(Mt) – Project Management HGC Company Case Study

FIND A SOLUTION AT Academic Writers Bay

Final PDF to printer C H A P T E R 2 T W O Organization Strategy and Project Selection LEARNING OBJECTIVES OUTLINE After reading this chapter you should be able to: 2.1 Why Project Managers Need to Understand Strategy 2-1 Explain why it is important for project managers to understand their organization’s strategy. 2-2 Identify the significant role projects contribute to the strategic direction of the organization. 2.2 The Strategic Management Process: An Overview 2.3 The Need for a Project Priority System 2-3 Understand the need for a project priority system. 2.4 Project Classification 2-4 Distinguish among three kinds of projects. 2.5 Phase Gate Model 2-5 Describe how the phase gate model applies to project management. 2.6 Selection Criteria 2-6 Apply financial and nonfinancial criteria to assess the value of projects. 2-7 Understand how multi-criteria models can be used to select projects. 2.7 Applying a Selection Model 2.8 Managing the Portfolio System Summary 2-8 Apply an objective priority system to project selection. 2-9 Understand the need to manage the project portfolio. 28 lar38865_ch02_028-067.indd 28 07/24/19 05:58 PM Final PDF to printer Estimate 5 Project networks 6 Schedule resources/costs 8 Reducing project duration 9 Define project 4 e PM 15 Introduction 1 Managing risk 7 Organization 3 Project manager 10 Strategy 2 Teams 11 Monitoring progress 13 Project closure 14 16 Agil Intern atio projec nal ts Outsourcing 12 A vision without a strategy remains an illusion. —Lee Bolman, professor of leadership, University of Missouri–Kansas City. Strategy is fundamentally deciding how the organization will compete. Organizations use projects to convert strategy into new products, services, and processes needed for success. For example, Intel’s major strategy is one of differentiation. Intel relies on projects to create specialty chips for products other than computers, such as autos, security, cell phones, and air controls. Another strategy is to reduce project cycle times. Procter and Gamble, NEC, General Electric, and AT&T have reduced their cycle times by 20–50 percent. Toyota and other auto manufacturers are now able to design and develop new cars in two to three years instead of five to seven. Projects and project management play the key role in supporting strategic goals. It is vital for project managers to think and act strategically. Aligning projects with the strategic goals of the organization is crucial for business success. Today’s economic climate is unprecedented by rapid changes in technology, 29 lar38865_ch02_028-067.indd 29 07/24/19 05:58 PM Final PDF to printer 30 Chapter 2 Organization Strategy and Project Selection global competition, and financial uncertainty. These conditions make strategy/project alignment even more essential for success. The larger and more diverse an organization, the more difficult it is to create and maintain a strong link between strategy and projects. How can an organization ensure this link? The answer requires integration of projects with the strategic plan. Integration assumes the existence of a strategic plan and a process for prioritizing projects by their contribution to the plan. A key factor to ensure the success of integrating the plan with projects is an open and transparent selection process for all participants to review. This chapter presents an overview of the importance of strategic planning and the process for developing a strategic plan. Typical problems encountered when strategy and projects are not linked are noted. A generic methodology that ensures integration by creating strong linkages of project selection and priority to the strategic plan is then discussed. The intended outcomes are clear organization focus, best use of scarce organization resources (people, equipment, capital), and improved communication across projects and departments. 2.1 Why Project Managers Need to Understand Strategy LO 2-1 Explain why it is important for project managers to understand their organization’s strategy. Project management historically has been preoccupied solely with the planning and execution of projects. Strategy was considered to be under the purview of senior management. This is old-school thinking. New-school thinking recognizes that project management is at the apex of strategy and operations. Shenhar speaks to this issue when he states, “It is time to expand the traditional role of the project manager from an operational to a more strategic perspective. In the modern evolving organization, project managers will be focused on business aspects, and their role will expand from getting the job done to achieving the business results and winning in the marketplace.”1 There are two main reasons project managers need to understand their organization’s mission and strategy. The first reason is so they can make appropriate decisions and adjustments. For example, how a project manager would respond to a suggestion to modify the design of a product to enhance performance will vary depending upon whether his company strives to be a product leader through innovation or to achieve operational excellence through low-cost solutions. Similarly, how a project manager would respond to delays may vary depending upon strategic concerns. A project manager will authorize overtime if her firm places a premium on getting to the market first. Another project manager will accept the delay if speed is not essential. The second reason project managers need to understand their organization’s strategy is so they can be effective project advocates. Project managers have to be able to demonstrate to senior management how their project contributes to their firm’s mission in order to garner their continued support. Project managers need to be able to explain to stakeholders why certain project objectives and priorities are critical in order to secure buy-in on contentious trade-off decisions. Finally, project managers need to explain why the project is important to motivate and empower the project team (Brown, Hyer, & Ettenson, 2013). 1 lar38865_ch02_028-067.indd 30 Shenhar, A., and Dov Dvie, Reinventing Project Management (Boston: Harvard Business School Press, 2007), p. 5. 