meyer

10 References

11 Bibliography

II Table of figures

Drawing 1: Committee of business unit

Drawing 2: Matrix Organisation of Bosch Rexroth

Drawing 4: Product-Life-Cycle

Drawing 5: BCG-Matrix

Drawing 6: McKinsey-Matrix

Drawing 7: Stage-Gate-Model

Drawing 9: Product-Market-Grid

Drawing 10: The research process onion

Drawing 11: Deduction emphasizes

Drawing 12: Induction emphasizes

Drawing 13: Distinction between quantitative and qualitative data

Drawing 14: Different Research Strategies

Drawing 15: Approach for dissertation

Drawing 16: Sample of a questionnaire

Drawing 17: Sample of interview questions

Drawing 19: Evaluation of the questionnaires

Drawing 20: Sales volume (electric-hydraulic components)

Drawing 21: Evaluation of the interviews

Drawing 22: Five-year-forecast (global electric-hydraulic market)

Drawing 23: Fragmentation of the global electric-hydraulic market

Drawing 24: SWOT-Analysis Matrix

Drawing 25: First questionnaire with open questions for SWOT-Analysis

Drawing 26: Detailed questionnaire for SWOT-Analysis

Drawing 27: Porter’s five forces

Drawing 28: Porter’s five forces questionnaire - supplier

Drawing 29: Porter’s five forces questionnaire - Buyer

Drawing 30: Porter’s five forces questionnaire - Competitors

Drawing 31: PEST(EL) analysis

Drawing 32: economic climate index

Drawing 33: Critical success factors at the electric-hydraulic market

Drawing 34: Forecast for electric-hydraulic components by BR at Europe

Drawing 35: Forecast for electric-hydraulic components by BR at AFTA

Drawing 36: Forecast for electric-hydraulic components by BR at NAFTA

Drawing 37: Global forecast for electric-hydraulic components by BR

Drawing 38: Questionnaire at the marketing and sales department of electric-hydraulic components at BR

Drawing 39: Exhibition calendar from October till November

Drawing 40: Distribution network of Bosch Rexroth

III Abbreviations

illustration not visible in this excerpt

IV Content

Because of the worldwide rising inquiry for electric-hydraulic components this shows in the hydraulic branch a future market. Bosch Rexroth is one of the worldwide biggest suppliers of hydraulic components.

The economic success of the enterprise can be guaranteed only by an enterprise strategy which changes in the market takes into consideration. To satisfy the rising requirements of customer wishes, the product program of the electric-hydraulic components must be adapted and extended.

The purpose of this work is to a global product development strategy at electric-hydraulic market for Bosch Rexroth

To develop a suitable strategy the electric-hydraulic market was more exactly examined. Besides, the future growth potential, the existing competition and requirements of the customers should be determined.

On the other hand the product program of the electric-hydraulic components from Bosch Rexroth was examined and its advantages and disadvantages. In addition, the customer service by Bosch Rexroth was more exactly looked, because this is a determining interface and decisively is for the success in the market.

To examine all these aspects and to value various theoretical analysis methods and assessment models were used. A huge number of the required information could be determined by interviews and questionnaires.

The electric-hydraulic market is a target market for Bosch Rexroth which can be taken by the advancement and removal of the product program.

The most successful product development strategy is to develop missing components in narrow collaboration with especially well-chosen customers.

To be able to pursue successfully this strategy, internal expiries for customer service should be improved.

Decisively for the success of the strategy is the choice of the customer. Moreover it is to be checked advisable the grieved customer choice by wide investigations.

V Acknowledgements

At this point I would like to thank all of those who have contributed in the production and in the success of this work, through their help and support.

First and foremost my thanks go to Dipl. Ing. Dülk, product manager for electric-hydraulics, who has helped me very much, on the one hand, through the great care he has taken in his strategic appraisals and, on the other, by the development of relevant sources of information and in the acquisition of contacts. Through his readiness to talk about the topic he has helped to me to look at the subject from different perspectives and to check the logic of my argumentation in controversial discussions.

I would like to thank all employees of Bosch Rexroth AG for the friendly and pleasant working atmosphere they created and the countless times they provided me with assistance.

Besides this, I would like to thank Mrs. Gerhard for her help in dealing with SAP and Mr. Klinger for the informative and helpful interview.

