International Project

Management
Background Information Companion Website

Table of Contents
Chapter 1
1.1 What types of projects do exist?
1.2 What purpose do international projects have?
1.3 How is an international project characterized?
1.4 Why do international projects fail?
1.5 What project management institutions and standards exist?
Chapter 2
2.1 Mission and vision
2.2 Recent trends in project management research
Chapter 3
3.1 Brainstorming tools for project concept creation
3.1.1 The tree diagram
3.1.2 Fishbone or ishikawa diagram
3.2 National culture and its embeddedness in context
3.3 Cultural frameworks: Application and limitations
3.4 Beyond culture frameworks: Cultural sense-making
Chapter 4
4.1 PESTEL tool
Chapter 5
5.1 Resources for planning international projects
Chapter 6
6.1 Additional resources
6.2 Detailed discussion of advantages and disadvantages of main
project organization forms
6.2.1 Functional project structure
6.2.2 The stand-alone project organization
6.2.3 The matrix structure
6.2.4 Virtual project structure
6.3 Background information regarding contracts in an international context
6.3.1 The contract as a special communication tool
6.3.2 International contract standards
6.4 More details on the Organization Breakdown Structure (OBS)

Chapter 7
7.1 Useful templates
7.2 International project management and the agency theory
Chapter 8
8.1 Resources
8.2 The force field analysis
8.3 Where to find effective international project managers? Anecdotal
evidence
8.4 Trends in leading international projects
Chapter 9
9.1 Resources
9.2 Short introduction to non-verbal communication
Chapter 10
10.1 Views on conflict based on the high-context/low-context
categorization
10.2 A model for intercultural negotiation
10.3 Conflict resolution guidelines
Chapter 11
11.1 More knowledge management tools
11.2 Details on the learning organization

Chapter 1
1.1 What types of projects do exist?
The following table provides you with a concise overview of various types of projects
in general. I have selected examples for projects for each categorization criterion.
Table 1.1 Systematic overview of different types of projects
Categorization Criteria

Examples

Nature of organization
carrying out projects

Enterprise, e.g. SME or multinational corporation

Non-profit organizations (regional or international)
Governmental agency

Industry

Project-based, e.g. Construction, Civil Engineering,

Defence, IT/IS, Pharmaceutical, Petrochemical
Operations-based, e.g. Automotive, Banking, Consumer
Electronics

Purpose

Development of new products or markets

Improvement of Customer Relationship Management
Improvement of Supplier Relationship Management
Improvement of Quality Assurance Systems
Improvement of general competitiveness by Business
Process Reengineering

Location in value chain

Primary activities, e.g. R&D, Purchasing, Manufacturing,

Marketing, Sales, After Sales Service
Secondary activities: IT, NPR procurement, HR

Scope

National or international
Within the organization, outside of the organization, or both

Main stakeholders

Customers
Shareholders
Suppliers
Co-operation partners
Employees

Locus (external internal)

External locus, e.g. deliveries of customer-specific systems

or services
(Contd)

 Internal locus, e.g. investments in systems/facilities,

internal development, change and reengineering,
management of technology and innovation
Risk intensity

High, e.g. R&D projects in the pharmaceutical

industry
Moderate, e.g. construction project with known and
experienced subcontractors
Low, e.g. introduction of an ISO 14001 system at a
local site

Duration

One month, e.g. move of one business unit from one

location to another
6 months, e.g. setting-up a new banks IT
infrastructure
12 to 24 months, e.g. the integration of a newly
acquired company
2 to 5 years, e.g. comprehensive change projects like the
modification of the organizational culture of an MNC
8 years, e.g. the construction of a 19 kilometre-long
bridge across the ocean built by an international
consortium

1.2 What purpose do international projects have?

The following table gives an overview of the purposes of international projects with
brief project descriptions linked to their respective purposes. The focus is on international projects and their link to the opportunities offered by globalization.
Table 1.2 Categorization of international projects depending on their purposes
Globalization:
Possible Consequences for
Organizations

Selected Examples for

International Projects

Search for new geographical

presence and/or new international
stakeholders

International joint venture

Strategic alliance with foreign partner, e.g. in
Marketing or R&D
Consortia with international partners, e.g. for
infrastructure construction projects
New subsidiary of NPO in different countries
Bi-lateral or multilateral co-operation between
countries, e.g. to control global warming
(Contd)

Globalization:
Possible Consequences for
Organizations

Selected Examples for

International Projects

Increase of global market power

or presence; increase of global
political power; increase of global
effectiveness

Establishment of a wholly owned foreign subsidiary

Acquisition of foreign competitor
Turnkey projects with numerous international
subcontractors
Build-Own-Operate-Transfer BOOT projects with
cross-border contractors and customers
Marketing campaign for different international markets
Development of new products in multi-cultural teams
Wars led by governments
Coordinated efforts of NGOs and governments to
work for a common, global objective

Realization of efficiency gains

(e.g. by benefiting from
economies of scale and scope)

Access to scarce or unique

resources (e.g. strategic
proprietary assets)

Acquisition of a foreign company which has e.g.

patents or special process knowledge
Virtual teams located across geographical and
cultural boundaries to jointly develop new products
or services (distributed high technological projects)
Diversity management projects
International infrastructure projects to secure supply
with natural resources

Reduction of risk through

geographical diversification

Production transfer to low-wage countries

Internationalization of sourcing activities
Outsourcing production to foreign OEMs or ODMs
Establishment of Shared Service Centres in a
neighbouring country (near-shoring) or overseas
(off-shoring)
Global implementation of one single ERP or general
information management system across the globe in
one MNC
Restructuring of the global supply chain of an MNC
Coordinating information flow between international
subsidiaries of an MNC

Acquisition of foreign company

Foundation of wholly owned foreign subsidiary
Establishment of international joint venture
Bi-lateral agreements of one country with other
different governments to secure the supply of
natural resources

1.3 How is an international project

characterized?
The following chart gives a more detailed overview of characteristics of international
projects than Figure 1.5 in the textbook. It summarizes the descriptions of the respective characteristics so that the reader can understand all the major characteristics of
international projects at a single glance.