07/24/19 05:58 PM Final PDF to printer Chapter 2 Organization Strategy and Project Selection 31 For these reasons project managers will find it valuable to have a keen understanding of strategic management and project selection processes, which are discussed next. 2.2 The Strategic Management Process: An Overview LO 2-2 Identify the significant role projects contribute to the strategic direction of the organization. Strategic management is the process of assessing “what we are” and deciding and implementing “what we intend to be and how we are going to get there.” Strategy describes how an organization intends to compete with the resources available in the existing and perceived future environment. Two major dimensions of strategic management are responding to changes in the external environment and allocating the firm’s scarce resources to improve its competitive position. Constant scanning of the external environment for changes is a major requirement for survival in a dynamic competitive environment. The second dimension is the internal responses to new action programs aimed at enhancing the competitive position of the firm. The nature of the responses depends on the type of business, environment volatility, competition, and the organizational culture. Strategic management provides the theme and focus of the future direction of the organization. It supports consistency of action at every level of the organization. It encourages integration because effort and resources are committed to common goals and strategies. See Snapshot from Practice 2.1: Does IBM’s Watson’s Jeopardy Project Represent a Change in Strategy? Strategic management is a continuous, iterative process aimed at developing an integrated and coordinated long-term plan of action. It positions the organization to meet the needs and requirements of its customers for the long term. With the long-term position identified, objectives are set, and strategies are developed to achieve objectives and then translated into actions by implementing projects. Strategy can decide the survival of an organization. Most organizations are successful in formulating strategies for the course(s) they should pursue. However, the problem in many organizations is implementing strategies—that is, making them happen. Integration of strategy formulation and implementation often does not exist. The components of strategic management are closely linked, and all are directed toward the future success of the organization. Strategic management requires strong links among mission, goals, objectives, strategy, and implementation. The mission gives the general purpose of the organization. Goals give global targets within the mission. Objectives give specific targets to goals. Objectives give rise to the formulation of strategies to reach objectives. Finally, strategies require actions and tasks to be implemented. In most cases the actions to be taken represent projects. Figure 2.1 shows a schematic of the strategic management process and major activities required. Four Activities of the Strategic Management Process The typical sequence of activities of the strategic management process is outlined here; a description of each activity then follows. 1. 2. 3. 4. lar38865_ch02_028-067.indd 31 Review and define the organizational mission. Analyze and formulate strategies. Set objectives to achieve strategies. Implement strategies through projects. 07/24/19 05:58 PM Final PDF to printer 32 Chapter 2 Organization Strategy and Project Selection S N A P S H O T F R O M P R A C T I C E 2 .1 IBM’s investment in artificial intelligence paid off. In February 2010, millions of people were glued to their television sets to watch IBM’s Watson outclass two former champion contestants on the Jeopardy quiz show. Watson performed at human expert levels in terms of precision, confidence, and speed during the show. Does Watson represent a new strategic direction for IBM? Not really. The Watson project is simply a manifestation of the move from computer hardware to a service strategy over a decade ago. Does IBM’s Watson’s Jeopardy Project Represent a Change in Strategy?* SeanGallup/Getty Images WATSON PROJECT DESCRIPTION Artificial intelligence has advanced significantly in recent years. Watson goes beyond IBM’s chess-playing supercomputer of the late 1990s. Chess is finite, logical, and reduced easily to mathematics. Watson’s work is ill-defined and involves dealing with abstraction and the circumstantial nature of language. Since Watson’s system can understand natural language, it can extend the way people interact with computers. The IBM Watson project took three intense years of research and development by a core team of about 20. Eight university teams working on specific challenge areas augmented these researchers. Watson depends on over 200 million pages of structured and unstructured data and a program capable of running trillions of operations per second. With this information backup, it attacks a Jeopardy question by parsing the question into small pieces. With the question parsed, the program then searches for relevant data. Using hundreds of decision rules, the program generates possible answers. These answers are assigned a confidence score to decide if Watson should risk offering an answer and how much to bet. WHAT’S NEXT? Now that the hype is over, IBM is pursuing their service strategy and applying the knowledge gained from the Watson project to real business applications. Watson’s artificial intelligence design is flexible and suggests a wide variety of opportunities in industries such as finance, medicine, law enforcement, and defense. Further extensions to handheld mobile applications that tap into Watson’s servers also hold great potential. lar38865_ch02_028-067.indd 32 IBM has zeroed in on providing healthcare solutions and has begun design of such a program. To create a “doctor’s consultant” program would likely follow a design platform similar to Watson’s. For example, it would be able to • Data mine current medical documents to build a knowledge base. • Integrate individual patient information. • Use the system’s complex analytics to select relevant data. • Use decision rules to provide physicians with diagnostic options. • Rank options, with confidence levels for each option. Creating a doctor’s consultant solution will not replace doctors. Although the system holds tremendous potential, it is humanmade and depends on the database, data analytics, and decision rules to select options. Given the doctor’s consultant input, a trained doctor makes the final patient diagnosis to supplement physical examination and experience. The Watson project provides IBM with a flexible component to continue their decade-old strategy, moving IBM from computer hardware to service products. *D. Ferrucci, E. Brown, J. Chu-Carroll, J. Fan, D. Gondek, A. Kaylanp, A. Lally, J. Murdock, E. Nyborg, J. Prager, N. Schaefer, and C. Wetty, “Building Watson,” AI Magazine, Fall 2010, pp. 59–79. 