Managing Product Architectures, A Study of Oganizational and Strategic Aspects

Abstract: Product modularization and product platforms constitute two major approaches to product architecture management. These concepts are applied to enable firms to cost-efficiently provide a high degree of product variety and to achieve a high level of strategic flexibility.

A major challenge concerning the application of these two concepts is the fact that they partly overlap in terms of their effects. As a consequence, the concepts are often used interchangeably or even as synonyms in practice as well as in theory, creating significant confusion. For that reason, this thesis focuses on a careful differentiation of the concepts. Moreover, each of them is argued to put specific demands on the organization of the firm in terms of its way of organizing, management of knowledge, and decision-making processes. In current literature, there is a modest amount of contributions explicitly describing the complex interrelationship between product architecture approaches and the organization of the firm. Therefore, the thesis further investigates this interrelationship. Finally, modularization and product platforms are not a panacea which fits every organization. However, current literature does not provide a satisfying answer in which situations these product architecture approaches are applicable. Hence, the thesis explores potential contingencies affecting the applicability of modularization and product platforms. Therefore, the purpose of this thesis is to describe and explore different approaches to managing product architecture, with an emphasis on organizational and strategic aspects.

The findings of this thesis are based on in-depth case studies, a multi-site case study and one questionnaire. They outline important differences in terms of effects of product modularization and product platforms, which in turn have important implications in practice and in theory. While product platforms primarily aim at achieving re-use economics, modularization puts more emphasis on reducing the cost of integrating innovated or newly designed components into an existing product architecture. With regard to the interrelationship between the product architecture and the organization, it is shown that modularization enables strategic flexibility through complementary organizational factors. Moreover, the connection between product architecture and the organization of the firm appears to be a two-way relationship in contrast to the generally assumed one-way relationship. This implies, for example, that the organizational choices made by a firm following a product modularization strategy significantly affect its ability to maintain a modular product structure over time. Finally, on the strategic level, two market-related contingency factors have been revealed, namely the demand for product customization and the rate of change in the market. The identification of these contingency factors enables firms to more fruitfully align their product architecture strategy with their business strategy.