Different national
cultures
Different organizational
cultures
Different functional
cultures
Different languages
Different educational
backgrounds
Different time zones
Different currencies
Different jurisdictions

Wide range of objectives

Organizations with cross-border activities, international
network of organizations, international joint ventures, etc.
Context: all countries in the world with their historical,
political, economic, technological, environmental, and
legal differences

Uniqueness

Diversity

Risk

High speed and time

pressure due to fast
developments in global
markets
Sudden changes due to
fierce competition in
global markets
Frequent changes due to
involvement of numerous
parties
Sudden changes due to
unforeseen
risks/opportunities
Continuous coordination
and alignment necessary
due to high
interdependency of
different stakeholders

Dynamics

Comprehensive scope
Heterogeneous
stakeholders with
conflicting interests
High number of
interactions
Huge number of
environmental risks
High uncertainty due to
unpredictable global
environment and
novelty of project
Many internal risks due
to complexity

International
Project

Complexity

Limited Resources

Additional cost due to transportation and coordination

Additional time for planning due to greater complexity
Scarce human resources due to greater skills
requirements and bigger scope (e.g. foreign languages,
intercultural skills)

Heterogeneous
stakeholders
Numerous
(sub)organizations with
self-interests and subcultures
High degree of virtuality
Multi-disciplinarity
Huge amount of
information that needs
to be processed
resulting in complexity
by volume and variety
Technical complexity
due to innovativeness
and comprehensive
scope

1.4

Why do international projects fail?

As a current or future member or manager of international projects, you should be

aware of the following stumbling blocks that may result in project failure. This list does
not indicate any order of importance, nor does it claim to be complete. It is partially
based on Lientz and Rea (2003):
Treatment of the international project as a standard project:
Project owners and managers need to be aware of the particularities of international projects in order to manage them well from the start of the project.
Failure to clarify and communicate goals:
Very often not all of the parties and stakeholders will have been involved in
the formulation of a common goal, which will limit their commitment to it.
Sometimes, the common goal is not well defined due to the complexity of
the project. There could be even be contradictory goals.
Failure to take self-interest into account:
The various stakeholders involved are likely to have different agendas which
need to be taken into account in order to gain full support and commitment
for the international project.
Lack of sensitivity to local cultures:
Motivation and support of local sites can easily get lost by the imposition of
rigid standards or the display of cultural superiority.
Ignoring context:
Project managers often insufficiently consider international differences in infrastructure, jurisdiction or other particularities of the international environment.
Customer dissatisfaction:
The project outcome does not meet customers expectations due to misunderstandings (mainly language and context) and the lack of a thorough project
definition.
Excessive management attention:
As some international projects are very important for the survival of an
organization, senior executives will tend to micro-manage, thus interfering
with plans and de-motivating project managers.
Time overrun:
This is may be caused by misunderstandings due to language barriers
between locations (national languages) and between functions (professional
languages). It may also be caused by bad planning, and by not taking into
account that more time may be needed than in a standard project for setting
up the right infrastructure, logistics, training, team building, and so forth.

1.5 What project management institutions and

standards exist?
Project management institutions
In 1965, the INTERNET, now known as the International Project Management
Association IPMA (www.ipma.ch), was established in Europe as a forum of practitioners
to share their knowledge about project management. The foundation of the US-American
Project Management Institute (http://pmi.org/info) followed in 1969. Today, the PMI is
the biggest project management non-profit organization with more than 200,000 professionals representing 125 countries as of March 2007. Although the PMI puts a lot of
effort into globalizing the organization as such, this is hardly reflected in its standards.
In 1972 the aforementioned British Association for Project Management APM was
founded (http://www.apm.org.uk/), and was simultaneously a member of the IPMA.
Its body of knowledge (as discussed in the previous paragraph) served as reference
for the IPMA Competence Baseline. Another local association of project management
is the Australian Institute of Project Management, established as the Project Managers
Forum in 1976. The Australians have taken the lead in coordinating project management associations in the Asia-Pacific region. They were also decisive in the foundation of the Asia Pacific Federation for Project Management (APFPM) in 2002. The
Chinese project management association (PMRC) was created in 1991. In 1998, the
Japanese followed suit with the establishment of the Japan Project Management
Forum (JPMF), a division of the Engineering Advancement Association (ENAA).
Sponsored by the Japanese Government, the ENAA developed its own standard
guidebook, called P2M: Project and Program Management for Enterprise Innovation.
Due to globalization as described earlier in this chapter, project management has
become international. However, the professional associations of project management
are still more nationally oriented, even partially competing with each other. These
associations are mainly active in the areas of defining a distinctive body of knowledge
(as described above), developing standards, and developing certification programs.
Yet, there are some global initiatives worth mentioning: The Global Project
Management Forum was initiated in 1994. While responsible for the development of
international project management standards and related topics, the political interests
of the incumbent associations have hampered the process so far (Crawford, 2004).
The British University of Manchester Institute of Science and Technology
(UMIST), with its Centre for Research in the Management of Projects (CRMP), plays
a main role in enlarging the research base of project management.

Project management standards

The most influential standards in project management have been developed within the
Anglo-American world. There is the project management standard of the US-American

PMI. It is called Project Management Body of Knowledge (PMBOK) and comprises

nine broad project management knowledge areas. One of the European counterparts is
the Association for Project Management (APM) which has a standardized body of
Knowledge BoK covering seven knowledge areas. In the context of international project management, I would regard the APM standard as more appropriate due to its
inclusion of context, stakeholder management, and more detailed people-related
areas.

Chapter 2
2.1

Mission and vision

Those readers who are not that familiar with strategic management may want to gain
some background knowledge about some key terms related to strategic management,
namely vision and mission.

Definition of Mission and Vision

Narrow definition:
Both reflect the strategy of an organization. A mission statement can be seen as the
overall purpose of an organization and should be in line with the values or expectations of its stakeholders. It should also clarify the scope of the operation. The
vision is the desired future state, the aspiration of the organization.
Broad definition:
A vision consists of two parts: (1) The core ideology of the organization, encompassing the core values and the core purpose, and (2) the envisioned future which should
include inspiring descriptions of the goals to be attained in ten to thirty years.
Following the latter definition, the mission statement is part of the vision.
Sources: Collins and Porras (2002); Johnson et al. (2005)

2.2 Recent trends in project management

research
You may also be interested in the recent and future developments of project management as a research discipline. The following box highlights some of the trends.