07/24/19 05:58 PM Final PDF to printer Chapter 2 Organization Strategy and Project Selection 33 FIGURE 2.1 Strategic Management Process Review/revise mission 1 External environment— opportunities and threats Internal environment— strengths and weaknesses What are we now? Set strategy and objectives 2 What do we intend to be? Portfolio of strategic choices 3 Strategy implementation Project selection How are we going to get there? 4 Projects Review and Define the Organizational Mission The mission identifies “what we want to become,” or the raison d’être. Mission statements identify the scope of the organization in terms of its product or service. A written mission statement provides focus for decision making when shared by organizational managers and employees. Everyone in the organization should be keenly aware of the organization’s mission. For example, at one large consulting firm, partners who fail to recite the mission statement on demand are required to buy lunch. The mission statement communicates and identifies the purpose of the organization to all stakeholders. Mission statements can be used for evaluating organization performance. Traditional components found in mission statements are major products and services, target customers and markets, and geographical domain. In addition, statements frequently include organizational philosophy, key technologies, public image, and contribution to society. Including such factors in mission statements relates directly to business success. lar38865_ch02_028-067.indd 33 07/24/19 05:58 PM Final PDF to printer 34 Chapter 2 Organization Strategy and Project Selection Mission statements change infrequently. However, when the nature of the business changes or shifts, revised mission and strategy statements may be required. More specific mission statements tend to give better results because of a tighter focus. Mission statements decrease the chance of false directions by stakeholders. For example, compare the phrasing of the following mission statements: Provide hospital design services. Provide data mining and analysis services. Provide information technology services. Provide high-value products to our customer. Clearly the first two statements leave less chance for misinterpretation than the others. A rule-of-thumb test for a mission statement is that, if the statement can be anybody’s mission statement, it will not provide the guidance and focus intended. The mission sets the parameters for developing objectives. Analyze and Formulate Strategies Formulating strategy answers the question of what needs to be done to reach objectives. Strategy formulation includes determining and evaluating alternatives that support the organization’s objectives and selecting the best alternative. The first step is a realistic evaluation of the past and current position of the enterprise. This step typically includes an analysis of “who are the customers” and “what are their needs as they (the customers) see them.” The next step is an assessment of the internal and external environments. What are the internal strengths and weaknesses of the enterprise? Examples of internal strengths or weaknesses are core competencies, such as technology, product quality, management talent, low debt, and dealer networks. Managers can alter internal strengths and weaknesses. Opportunities and threats usually represent external forces for change such as technology, industry structure, and competition. Competitive benchmarking tools are sometimes used to assess current and future directions. Opportunities and threats are the flip sides of each other. That is, a threat can be perceived as an opportunity, or vice versa. Examples of perceived external threats are a slowing of the economy, a maturing life cycle, exchange rates, and government regulation. Typical opportunities are increasing demand, emerging markets, and demographics. Managers or individual firms have limited opportunities to influence such external environmental factors; however, notable exceptions have been new technologies such as Apple using the iPod to create a market to sell music. The keys are to attempt to forecast fundamental industry changes and stay in a proactive mode rather than a reactive one. This assessment of the external and internal environments is known as the SWOT analysis (strengths, weaknesses, opportunities, and threats). From this analysis, critical issues and strategic alternatives are identified. Critical analysis of the strategies includes asking questions: Does the strategy take advantage of our core competencies? Does the strategy exploit our competitive advantage? Does the strategy maximize meeting customers’ needs? Does the strategy fit within our acceptable risk range? These strategic alternatives are winnowed down to a critical few that support the basic mission. Strategy formulation ends with cascading objectives or projects assigned to lower divisions, departments, or individuals. Formulating strategy might range around 20 percent of management’s effort, while determining how strategy will be implemented might consume 80 percent. lar38865_ch02_028-067.indd 34 07/24/19 05:58 PM Final PDF to printer Chapter 2 Organization Strategy and Project Selection 35 EXHIBIT 2.1 S M A R T Characteristics of Objectives Specific Measurable Assignable Realistic Time related Be specific in targeting an objective Establish a measurable indicator(s) of progress Make the objective assignable to one person for completion State what can realistically be done with available resources State when the objective can be achieved, that is, duration Set Objectives to Achieve Strategies Objectives translate the organization strategy into specific, concrete, measurable terms. Organizational objectives set targets for all levels of the organization. Objectives pinpoint the direction managers believe the organization should move toward. Objectives answer in detail where a firm is headed and when it is going to get there. Typically objectives for the organization cover markets, products, innovation, productivity, quality, finance, profitability, employees, and consumers. In every case, objectives should be as operational as possible. That is, objectives should include a time frame, be measurable, be an identifiable state, and be realistic. Doran (1981) created the memory device shown in Exhibit 2.1, which is useful when writing objectives. Each level below the organizational objectives should support the higher-level objective…

