Tm Ch02 Organization Strategy

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Chapter 2

organization strategy and project selection

Chapter Outline

1.The Strategic Management Process: An Overview
A.Four Activities of the Strategic Management Process
2.The Need for an Effective Project Portfolio Management System A.Problem 1: The Implementation Gap
B.Problem 2: Organizational Politics
C.Problem 3: Resource Conflicts and Multitasking
3.A Portfolio Management System
A.Classification of the Project
B.Nonfinancial Criteria
4.Applying a Selection Model
A.Sources and Solicitation of Project Proposals
B.Ranking Proposals and Selection of Projects
5.Managing the Portfolio System
A.Balancing the Portfolio for Risks and Types of Projects 6.Summary
7.Key Terms
8.Review Questions
9.Exercises
10.Case: Hector Gaming Company
11.Case: Film Prioritization
12.Appendix 2.1: Request for Proposal (RFP)

Chapter Objectives

• To identify the significant role projects contribute to the strategic direction of the organization • To stress the importance of establishing project priorities and top management support • To describe the linkages of strategies and projects

• To write a set of hierarchical objectives for an organization • To describe a scheme for prioritizing projects that ensures top management involvement and minimizes conflicts • To apply an objective priority system to project selection.

Review Questions

1.Describe the major components of the strategic management process.

The strategic management process involves assessing what we are, what we want to become, and how we are going to get there. The major generic components of the process include the following:

a.Defining the mission of the organization
b.Analysis of the external and internal environments
c.Setting objectives
d.Formulating strategies to reach objectives
e.Implementing strategies through projects.

2.Explain the role projects play in the strategic management process.

Strategy is implemented primarily through projects. Successful implementation of projects means reaching the goals of the organization and thus meeting the needs of its customers. Projects that do not contribute to the strategic plan waste critical organization resources.

3.How are projects linked to the strategic plan?

Projects are linked to the strategic plan because projects represent how a strategy is to be implemented. Since some projects are more important than others, the best way to maximize the organization’s scarce resources is through a priority scheme which allocates resources to a portfolio of projects which balance risk and contribute the most to the strategic plan.

4.The portfolio of projects is typically represented by compliance, strategic, and operations projects. What impact can this classification have on project selection?

By carefully aligning your project proposal with one classification, you may increase the chances of it being selected. Remember, senior management typically allots budgets for each category independent of actual project selection. Knowledge of funds available, risk portfolio, senior management bias, etc. may cause some to attempt to move their project proposal to a different classification to improve the chances of the project being selected.

5.Why does the priority system described in this chapter require that it be open and published? Does the process encourage bottom-up initiation of projects? Does it discourage some projects? Why?

An open, published priority system ensures projects are selected on the basis of their contribution to the organization. If the priority system is not open, squeaky wheels, strong people, and key departments all get their projects selected for the wrong reasons. Bottom-up is encouraged because every organization member can self evaluate their project idea against priorities – and so can everyone else in the organization. To some,...
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