Project Management Research: Theoretical Basis and the Importance of

Context
According to Morris (2002), project management as a practical discipline is contextual, although there are generic elements. The challenge for future research in the
area of project management is the perceived weakness of the disciplines theoretical
base. Morris sees the future research focus as needing to be on the linkages between
project management and business performance. The challenge is to build a broad,
multi-industry, theoretically-grounded explanation of what the key factors for successful projects are.
Some researchers, for instance those belonging to the Scandinavian School of
Project Studies, have used the organizational theory perspective together with theories on entrepreneurship and industrial development as a theoretical basis for projectrelated research. They view context as extremely relevant for understanding projects
and project management. Parallel to the developments in organization theory in
which organizations are understood as open systems (see Chapter 1), projects are
seen as being affected by their environments and by organizational fields. The
Scandinavian School of Project Studies is strongly empirically-based. There is a deep
awareness that projects do vary, depending on differences in their tasks, context, history and process. Deep qualitative studies are carried out in order to understand a
project from its specific contextual circumstances. Due to this variety in the project
landscape, it is argued that caution needs to be applied when formulating general
normative how-to models for running a successful project.
Sources: Morris (2002); Sahlin-Andersson and Sderholm (2002)

Chapter 3
We have said that it is important in the project initiation phase to integrate the project
management team and if possible the many project members into a projects concept
creation and planning.
The following tools can help you to structure the input you get from groups of colleagues or team members.

3.1 Brainstorming tools for a projects concept

creation
3.1.1. The tree diagram
This tool is primarily used for identifying effective and feasible approaches to the solution of a problem, or for brainstorming on measures sessions to implement change
throughout a project. Examples of situations where the tree diagram is helpful are:
To explore possible root causes for a challenge the organization is faced with.
To break down customer expectations on a product or service to a manageable
level.
With this tool the reader can easily break down a problem into causes on different
levels. The tree diagram can also be used for dividing a projects objective into subgoals. Then, the sub-goals are further split into manageable work packages and tasks.
The following tree diagram shows the analysis of a lack of organizational cost
competitiveness. The objective given to the international project team was to cut
costs by 15 per cent within one year. The first level of the diagram shows some functions of the organization where the major root-causes of the problem can be seen.
The next level provides more details about the causes of the high cost.

Cost reduction
15%
Cost reduction within
byby15%
within one year
one year

Sales &
Distribution

Marketing

Expensive
campaigns in
print media in
EU countries
without visible
results
Expensive
promotion
activities in Asian
super markets
without an
increase in sales

Production

Large sales
force with low
per capita
turnover
Strong
bargaining
power of
customers
High inventory

Most sites in
high-wage
countries
High defect
ratio
High
absenteeism
Unused
capacity

R&D

Purchasing

All R&D sites in

high-wage
countries
No value
engineering
Overspecification
Market
information not
available in time

Unsatisfying
quality of
components
from Asian
suppliers
No global
bundling of
purchasing
volumes

3.1.2 Fishbone or ishikawa diagram

Another frequently used tool to define the causes of a problem or to brainstorm new
ideas on how to achieve an organizational target is the so-called fishbone or ishikawa
diagram. It provides answers to questions such as:
What is impeding the information flow in our global supply chain?
How can our organization grow faster in the Latin-American region?
By establishing cause-and-effect relationships, and arranging information in an orderly
manner, complex challenges can be structured and rendered manageable. Fishbone
diagrams are also excellently suited for use in identifying the parameters that may
affect a project, for instance when related to a project risk analysis (see Chapter 4).
Beyond their original purpose, both tools can also serve as a common language in international projects, as they are widely used and easy to understand thanks to visualization.
Effective
communication

Global accessibility
of real time data
Design new IS architecture compatible with
legacy systems and new data warehouse

Creation of communication
cube

Integrate legacy tools

Development of behaviours
Roll-out to all global sites

Challenge
Scattered IS/IT
landscape in
international
organization
Lack of awareness of
importance of global
communication

Development of intranet
structure

Trainings, manuals,
new reports

Introduction of interactive tools

Establish business
intelligence channels

Establish report tool

Poor availability of
basic information

Preparation of
data warehouse

Scan & filter business

intelligence information
Establish different
info sharing tools

Introduce dissemination
system

Transparency,
consistency and velocity

Knowledge expansion

Objectives
Have an integrated
Information System
globally accessible
across all units of the
organization with
regular updates of data
Have established
informal networks of
cross-border and crossfunctional
communication

3.2 National culture and its embeddedness

in context
In this chapter, we have talked a lot about various kinds of cultures. As a national
culture will play an important role in international project management, it is crucial
to understand the concept as something dynamic and interrelated. A national culture
will not emerge in a vacuum, and it is not static.
Instead, a national culture is embedded in its environment and constantly
developing further. It influences and is influenced by religion, the economic system of
a country, the political system of a country, the education system, and the language. It is
also impacted by the geography and the climate of a country. As all these elements are
subject to change, culture also changes over time. Privatization movements in Eastern
European countries and Russia, for instance, will have an impact on the behaviour and
attitude of employees in those countries. They might become more ambitious in their
day-to-day behaviour, stemming from an attitude which has moved from solidarity with
others to competitiveness and rooted in a value change from equality to equity.
The following figure summarizes the factors influencing national culture and vice versa.

Management
Practices
Economic
System

History

Geography/
Climate

National
Culture

Political
System

Educational
System

Religion
Language

3.3 Cultural frameworks: Application and

limitations
We have learnt to understand national culture better by using so-called cultural
frameworks. In the textbook, I stressed that cultural frameworks oversimplify reality. It is important that you keep the limitations of such cultural frameworks in
mind.
The behaviour of an individual might not even fit into the cultural framework of
his or her culture (Osland and Bird, 2000). Reasons for this could be for instance an
individuals personality where their values might be different from the groups values. Another reason could be role differences. Although the USA in general has a
very low power distance, the CEO of a US company can behave very autocratically.
Another reason why cultural frameworks have difficulty in explaining certain individual behaviours lies in the bipolar pattern of the frameworks. People can change in
different circumstances. In Latin America, for example, an individual can be very
friendly and warm at a family reunion party. Sitting in a public office behind a desk
that same person, however, can come across as unfriendly and arrogant. Finally, culture frameworks usually explain what should be valued and how people should act
which do not always correspond to what people choose to do in practice. Cultural
comparisons often focus on should not is, so in practice some people might
behave differently.
However, it is still useful to have such tools and techniques to understand cultural
differences, as they are valuable to define the project scope and plan a schedule. As
pointed out in Chapter 1, the culture and the behaviour and attitudes of stakeholders are an important element of international project management. Hence, a lot of
care should be taken in getting to know cultural differences and their (potential)
consequences for the management of an international project. This starts with a sensitivity about cultural topics, includes cultural self-awareness (see the exercise on the
companion website), and leads to the mapping of cultural gaps between the main
stakeholders which is an important deliverable of the initiating phase of each international project.