• WE OFFER THE BEST CUSTOM PAPER WRITING SERVICES. WE HAVE DONE THIS QUESTION BEFORE, WE CAN ALSO DO IT FOR YOU.
• Assignment status: Already Solved By Our Experts
• (USA, AUS, UK & CA PhD. Writers)
• CLICK HERE TO GET A PROFESSIONAL WRITER TO WORK ON THIS PAPER AND OTHER SIMILAR PAPERS, GET A NON PLAGIARIZED PAPER FROM OUR EXPERTS

QUALITY: 100% ORIGINAL PAPER – NO PLAGIARISM – CUSTOM PAPER

Why Choose Us?

How It Works

• Click on the “Place Your Order” tab at the top menu or “Order Now” icon at the bottom and a new page will appear with an order form to be filled.
• Fill in your paper’s requirements in the “PAPER DETAILS” section.
• Fill in your paper’s academic level, deadline, and the required number of pages from the drop-down menus.
• Click “CREATE ACCOUNT & SIGN IN” to enter your registration details and get an account with us for record-keeping and then, click on “PROCEED TO CHECKOUT” at the bottom of the page.
• From there, the payment sections will show, follow the guided payment process and your order will be available for our writing team to work on it.

About AcademicWritersBay.com

AcademicWritersBay.com is an easy-to-use and reliable service that is ready to assist you with your papers 24/7/ 365days a year. 99% of our customers are happy with their papers. Our team is efficient and will always tackle your essay needs comprehensively assuring you of excellent results. Feel free to ask them anything concerning your essay demands or Order.

AcademicWritersBay.com is a private company that offers academic support and assistance to students at all levels. Our mission is to provide proficient and high quality academic services to our highly esteemed clients. AcademicWritersBay.com is equipped with competent and proficient writers to tackle all types of your academic needs, and provide you with excellent results. Most of our writers are holders of master’s degrees or PhDs, which is an surety of excellent results to our clients. We provide assistance to students all over the world.
We provide high quality term papers, research papers, essays, proposals, theses and many others. At AcademicWritersBay.com, you can be sure of excellent grades in your assignments and final exams.