I would also like to thank my Tutor Mathew Shafaghi for his incessant assistance and his patience.

And I want to thank my best friend Markus Lock for his help at this hard task.

Special thanks go to my parents Ira and Karl-Ernst Sachse who gave me the chance to study and supported me during it.

1 Introduction and General overview

Hydraulic impulses are used in all machines, hence, the hydraulic market is looked in this work. Because of their specific advantages hydraulic impulses are often used in mobile machines like construction machines or agricultural machinery. Lifting and depressions of loads (forklift, excavator, lifts, cranes) occurs, above all, through hydraulic cylinders.

Groups like Caterpillar, Volvo, Liebherr, John Deere und Sany are the worldwide biggest manufacturers of working machines and are especially influential by their purchasing power. Besides, these customers are precursor with new technologies and set new standards in the market. Why it is for suppliers a gain in prestige to cooperate with these customers.

The worldwide biggest supplier in hydraulic components is Bosch Rexroth, immediately followed by Parker, EATON, Sauer Danfoss, Hydraforce and SUN.

Topically the worldwide economic crisis is a driving force which forces all enterprises to rework their strategy. At the moment well-thought-out business strategies create a crucial competitive advantage. That’s the reason why companies use all their energy to develop these. Thereby cost-effective and energy-effective impulse systems are developed. In addition a strong price competition has started, because all forced to reduce costs as much as possible.

Another catalyst for changes in the hydraulic market are environmental-laws which demand a massive reduction of pollutant emission (USA: Tier4, Europe: EURO 5-6).

These both driving forces produce the new technology of electric-hydraulic components.

Therefore, the new technology of the electric-hydraulic components becomes more and more important. Caterpillar, Liebherr, Volvo und John Deer have reacted and equipped new machines with electric-hydraulic systems.

Many suppliers have reacted to this change. Hydraforce and Parker have developed an extensive portfolio which signifies a huge competitive advantage. Also Bosch Rexroth has extended its offer of electric-hydraulic components.

1.1 About Bosch Rexroth (BR)

Bosch Rexroth AG is an industrial enterprise in the area of the impulse and control technology. In 2007 the enterprise achieved with 32,900 employees a turnover of more than 5.3 bn. euros.

Bosch Rexroth is classifying into four independent business units:

- Electric Drives and Controls
- Hydraulics
- Linear Motion
- Pneumatics

A committee manage each business unit and decides all strategically or cross-divisional decisions. Such a committee consists of three senior managers. The following graphic shows a committee of the business unit Hydraulics:

illustration not visible in this excerpt

Drawing 1: Committee of business unit

Source: Bosch Rexroth intranet

Generally Bosch Rexroth is structured as a matrix organisation into different departments. The purpose of this is to create specialised departments, which can be linked to each other according to the requirements of a project. Thereby, projects should be concluded quickly and successfully.

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Drawing 2: Matrix Organisation of Bosch Rexroth

Bosch Rexroth works in a process culture. Competence, work routines and formalism shape and regulate the everyday work life in the organization. The risk of mistakes and incorrect decisions is reduced by this enterprise culture; however, this bureaucratic construction slows down many working processes.

Enterprise vision, mission, values, purposes and one derived behavioural code are summarized in a document "House of Orientation". All employees are trained on this behaviour rules. It is the way of working together at Bosch Rexroth.

Bosch Rexroth wants to be a full-liner to offer customers an all-encompassing product assortment. Thus, through this strategy Bosch Rexroth consolidates its market position.

One challenge of Bosch Rexroth is the new dominant technology of electric-hydraulic components in the hydraulic market. The other challenge is the current economic crisis. These challenges force Bosch Rexroth to jettison uneconomical business units and to promote further potential enterprise strengths. It is more than ever important to overhaul the business strategy. For Bosch Rexroth it is difficult because of its size, so it is not so simple to become changes realized as quick as needed.

The aim of this study is to investigate opportunities for innovation and new product development for competitive advantage. The objective is to recommend a global product development strategy for Bosch Rexroth with a view to market domination. In meeting the requirement of the objective, the study will explore a wide range of relevant issues including: product portfolio, market opportunities, customer target.