3.4 Beyond culture frameworks: Cultural

sense-making
The following box shows how you can use cultural frameworks in a more sophisticated way. You have to add in more factors to your analysis of any given situation.
This approach is called Cultural Sense-making.

Cultural Sense-Making Beyond Cultural Frameworks

A true understanding of the logic of another culture includes comprehending the
interrelationships among values, or how values relate to each other in a given context. This can lead to explanations of apparent paradoxes in cultures: the USAmericans have low uncertainty avoidance whereas the Japanese score very high on
that dimension. Why is it that the Japanese have very ambiguous clauses in their
short business contracts, and the US-American business contracts will spell out each
and every contingency? One possible answer lies in value trumping. In certain situations, one value is more important than another in a given society.
To make sense of cultural paradoxes as outlined above, and to learn to appreciate
the holistic nature of cultures, the interested reader can use the following model of
cultural sense-making.
1.

2.

3.

Indexing The context of the encounter needs to be identified. It could be a

meeting between the Australian project manager and his Japanese sub-team
leader. Prior events: Head of Japanese subsidiary does not support the project
which is stalled. Background: What is the relationship of the two interacting individuals at work and outside? Topic: Discussion on measures to get buy-in from
head of Japanese subsidiary. Location: Sub-project Managers office in Tokyo.
Making attributions The context is interpreted by the two individuals based
on their own social identity (e.g. ethnic or religious background, gender, social
class) and experience. For the Australian project manager, Japan could be the
country exporting their senior citizens to live in Australia, whereas the
Japanese sub-project manager may see Australia as a huge outdoor-park
where he can take wonderful holidays.
Based on the interpretation of the context, both individuals will behave in the
adequate way which is embedded in their cultural scripts. The selection of a
behaviour will depend on their own cultural values which can be characterized
with the cultural frameworks. However, in this situation, some values might be
more important than others. Being strongly achievement oriented, the
Australian project manager will give instructions to his Japanese sub-project
manager on how to proceed with the project in Japan. This will contradict his
usual style which is based on low power distance, which would make the
Australian project manager openly discuss with the Japanese sub-project manager in order to brainstorm the best ideas on how to win over the local head of
the subsidiary. Cultural history also influences the selection of a behaviour.
The Australian might still vaguely feel Japan is a trouble-maker due to the
Pacific war, although this happened long before his birth.

A general remark on cultural history here. Due to colonialism and the relentless
global pursuit of industrialization, people from European and North American

countries are sometimes regarded as still feeling superior to the representatives of

emerging markets. Out of a fear of being treated with a lack of esteem, some individuals or organizations from emerging markets might then come across as arrogant or aggressive.
The sensemaking model shows how complicated and multi-faceted cultural
interactions are. It is more appropriate for people involved in international project
management who have already some experience of using the cultural frameworks.
Source: Model based on Osland and Bird (2000), own examples

Chapter 4
4.1

PESTEL tool

We learned in Chapter 4 of the textbook that the PESTEL tool is an appropriate tool
to structure the environmental risks to be encountered in the country or countries
the international project is involved with.
There, is, however, another tool which has a broader reach than PESTEL. It does
not only focus on the external environment in the form of country-related risks, but
also includes internal risks such as organizational or stakeholder related issues. The
so-called ETHOS tool was originally developed and used in the context of software
programming. The following figure outlines the main areas ETHOS covers in relation to project risks:

Novelty of technology
Health risks
Safety risks
Hazardous materials, processes,
energy sources,
Hazards associated with failure of a
utility
Security risks
Regulatory risks

Contract related
penalties
expensive litigation or
law suits
Faulty cost estimates
Budget cut
Flawed strategy

Te

International
Project

Organizational

an

ch
nic
al

Hum

ial

Soc

Risk from external

stakeholders such as
Local communities
Public opinion

c
mi
no
o
Ec

Stakeholder management
related
Conflicting interests
Withdrawal of support
Change of personnel
Project staff related
Team member drop-out
Lack of knowledge and skills
Lack of human resources
Difficulties in co-operation
due to diversity

Unclear or inconsistent project

management methodology
Fuzzy responsibility and accountability
Lack of co-operation between
organizational units (NIH-syndrome)
Lack of information flow between all
participants
Reporting guidelines not followed
Schedule or cost estimates flawed

As pointed out in Chapter 4, many risks are industry-specific. This is mainly

reflected in the area termed technical in the ETHOS-tool above.
The examples of risks provided in the figure above are not comprehensive. These
only aim to make the tool more accessible and easier to use.

Chapter 5
5.1 Resources for planning international
projects
The following list provides you with some useful links that can support you with
planning an international project both time- and cost-wise.
1. This link provides you with historical exchange rates of currencies. You can
also calculate the ratio of one currency against another over a certain period
of time. This can help you to assess the volatility of currency fluctuations
and gives you input for your budget planning.
http://fxtop. com/en/historates.php3?C1=USD&C2=CAD&YYYY1
=2008 &MM1=10&DD1=31&YYYY2=2009&MM2=01&DD2=31
2. Public holidays throughout the entire world for 2009 are provided under
the following link which is a very informative source.
http://www.qppstudio.net/publicholidays.htm
3. This link gives an overview of the social protection systems of all EU
countries as of 2007. It can be a vital input to plan the cost and time for
projects where one of the 27 EU member states is involved.
http://ec.europa.eu/employment_ social/social_protection/missoc_tables_de.
htm
4. The following link contains important information regarding labour
conditions and social security systems in 174 countries world-wide. It is
maintained by the US Social Security Administration and the International
Social Security Association. It is updated regularly. A new report on Europe
is expected 2010, followed by Asia Pacific in 2011.
http://www.ssa.gov/policy/docs/progdesc/ssptw/2006-2007/africa/index.html

Chapter 6
6.1

Additional resources

For contracts, concrete model laws can be found on this organizations website:
http://www.uncitral.org/uncitral/en/uncitral_texts.html

6.2 Detailed discussion of advantages and

disadvantages of main project organization forms
6.2.1 Functional project structure
The following four tables can provide the reader with a comprehensive overview of
the main advantages and disadvantages of the most common project organization
structures. You will find some more details compared to the discussion of the textbook.
Table 6.1 depicts the advantages and disadvantages of a functional structure for an
international project:
Table 6.1

Advantages and disadvantages of functional project structures

Advantages of a Functional Project Structure

Disadvantages of a Functional Project Structure

No organizational changes need to be made:

Lack of speed and poor integration due to:

 No additional cost occurs

 No uncertainty for the employees or
project members
No changes in hierarchies need to be made:
 Functional head also coordinates the project

