Project-Based or Product-Based?

baseddCompanies can most often be categorized into two types: project-based or product-based. Though both the categories witness a great surge in revenue every year, it is believed that product-based companies have a better edge over the service-based ones in long-term growth potential. To make their customers happy, project-based companies develop very custom applications, often where the client owns their intellectual property.  A challenge faced by a product-based company is the market need for the product and predicting the features that enhance the customer’s workflow.  Product-based companies make a specific product and try to market it as a solution. But project-based companies create a solution based on many products and sell it as a packaged solution to a particular need or problem. For example, Coca cola, Pepsi, Colgate manufacture their products in the plants and then market and sell them with profit to the customers.

With that being said, there are varying opinions as to just exactly what is a “project-oriented” company.  Many describe project-based companies as those whose main business is to run projects for external clients, as well as for traditional service-or product-oriented companies. Project-oriented companies, also known as matrix-based organizations, group employees into teams. Each team works to complete a task, which might be a project, product or program that benefits a specific organization. The matrix structure is just one type of organizational structure available to companies. They usually include construction companies, software developers, advertising agencies or audit firms.

Since project-based organizations have reached the highest possible degree of project-orientation, they provide a wealth of learning opportunities for non project-based enterprises when it comes to project work. In companies where the main business does not consist of performing projects for clients usually indicates that an effective project portfolio management is missing which is an attribute of weak project orientation.  In a project-based company, it is just the opposite way round: the more projects the better because they generate revenue.

Project-conscious management has a broader scope than projects, programs and project portfolios; it looks at project work as optimization of the whole enterprise by addressing all elements relevant to project work. This includes the relationships between projects as temporary organizations and the permanent organization.

Source: “What Is the Difference Between Project Based & Non-Project Based Organizations?” Small Business. Web. 14 Apr. 2013.

Baldwin, Anya. “What Are Project-Based Organizations?” E How. Demand Media, 31 July 2011. Web. 14 Apr. 2013.

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