2 Literature review

According to Saunders et al. (2007) to develop a basic understanding for the subject to be worked on, a sound literature research is necessary.

The aim of the literature review was to find relevant theories in the area of product development, product portfolio, growth strategy, marketing, customer relationship management and competitive advantage.

The following graphic shows relevant theories:

illustration not visible in this excerpt

In this chapter some fundamental theories about product portfolio, product development processes and marketing are described.

2.1 Product-Life-Cycle

Product lifecycle is one important theory which is used to develop and evaluate a product strategy for the future. “The theory breaks the economic life of a product into a number of stages (four or five being most common).” (Richard Pike and Bill Neale, (2006), pp 33)

illustration not visible in this excerpt

Drawing 4: Product-Life-Cycle


Launch is the first stage and contains a high business risk, because the product isn’t established and it could quite happen that it will fail without returning the initial cost for its development.

At breakeven the launch stage is finished and the growth stage starts.

Attributes of the growth stage are progressive rising sales, a fast growth of the market and the business earns its first gains.

“Many of the business involved will find themselves with substantial spare capacity and there may be a short, sharp shake-out period during which several competitors leave the industry or taken over and capacity is rationalized” (Keith Ward, (1992), pp. 35) Ruth Bender and Keith Ward (2002) stated that maturity stage is indicated by a stable market, sales demand and available capacity are balanced so the business is able to gain constant profits.

The decline stage is the end of the product lifecycle and is indicated by declining demands. “This can be caused by saturation of the market or by the launch of a better product which rapidly attracts away most of the current maturity product’s user” (Ruth Bender and Keith Ward, (2002), pp. 47)

The product lifecycle only looks at the market cycle and neglects the costs in the product development process and the aftercare process. Products are often reworked to new customer wishes before they are launched once more (Relaunch).

The product lifecycle doesn’t always go through all phases. However, so-called "Flops" are taken from the market very early because of too-low sales figures. Or fashion products go through the product lifecycle extremely fast.

Also external factors of influence aren’t taken into consideration. Policy, economy, environmental factors and society have influence on the course of the curve.

According to Siegwart et. al. (1995) the product lifecycle is helpful for further discussion to show the market dynamism. However, it isn’t suitable as a prediction instrument because the sales course can’t be determined empirically.

2.2 Boston Consulting Group Matrix

One famous concept is the BCG Matrix which is shown below.

illustration not visible in this excerpt

Drawing 5: BCG-Matrix


According to Richard P. et. al. (2006) the BCG-Matrix can be used to evaluate the product portfolio by considering its relative market share, its rate of growth and the product lifecycle. According to where a product is placed in the BCG Matrix, it “can be related to the key strategic thrusts of the business and the most appropriate management style” (Ruth Bender and Keith Ward, (2002), pp. 49).

“Question marks” has at the start a low growth rate which will rise continuously. But the share of the market is very low (newcomer products)

Products with a high share of the market and an intensive market growth are called “Stars”. From this stage they could develop in two directions. If a business didn’t invest they will lose market shares and the product will become a question mark. But if they have invested the product will develop into a “Cash cow”.

“Cash cow” products obtain a high share of the market but the market growth is low; however, they provide a solid cash flow and draw profit.

At the end of a product lifecycle there are the so-called “Dogs”. These products are indicated by a low share of the market and through a light or even a shrinking market growth.

In this approach an especially high weighting is given to market growth. There are other aspects which form an attractive market for an enterprise.

Furthermore, it is not taken into consideration that falling markets often offer a promising potential. The spare-part business shows a profitable business segment for many enterprises.

Also the relation between profitability and share of the market is not explored with this model. This provides a base for other basic considerations; nevertheless, it isn’t a prediction for future developments.

2.3 McKinsey Matrix

The advantage of the McKinsey matrix is that it is greatly variable in applicable in many areas. Market attraction and the relative competitive advantage are taken into consideration.

illustration not visible in this excerpt

Drawing 6: McKinsey-Matrix

The market attraction can be determined by the following factors:

- Market growth and market size
- Market quality (profitability, number and strength of the competitors)
- Infrastructure
- Environmental situation (economic situation, legislation)
- Barriers to market entry

The relative competitive advantage is defined with reference to the strongest competitor:

- Relative market position
- Relative potential of production
- Relative potential of development
- Financial situation

According to classification a recommendable strategy can be derived.