Availability of expertise:
 Large concentration of specialists within a
function
 High degree of flexibility in allocating
specialists to a project

 No specific project manager assigned

 Trend towards delays due to slow
handovers across functions
Lack of responsibility and accountability:
 Even if a dedicated project manager is
assigned, the functional managers might
not take him/her seriously due to their
weak status
Low commitment:
 Lack of speed partially due to
prioritization of functional tasks

(Contd)

Table 6.1
Advantages of a Functional Project Structure

Disadvantages of a Functional Project Structure

Flexibility:

Lack of ownership:

 Easy prioritization between day-to-day

work and project work
Synergies:
 Investment in function-specific technology
to be shared among different projects
Tight control:
 Good control over personnel, cost, and
budgets
Facilitation of knowledge sharing:
 Easy post-project transition

 Parties involved have other priorities than

project implementation
Inherited problems:
 General problems in the functions are
brought into the project
Lack of creativity:
 No impetus from outside function or
organization
Lack of creativity:
 No impetus from outside function or
organization

Source: Partially adopted from Larson, 2004; Kerzner, 2006

6.2.2

The stand-alone project organization

Table 6.2 gives an overview of advantages and disadvantages of a stand-alone project organization, also called projectized structure.
Table 6.2: Advantages and disadvantages of projectized structures
Advantages of a Projectized Structure

Disadvantages of a Projectized Structure

High speed and quick decisions due to:

High cost due to:

 Lean structure
 Great autonomy of project manager
 Collocation of project team members
Easy interface management:
 Simple structure leaving functional
structure intact
 Hardly any effort for coordination with
line organization

 Huge organizational effort to create

independent units
 Lack of realization of synergies between
projectized structures
Integration problems:



Strong subculture resulting in frictions

with the main organization and
re-integration issues
Lack of suitable tasks in main
organization
(Contd)

Table 6.2
Advantages of a Projectized Structure

Disadvantages of a Projectized Structure

High efficiency:

Limited efficiency:

 Great commitment through focussed

goal-oriented cooperation within project
team
 Cross-functional integration
 Flexibility in determining schedule, cost,
and quality trade-offs

 Investment cannibalisation between

several projectized structures
 Lack of opportunities for knowledge
sharing between projectized units
 Organizational inertia (tendency to retain
personnel on a project for longer than is
needed)

Source: Partially adopted from Larson, 2004; Kerzner, 2006

6.2.3

The matrix structure

Whether weak, balanced, or strong, the matrix structure in general has pros and cons
as elucidated in Table 6.3.
Table 6.3: Advantages and disadvantages of matrix structures
Advantages of a Project Matrix Structure
High efficiency due to:
 Avoidance of duplication of effort
 Integrative approach which potentially
increases competitiveness
 Opportunities for staff development
 Knowledge sharing between function
and project
 Strong commitment of project manager

High flexibility:
 No problem with allocation and
re-allocation of staff
Organizational stability:
 Employees anchored in function while
project members

Disadvantages of a Project Matrix Structure

Low efficiency due to:
 Lack of speed because of stalemates
between function and project
 Dysfunctional conflicts between function
and project
 Infighting for resources between
functional and project managers
 Stress: employees frustrated or demotivated due to tensions
 Breakdowns in communication and
coordination
Low transparency:
 Accomplishments difficult to allocate
between project and function
Huge organizational effort:
 A lot of effort and time needed to
establish matrix

Source: Partially adopted from Larson, 2004; Kerzner, 2006

6.2.4

Virtual project structure

As explained in the textbook, virtual structures are usually combined with matrix or
stand-alone structures.
Table 6.4 depicts the advantages and disadvantages of a virtual structure.
Table 6.4: Advantages and disadvantages of virtual structures
Advantages of a Virtual Structure

Disadvantages of a Virtual Structure

Great flexibility:

Lack of speed due to:

 Misunderstandings based on the use of
asynchronous media
 Communication system breakdowns
 Missing concurrent team dynamics

Fast and simple establishment of

structure
 Easy dissolution

High efficiency due to:

Low efficiency due to:

 Misunderstandings because of cultural
and language diversity
 Lack of team cohesiveness because of
context differences

 Use of best people available world-wide

 Use of computer-aided systems such as
design visualization and repository
software
High innovativeness due to:

Low innovativeness due to:

 Collaboration of global talent and

expertise

 Lack of ad-hoc interaction

 High degree of formalization because of
computer-aided media

Source: Partially adapted from al Kumar, et al. (2005)

6.3 Background information regarding

contracts in an international context
6.3.1

The contract as a special communication tool

The contract or project agreement can be closed intra-organizationally or between

an external customer and a contractor. It functions as a frame of reference regarding
the scope of project, the specifications, the agreed commercial conditions, the risks
and much more. As a result contracts will tend to become very comprehensive,
especially for a complex international project with a long duration such as the building of a power plant.
These contracts carry so many details that no project manager can memorize them
and always act accordingly. Therefore, it is recommended that the project manager
reads the contract again at the beginning of each major project phase.

With a contract covering 100 pages plus appendices, this is still a manageable task.
If a contract extends to 26 big folders, however, it cannot be easily implemented any
more. Hence, the main stakeholders should balance out the ease of manageability
versus the coverage of all possible risks and the necessary level of detail.
The same goes for flexibility. In the Anglophone world and central and Northern
Europe, contracts are a tool to manage risk and decrease uncertainty. In many Asian cultures, but also in Southern Europe and Latin America (cf. chapter end case of Chapter 5),
contracts are rather a milestone to document the mutual will for cooperation. Spanish
and Italians will typically aim at maximum flexibility. Asians will just negotiate further,
including after a contract has been signed, to adapt the relationship between both parties to changing market conditions. In Japan, companies will usually use a template of
one to two pages as a contract to do domestic business. It is totally unusual to consult
lawyers on this who are seen as very expensive and unnecessary when business relations
are good. The focus is instead put on fostering good business relations.
The project manager, his or her organization, and the project owner have to decide on
how much flexibility they can afford and accept. Beyond the organizational and national
culture, risk management policies and the nature of the project will have an impact on this
decision which also implies the selection of a contract form as discussed in Chapter 6.
In a globalizing world, industry standards are spreading out and become more and
more accepted. One example here is the construction industry. International consortia,
including companies from the USA, Europe and Japan, will use comprehensive contracts running to more than 300 pages and covering all the details and potential risks.
Misunderstandings or differing interpretations of the contract can be minimized
by referring to internationally accepted and known definitions and standards, like
the INCOTERMS.

