Abstract
Project portfolio selection for developing a new product is critical to a company because the attributes of the project reflect on the price, quality, and functionality of the developed product. The market evaluates the developed product and the assessment of the product value determines its sale on the market. The project portfolio selection and sales are interconnected from a corporate perspective. The automobile industry is an industry which responds to the issue of business sustainability sensitively because their business directly relates to the environment. In this study, business sustainability was approached through the perspective of total cost of ownership (TCO) embedded into the project selection model after the attributes of the project, investment and efficiency, and the TCO of the product were combined to generate a sales function. The sales and revenue models were proposed, and the validity of the models was confirmed using a case from the automobile industry. As a result of the experiments, the sales model tended to show that the market share increased by selecting the proper number of projects to maximize sales. In contrast, the revenue model showed a tendency to select projects more than the sales model in order to maximize the profits of the company. By suggesting project selection models in a new perspective different from the ones in existing studies, this study is valuable with regard to the fact that the suggested models preserve project interrelationships, TCO, and product sales in a practical manner to enhance business sustainability.
Highlights
Business sustainability creates value for the profit of a company by taking in opportunities and handling risks derived from economic, environmental, and social development
Dumortier et al [27] examined the preferences of customers for purchasing conventional vehicle (CV) and electronic vehicles (EVs) and the preferences were calculated on the basis of their fuel costs for five years and the total cost of ownership (TCO)
As the operating cost is the primary issue in the automobile industry, researchers have studied the TCO to compare the cost of EVs to a CV [28,29]
Summary
Business sustainability creates value for the profit of a company by taking in opportunities and handling risks derived from economic, environmental, and social development. Practical approaches to address the project selection problem are needed which consider a market-based perspective because project selection is related to a company’s profit, either directly or indirectly. To manage and cope with the aforementioned situations, the concept of total cost of ownership (TCO) was adopted and embedded into the project selection process to consider business sustainability and the risks in the market. In the case of the automobile industry, it is used for validating the project selection models These models contribute to managing project selection for companies in order to handle the issues deriving from environmental regulations of the market.
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