On this occasion, the market attraction and the competitive advantage is medium to high, for which reason a growth strategy is advisable.

Balanced Well-Chosen:

In this area can be chosen between three strategies: offensive strategy, defensive strategy and transference strategy which can reach a position of improvement.


In this area the market attraction and the competitive advantage is low; hence, possible profits are still to be taxed and it is recommendable to de-invest.

The assessment of the factors of influence isn‘t measurable, and is defeated by the appraisal of the observer. In addition, a practical application is often problematic, because a clear instruction can be derived only partly from the normal strategies.

Also the interaction of single business segments is disregarded at this approach. A small improvement in one business segment could cause a strong deterioration in another. These connections are very important but not taken into consideration in this model.

2.4 Stage-Gate-Model (Cooper)

The Stage-Gate-Model can be used to improve processes of development. The model places its focus on certain objectives, which only be secondarily considered in the present development processes:

- Quality improvement by the realization process
- Product development with high competitive advantages
- Especial inclusion of market orientation and market judgment
- Working parallel on processes

According to Cooper (2002), the model divides the development process into several partial processes, which are separated by gates. The number of the partial processes and gates can be adapted according to the needs of the user. Every gate offers a decisive possibility regarding whether a project should be continued or not. The assessment occurs according to predefined criteria. Before the next partial process can start the preceding gate has to be passed.

Ideally the process segments are formed in a way that allows several employees to work on the process in parallel.

illustration not visible in this excerpt

Drawing 7: Stage-Gate-Model


The first criticism point is the sequential process construction. Already missing information can prevent the entry into the next stage.

The model seems to be very simple; however, the challenge is to design the processes suitable to the business needs.

The stage-gate model causes a huge amount of expenditure in formalism and the implementation can often last several years.

It is a challenge to change the behavior of the individuals in an organization; therefore it is a big risk.

To live this process really expeditiously, a certain routine is necessary from all involved employees dealing with this process. Therefore this approach is only recommended for enterprises which already have experience in working in a strongly structured process landscape.

2.5 Product development process by Bosch Rexroth (BR-PEP)

The product development process by Bosch Rexroth is built up according to the Stage-Gate-Model. The development process is spited into four sub-processes.

The first sub-process is called the primary sedimentation phase (1). This stage could be started by any employee who has an idea about any innovation. A brief concept description was given, which will be checked through the direct supervisor. If the concept seems to be beneficial the next stage, called the planning phase (2), could be started.

At this stage all affected departments and business areas work on giving more details to the concept. For this there are some standard questions which have to be answered. After treatment of this phase the result is presented an committee. This committee is called the decision board, because it will take the decision of whether the project will be continued or not.

The validation phase (3) comes next during which the previous planed concept will be checked for its feasibility. This result will once more be presented to the decision board.

If the project is worth continuing the conversion phase (4) starts and the project will be completed and a new product or innovation should be created.

illustration not visible in this excerpt

“Design-for-manufacture – designing products for ease of production rather than for functionality and esthetic – can offer substantial cost saving, especially when linked to the introduction of new process technology.” (Grant, J., 2000, pp. 237)

This approach should be thought at every development process for new products. At BR-PEP the manufacturing department is implemented at the first steps of the design development.

The BR-PEP was introduced 2006 to Bosch Rexroth and still many employees aren’t familiar in dealing with this process. This leads often into difficulties at every day work life. Innovations are delayed and "decision boards" must be repeated several times to get a final decision.

The process is less concrete; hence, it is often used to discuss the process instead of meeting necessary arrangements for the project. As already described in the stage gate model, it can take years to introduce this to an enterprise.

This method fits the process landscape of Bosch Rexroth; hence, it should be worked on further in spite of topical difficulties.

It is necessary to adapt the BR-PEP to the needs of the different business units.

2.6 Product/Market Grid (Ansoff)

The product-market grid is a tool for the strategic management to develop a growth strategy. According to Hackley (2003) the product-market grid four scenarios with diverse advantages and risks can be described.

illustration not visible in this excerpt

Drawing 9: Product-Market-Grid


Market Penetration:

In an existing market the enterprise tries to grow further. This could be reached by raising the market share with already existing products:

- Rise of the sales amount at existing customers,
- Advertise of new customers
- Combination of both.