6.3.2

International contract standards

The New Engineering Contract (NEC)

This is a whole system of contracts which aims at governing partnerships
efficiently and effectively. It comprises a whole set of contract options
(including some of the contract types described in Figure 6.6). Another
important feature is the inclusion of multiple parties, such as the project
manager with his team, subcontractors, suppliers, etc. An adjudicator, who
will be named in the contract, is recommended by both parties and used for
arbitration (Wong, 2001).
The International Federation of Consulting Engineers (FIDIC)
This organization has standard forms of contract for use between customers
and contractors on international construction projects. The standard forms
of contract published in 1999 are being increasingly used for international
construction and plant installation projects around the world, for instance in
Russia, India, and the Middle East, by the Japanese Toa Group for example
(FIDIC, 2008).

6.4 More details on the Organization Breakdown

Structure (OBS)
In order not to overlook any activities, it is worthwhile to integrate the Work Breakdown
Structure with the Organization Breakdown Structure as indicated on a high level in the
figure below. On the left-hand side, you will see the Organization Breakdown Structure. It
is an abbreviated version of a functional structure as introduced in the textbook.
On the right-hand side, you can see a high level Work Breakdown Structure as
visualized in Mini Case 3.1. In this case, it is a WBS for the production transfer project of medical equipment from Europe to China. The arrows indicate the link
between the organizational structure with the work packages. Due to space constraints, not all units of the organizational structure and not all work packages of the
project are covered in the following figure.

Transferring Production to China

etc.
Research &
Development

C
o
m
p
a
n
y

Technical
Design

Manufacturing Process

Product
Management

Purchasing

Material

Change
Management
(assembly
drawings)

Creation of
Market
Concepts

Supplier
Selection

Assembly
Facility Layout

Creation of
Product
Specifications

Vendor Rating
and
Development

Translation of
Manuals

Contract
Management

Quotations
and Tender
Texts in
Chinese

Order
Follow-up

etc.

etc.

Parts Quality
Assurance
Procurement

Supplier
Qualification

Quality
Assurance
Production
Assembly

Marketing

etc.

etc.

Figure 6.1 Organization Breakdown Structure and Work Breakdown Structure a matrix

In the case of a weak matrix, the WBS will be integrated into the OBS, because
the emphasis is laid instead on function. If the project is organized in a strong matrix,
the OBS will typically be integrated into the WBS, as the focus will lie more with
the project.

Chapter 7
7.1

Useful templates

The following is a template which you can use for decision preparation as described
in Snapshot 7.1 of the book.

Decision Preparation Form

Project Name:
Project Identification:
Project Manager:
Date:

Definition of the problem/ issue

Cost

Included in budget
yes/no

Status regarding solution

Consequenses if decision not taken immediately

Recommended course of action

Suggested decision

7.2 International project management and the

agency theory
The following paragraph provides you with a spotlight showing the link between
new institutional economics and international project management. The principalagent approach assumes an interesting perspective regarding project monitoring
and controlling.

Monitoring and Controlling International Projects using the Agency Theory

Many international projects are characterized by stakeholders being geographically dispersed. Therefore, coordination and communication resulting in monitoring project implementation are paramount for the overall success of the
international project.
Agency theory is based on the assumption that agents are work averse,
opportunistic, and will maximize their own self interests, which many times
will conflict with the principals interest. The principal, in our context the customer or project sponsor, has to make sure that the interests of the agents dispersed around the globe coincide with his or her own interests.
Monitoring an agents adherence to the principles objective is very critical.
When knowledge or trust climbs, monitoring can decrease considerably. The
establishment of trust among the main stakeholders is a prerequisite for costefficient monitoring. Otherwise, the cost would be so high that the international project might not be competitive any more.
Source: Evaristo and Scubber (2000)

Chapter 8
8.1

Resources

Project GLOBE is a research project with 150 researchers located around the world.
They have collected data from 15,000 middle managers from 875 organizations
in 61 nations about the interrelationship between national culture, organizational
culture, and leadership (Francesco and Gold, 2005). More info on Globe is available
at http://www.thunderbird.edu/wwwfiles/ms/globe/

8.2

The force field analysis

The following provides the reader with a tool that is helpful to analyse the drivers
for project success, and the impediments against this. It is a tool which is typically
used in the context of organization development.
Like the tools we discussed in Chapter 3 which help us in the conception phase of
the project, the force field analysis is a low-tech tool that can be applied either in the
initiation phase or during the project implementation phase.
The project manager can use it at milestone workshops with his management
team, or in case of a smaller international project with all team members. The purpose is to brainstorm about the drivers for successful project delivery and also the
hindrances against successful project delivery.
The project leader can use the force field analysis to structure and visualize the factors supporting the project and the factors interfering with it. The example below
shows a force field analysis that was done for a huge organizational change project
involving an entire organization. Hence, it looks at the forces supporting and impeding the project on a very high organizational level. As it is a change project, the
figure calls these forces for change and forces against change.

Force Field Analysis for Organizational Change Project

Forces for
change

Forces against
change

New management

Organizations culture

New legislation

Organizations capabilities

Declining performance

Social changes

Organizations
readiness to
change

Myopia

Perceived hopelessness

Economic crisis

Power structures

New competition

Complacency

Threat of takeover

Pain of the new

Technological changes

Change fatigue

Source: Adopted from Haberberg and Rieple (2001) The Strategic Management of Organisations. London: Financial
Times/Prentice Hall

Based on the drivers for success and barriers to success, either the team can think
jointly about countermeasures, or the project manager will have to develop and
implement countermeasures on his or her own. The project manager may face the
constraint that he or she is not sufficiently senior enough to tackle certain barriers on
his or her own. In this case, senior management will need to get involved.

8.3 Where to find effective international project

managers? Anecdotal evidence
You may wonder whether there are indeed any gifted international project managers? Certainly, it requires a lot of international experience and the competences
discussed in this chapter to fulfil this role efficiently. There may be personalities that
have most of the required traits and hence will perform the role better than others.
After you have completed the exercise at the end of Chapter 8, you may have a
clearer picture of your own traits.

There is anecdotal evidence to suggest that individuals from small countries like
the Netherlands, Switzerland, Austria, Belgium, the Scandinavian and Baltic countries, the Czech Republic, and Singapore will tend to be more open towards diversity
and also more open to learning other languages. This general attitude and knowledge might have historical roots: an awareness in people from smaller countries has
developed over time that most of their customers will come from non-domestic markets. Other factors can also play a role here, for instance the absence of dubbed television programmes which confront people from childhood onwards with multilanguage TV shows.
To be respected and recognized by an international team, it also helps to come
from a country without an aggressive history over recent decades. An international
project manager will always be perceived as being one of a group, for instance a
country, which is especially the case in collectivist cultures. Hence, it helps to come
from a peaceful nation. Of course, this is by no means a guarantee for efficiency in
international project management.
The children of diplomats or global managers, who will have spent their careers in
various countries, or children from bicultural families, will typically bring with them
some of the knowledge and characteristics that are needed to become successful
international project managers. Of course, there is also no guarantee that they
indeed can develop all the necessary competences in this area. In intercultural communication, we term the fact that a person has internalized two or more cultural
frames of reference marginality (Taylor and Osland, 2003). Marginal people are
often ideally suited for boundary spanning or for translating between different cultures, one of the main tasks of international project leaders.

8.4

Trends in leading international projects

Self-directed teams
International project leaders often have to rely on information and judgements
by their local team leaders. Power and responsibility will shift from project
managers to local team leaders and their members who then take on higher levels of responsibility, authority and control for project results. These teams will
become self-directed, replacing the more hierarchical traditional project teams.
Leading self-directed teams require a great deal of emotional intelligence, team
management skills, and overall guidance by senior management.
We have to keep in mind, though, that power and resource sharing related to
such a leadership style might not be accepted in all national cultures and possibly
misinterpreted as weakness, incompetence or a lack of interest and commitment. The manager of an international project therefore needs to assess which
locations or sub-organizations might not be comfortable with a self-directed
team approach and then gradually accustom those sites to the style involved or
choose a different style as explained above.

 Sharing responsibility
Apart from the development towards self-directed teams, there is the trend
towards co-responsibility, e.g. one business and one technical project manager
in order to distribute the burden of the workload onto more shoulders, but also
to have two different personalities who together might have the traits which
are needed for leading an international team. The US-American company NCR
even creates cross-functional teams at the head of a project (Frame, 2002).
Earlier in this chapter, we mentioned that the manager of an international project
needs to be prepared to share responsibility with sub-team leaders, just because of
the complexity of international teams making it impossible to centrally control all
details. Especially during the implementation phase, the project manager should try
to retreat and share more and more of his responsibility and authority with his or
her core team members. A caveat here is culturally different expectations towards
leaders frustrating such efforts of sharing responsibility.

Chapter 9
9.1

Resources

The following provides you with some links which may be useful to gain further
insights into silent language or non-verbal communication.
1. The following link reflects the views of some leading researchers in the field
of intercultural management regarding difference values and non-verbal
communication across countries. It goes without saying that generalizations
are not possible, but you can still obtain an overview of what can be
different and how non-verbal communication differs. A special emphasis is
put on non-verbal communication in Asia and the USA. See
http://www.csupomona.edu/~tassi/gestures.htm
2. The following link offers a concise overview of verbal and non-verbal
communication differences among cultures. It also points you towards
further reading, both online and printed. See
http://www.beyondintractability.org/essay/cross-cultural_communication/
3. This link gives an overview of non-verbal communication in general. What
do we understand by non-verbal communication? What kinds of gestures,
posture, and so on are incorporated? See
http://www.blatner.com/adam/level2/ nverb1. htm

9.2 Short introduction to non-verbal

communication
You will find some first pointers at non-verbal communication and what can be different among cultures in the following few sections. Try to pay special attention to
the fact that a smile does not necessarily mean happiness. This can be a frequent
source of misunderstanding.

Cultural differences in non-verbal language

A lot of cues about project stakeholders are taken from non-verbal communication.
As this usually is an unconscious process, participants in international projects have

to be very careful not to pick up the wrong cues, thus misinterpreting their counterparts and creating misunderstandings or even conflicts.

Potential meanings of a smile

Amusement
Forgiveness
Thank you
Avoidance of conflict
Embarrassment

Sources of cues

Facial expressions
Body posture
Gestures with hands, arms, head, etc.
Interpersonal distance
Touching, body contact
Eye contact
Clothing, cosmetics, hairstyles, jewelry
Paralanguage (voice pitch and inflections, rate of speech, and silence)
Colour symbolism
Attitude toward time and the use of time in business and social interactions
Food symbolism and social use of meals

The following example shows how easily cues can be misinterpreted. A French international project manager remembered his experience in Singapore: They looked
very cold and unfriendly. For me, it was hard to read their faces. They also greeted
me in a very reserved manner, no kisses on the cheeks like at home. I did not feel at
ease at all with them, and was quite insecure about whether they approved of my
project proposal or not.

Chapter 10
10.1 Views on conflict based on the high-context/
low-context categorization
We can use Halls low-context and high-context categorization which we discussed
in Chapter 9 to differentiate between views on conflict. People from low-context
cultures will tend to separate the issue from the person. There will be discussions
around the issues and what can be done to solve them. Low-context people will trigger a dispute when they feel that their personal expectations have been violated, for
instance if they feel that the wrong technical approach for a new product development has been taken. They will openly confront others and explicitly push for solutions (Ting-Toomey, 1985).
High-context people will have a more holistic approach. They will tend to consider all kinds of surrounding factors and not separate the person from the issue.
Conflicts can occur when group values or expectations are not met, as shown in
Snapshot 10.3. They also tend to approach an issue indirectly, e.g. by including a
third party. Strategies for conflict resolution tend to be more intuitive and ambiguous compared to those which persons from low-context cultures will apply (TingToomey, 1985).

10.2

A model for intercultural negotiation

The following model can help the member or leader of an international project to
plan his or her negotiations well in a culturally diverse project environment.
Nadler et al. (1985) suggest a model for intercultural negotiations which aims at
rendering this complex process more effective. It consists of three major steps: first,
the clarification of the participants attitude towards conflict; second, the assessment of how the participants view fairness, trust, and power; and third, an assessment of which message strategies they would select to further their interests in the
negotiation.
The following figure summarizes the model. It is used like a filter or internal
check-list that the individual goes through mentally before he or she approaches the
other party. Such a mental preparation increases the efficiency of the negotiation.