The risk is low because the enterprise uses existing resources and abilities. A disadvantage is that the possible growth is mostly limited and later another strategy must be pursued if the market is matured.

Market Development:

The enterprise tries to enter new market segments with existing products.

This approach is recommendable for specialists because they have special unique products / experience. Nevertheless, the risk with this strategy is higher because a new unknown market must be opened.

Product Development:

The enterprise tries to satisfy new needs of the market with innovative products.

This strategy is recommendable for enterprises which deal with special clientele instead of special products. The enterprise has to be innovative and takes the risk that new products won’t be accepted.


This is the strategy with the highest risk, because not only new products have to be developed, at the same time new markets have to be entered. But at success the return on invest is very high.

According to Meffert et. al. (2008) a criticism point is the growth fixation, which doesn’t consider disinvestment or retreat strategies, as is the restriction to two factors (products and markets).

Internal strengths and weaknesses of the enterprise aren’t converted and aren’t considered in the strategy definition.

Also the strengths and influence of the competition aren’t incorporated.

Nevertheless, the biggest disadvantage consists in the fact that the resources and topical situation of business units aren’t taken into consideration.

2.7 Customer-Relationship-Management (CRM)

Customer-Relationship-Management defines a consistent adjustment by an enterprise its target customers. Besides, CRM is a sub range of the marketing and deduce its aims from it. At a long-term customer-relationship it is essential to document all information about customer-relationship and customer transaction.

With the help of the accumulated data the communication is supported to the customer to identify weaknesses and to improve working processes with the customer. Further a lot of different analysis could be done, which provides a basement for strategically business decisions.

- Drift Trends
- Technological Change
- Customer evaluation
- Customer and Market segmentation

For every enterprise is it important to acquire new customers, but at least as important, if not even more important, it is to keep customers. According to Bergmann K. (1998) it is fivefold more expensive to acquire new customers instead to retain customers. CRM is an approach to optimize all cross-divisional customer processes and to improve thereby the business connection.

According to Rennhak C., (2006) a cause for failure of many CRM concepts are the lacking data quality. Incorrect, redundant, incomplete and outdated data are grasped and this defective data base lead to wrong enterprise decisions. The data quality is therefore a critical successful factor for a successful CRM.

2.8 Key Account Management (KAM)

Primarily, Key account management signifies the care of great customers by special Key account managers. The objective of KAM is to reach market growth by differentiated customer care. To this belong removals of long-term business connections with old customers as well as the recruitment of new customers. Professional Key account management contains a comprehensive customer care to optimize the customer processes and to improve result with the top customer (Win-Win situation).

The Key account manager looks extensively after the specific interests and needs of strategically significant customer. He forms the interface between customer and enterprise and provides a clear responsibility.

Key accounts are customers who take a key position for the present and future existence of the enterprise. Generally Key accounts are customers which generate at least fifty to sixty percent of the turnover or the purpose turnover

2.9 Customer Segmentation – Motivation

"Segmentation is often the key to developing a sustainable competitive advantage" (Aaker A.D., 2005, pp. 42). The first reasonable differentiation occurs in industry customers and mobile customers.

After the segmentation group-related purchase criteria can be determined. What motivates the customer to the purchase or to the non-purchase.

3 Summary of the literature review

The aim of the Literature review is to answer a scientific question.

Only through a comprehensive knowledge about an area of expertise and weaknesses of existing solutions could innovative solutions be developed.

To develop a successful strategy the starting position the internal situation of the enterprise as well as the external situation in the market must be confessed. At the same time the future how the market will be develop and how customers and competitors will act must be forecasted. Also the possibilities in the enterprise what can be changed or be improved are to be determined. With this knowledge different scenarios can be put up to operate on the change.