Attitude towards
conflict:

Aviodance/Accomodation/
Competition/Compromise/
Collaboration

Aviodance/Accomodation/
Competition/Compromise/
Collaboration

Notions about
Fairness
Trust
Power

Strategies:
Task vs. Relationship
Nature of argument
Risk-taking propensity
Use of time
Decision-making style
Communication style

Message/ Content/ Issue

Attitude towards
conflict:

Notions about
Fairness
Trust
Power

Strategies:
Task vs. Relationship
Nature of argument
Risk-taking propensity
Use of time
Decision-making style
Communication style

Solution/Consensus

Mutually beneficial outcome in line with the project objective

Let us go through the three main areas of the filter in the next section.
1. Which orientation do negotiation participants have towards conflict? Any
negotiation is determined by the participants attitude towards conflict is
this seen as something negative or positive? Do they adopt a style of
avoidance, accommodation, compromise, competition or collaboration? Do
they see a conflict resolved when the needs of one party are satisfied, or
when both parties have reached mutual agreement and satisfaction, or is
conflict an ongoing process which never ends?
2. Which notions do the participants have regarding fairness, trust, and power?

Fairness
Fairness entails a perception of what negotiation outcomes represent a proper
balance between the interests of both conflicting parties. It can be judged based on
equality, equity, or responsibility, and revolves around the theme of reciprocity namely
give and take. Balanced reciprocity seems to be deeply entrenched in the US-American

culture: there should be a 50:50 split. Reciprocity can be also generalized entailing a
strict adherence to obligations. It would therefore imply helping a person in need
without expecting an immediate repayment. Chinese people will often expect reciprocity to be centred on responsibility with the stronger (wealthier) negotiation
partner, like a US-American, giving advantages to the Chinese without adhering to
equality.
It goes without saying that differences in the understanding of fairness can lead to
major conflicts.

Trust
At the beginning of this chapter, we highlighted the importance of trust as the basis
for effective cooperation in international projects. It is not surprising that trust is a
very influential factor in the negotiation process. The potential lack of information
about the negotiation partner, an increased likelihood of accidental misinterpretations
or misunderstandings, a potential lack of awareness of each cultures norms and
habits will all build a barrier to a trustful relationship in a multicultural negotiation
set-up.

Power
In negotiations, the participants will make different moves which are also influenced by the power they can exert directly or indirectly. Power is a social construct
that does not belong to an individual. The resources it depends on will vary
between national and organizational cultures. We can distinguish between attraction power (a person being liked), reward power (a person having the material
resources to reward or punish others), coercive power (a person having the authority to issue orders and demand allegiance), legitimate power, and expert power (a
person having the required knowledge and skills in a relevant area). In many highpower distance cultures like Central Asia, South-Eastern European or many Latin
American countries, an affiliation to powerful figures in a society will extend to the
power of that individual.

10.3

Conflict resolution guidelines

In the following section I have summarized some easy to grasp pointers from
seasoned international project managers regarding effective conflict management. The reader may want to use these for their own international management practice.

Tips from practitioners on conflict resolution in

international projects

Always double-check your own assumptions regarding a conflict situation
and control your reactive emotions.

Constructive future orientation try to look into the future. Do not blame
anybody for past mistakes. The focus should be on joint efforts to come up
with a possible solution: I would suggest that we do.

Assume good will pay respect to all parties involved in the conflict.
Typically, people are not ill-willed. All project members will want to work
successfully. Sometimes, however, they may lack experience or expertise.
This needs to be compensated for.

Four eyes principle if there must be direct criticism, do not confront
people in public. Try to have a conversation in private.

Do not cause a loss of face being offensive is counterproductive and only
satisfies short-term revenge feelings whilst endangering long-term success.

Take into account the basic assumptions of the other conflict party.

Be responsive to new conflict interaction modes.

Always view a conflict situation from different perspectives.

Chapter 11
11.1

More knowledge management tools

The following two knowledge management tools may be used in addition to the
tools listed in the textbook in Table 11.1.

After action review

This approach was originally developed by the US Army with the purpose of supporting soldiers in missions when they dont have time for lengthy procedures. It
takes between 20 minutes to two hours and is carried out as a brainstorming session
with the results pinned onto flipcharts. Transferred to a corporation, project managers have to answer the following questions:

What was supposed to happen?

What did happen?
What are the reasons for the deviations?
What can you learn from this experience?

It is a very pragmatic approach, carried out by a facilitator and ideally involving the
whole project team or, in international projects where travel cost may not permit the
gathering of the whole team, at least the core team (Schindler and Eppler, 2003).

Recall
This approach was developed by the National Aviation and Space Agency NASA. It
uses a database at the front end to collect the lessons learnt in an automated and
comfortable way. Anyone who wants to enter his or her project experience into the
database is supported by guiding questions regarding the relevance of his or her
experience. Moreover, a submittal form navigates the individual through the description of the project scenario to make sure that necessary context is provided
(Schindler and Eppler, 2003).
With database approaches we have to consider the differences between high- and
low-context cultures. As explained in Chapter 9, high-context cultures are more
reluctant to confide in anonymous data tools. This goes for their active and passive
use. Rather they will activate their personal networks. A more personalized approach
(like micro articles or learning histories) while anonymous might be more appropriate because it can deliver more context and in the case of learning histories will be
accompanied with a workshop a human touch.

11.2

Details on the learning organization

You may be curious about what a learning organization concretely consists of. In the
following I have summarized its main characteristics (which have been termed
disciplines by one of the most famous researchers in this area, Peter Senge).
Senge (1990) envisages the disciplines that can lead to a learning organization.

Systems thinking
This relates us back to the first chapter where I explained that project management
has to be based on the view of the organization as an open system. Senge also stresses
the importance of looking at the organization as a system, as an entirety with a
strong focus on long-term orientation.
For publicly listed corporations, however, a long-term perspective is difficult to
assume in light of the short-term profit expectations of shareholders. However, in
the aftermath of the current world economic crisis, even shareholders may feel more
inclined to think long-term.

Personal mastery
The second discipline or component of a learning organization is the fact that each
organizational member has to continually clarify and deepen his or her personal
vision, to focus his or her energies, to develop patience, and to see reality objectively.
We can easily imagine that this is a great challenge to an individual. Indeed to
some of us, this may seem unrealistic.

Mental models
The third discipline is that each organizational member has to unearth his or her
basic assumptions and work on absolute openness. In light of international projects,
of course, this would be ideal ground for turning diversity into creativity based on
smooth co-operation.

Building a shared vision

The fourth discipline directly touches on learning: when there is a genuine vision
organizational members will excel and learn, not because they have been told to but
because they want to.

Team learning
The fifth and last component of organizational learning refers to what Senge calls
dialogue in teams. This kind of dialogue comprises of an absolute free flow of
thoughts without any barriers or impediments. The team becomes a super-creative
collective the essence of a learning organization.