Poter's five forces, PESTEL and Critical Success Factors are helpful models to determine the enterprise environment and the conditions in the market. Indeed, Poter's five force can examine only simple market structures and shows merely a snapshot, but offers very fast and simply an insight into the market situation. Also PESTEL is helpful to identify the factors of influence and their dependence in the market, however, a big disadvantage is that it indicates no changes. To define CSF are extremely important, because these determine the success of an enterprise. CSF changes, why a unique analysis is not sufficient, these factors must be checked over and over again for their validity. To be able to estimate the market development a forecast is necessary. Nevertheless, a forecast could only be estimation about the future, which is always defeated of a certain inaccuracy. An easy approach for the strategy development is the Product/Market-Grid. This can be used very well in this work, because a growing market is looked. However, it must be considered with the fact that the current enterprise situation and the competitive situation remains disregarded.

Customer Relationship management (CRM) and Key-Account-Management (KAM) are important for the success of an enterprise. Over it shows whether an enterprise is able to set up new customers, to support and to retire them to the enterprise.

Customer Segmentation/ Motivation it is necessary to identify customer wishes and to satisfy these needs.

All these attempts deal with soft factors which only restricted are measurable and determineable.

For the strategy development an internal analysis of the enterprise is necessary and, besides, especially the product portfolio. Besides, Product-Life-Cycle, Boston Consulting Group Matrix und McKinsey Matrix are helpful attempts. However, the knowledge from these tools are to be used with care, because these are strongly simplified and the results often strongly depends on the user and its interpretation. However, these are methods simply to be applied and offer together with a check of causality a good basis to the strategy inquiry.

Strengths and weaknesses of the enterprise can be determined about a SWOT-Analysis. Indeed, this is relatively fast provided, nevertheless the result is partially very superficial and depending on the view of the user.

The literature review for this work was complex because to answer the research questions it was necessary to cover a wide range of topics. At the area of marketing, product portfolio and strategy development are a multiplicity of theories available.

There is much more literature available, therefore it is necessary to select very carefully. The literature review was sufficient and a number relevant theory was found. Other interesting theories which could be used for further more circumstantial analyses are:

- 7-S-Framework (McKinsey)
- Force Field Analysis (Lewin)
- Competitive Advantage (Poter)
- SMART (Drucker)
- Marketing Mix (4P's)
- Extended Marketing Mix (7P's)
- Balanced Scorecard
- Four Strategic Types (Miles and Snow)
- Time-to-Market
- Gap Analyse
- Core Competence

4 Research design

Research is a method to collect information and evaluate the found information. With a defined research strategy it is possible to discover unknown coherences and backgrounds. Often information could only used after an in-depth research. That’s the reason why research is so essential. During research it is very important every time be aware of the question which should be answered.

It is important to clarify where and how data will be collected, because this affects the results. “A research design provides a framework for the collection and analysis of data” (Bryman A. and Bell E., 2007, pp. 40). This chapter provides an overview of research methodology and helps to select a suitable research strategy. A helpful approach is the research process onion according to Saunders et al. (2007), which divides the research process into several layers. The most important topics are on the external layers and should be peeled off first.

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Drawing 10: The research process onion

Source: Saunders et al. 2007, pp.83

4.1 Research philosophy

At first it is important to decide an appropriate research philosophy. According to Saunders et al. (2007) there are three different research philosophies:


Positivism is an approach which is often applied by natural scientists.

Investigations are taken under defined conditions to proof the correctness of a theory. Furthermore, it is assumed that the investigator accepts an objective and analytic point of view to win a logical conclusion from the observed data. With other words „the researcher is independent of and neither affects nor is affected by the subject of the researcher” (Remenyi et al. 1998, pp. 33).


Interpretivism is an approach that the real world is too complex to explain with simple laws. By the reduction to easy legitimacies a lot of information about connections gets lost. It is important to understand to unique of every situation to understand the reactions and behavior of people. “It is therefore the role of the interpretivist to seek to understand the subjective reality of those that they study in order to be able to make sense of and understand their motives, actions and intentions in a way that is meaningful for these research participants” (Saunders et al., 2007, pp. 84).


„Realism is based on the belief that a reality exists that is independent of human thoughts and beliefs“ (Sauders et al., 2003, pp. 84). This reality has influence on everybody no matter whether these persons are aware of it or not. Realism combines aspects of the positivism as well as interpretivism and uses research approaches like case study.

According to Saunders et al. (2007), it would be a failure to think that “one research approach is ‘better’ than another… They are ‘better’ at doing different things” (Saunders et al., 2007, pp. 85).


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Global product development strategy at electric-hydraulic market
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