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W2 Chp 2: Organization Strategy & Project Selection (The Need For…
W2 Chp 2:
Organization Strategy & Project Selection
The Strategic Management Process:
An Overview
Strategic Management
project clearly linked to strategy
give theme & focus for future direction
Respond to changes
Allocate scarce resources
strong linke mission, goals, objectives, strategy & implementation
4 Activities Strategic management Process
Review & define mission
Set long range goal & objective
Analyze & formulate strategy > reach objective
Implement strategy
Characteristics Objective
Smart
Measurable
Assignable
Realistic
Time related (duration)
The Need For Effective
Project Portfolio Management System
Prob 1: Implementation Gap
lack understanding and consensus on strategy by top & middle (functional) manager > independently implement strategy.
Prob 2: Organization Politics
Project selection > persuasiveness & power of people> advocate project
Prob 3: Resource Conflict & Multitasking
Interdependency relationship shared resources > start, stopping, restart project.
Benefit
discipline
link project selection to strategic metrics
prioritize project proposal > common set of criteria
|> politic & emotion
allocate resources
balance risk
justifies killing project > not support strategy
improve communication & support agreement.
A Portfolio Management System
Classification Project
Compliance Project (must do)
Strategic Project
Operational Project.
Selection Criteria
Financial Model
Payback Model
measure time project recover investment
uses more desirable shorter payback
emphasize cash flow
Limitation
ignore time value of money
cash flow on investment period only
not consider profitability
Net Present Value (NPV) Model
min desire rate-0f-return > compute present value net cash flows
+NPV: meet min desire ROT, future consideration
-NPV: project rejected
NonFinancial
capture larger market
make difficult for competitor
develop enabler product
develop core technology
reduce dependency
prevent government intervention
restore corporate image
demonstrate commitment
Checklist Model
list of question > review potential project> accept/ reject
not allow mcompare other potential project
Multi- Weighted Scoring Model
uses several weighted qualitative &/ quantitative selection > evaluate project proposal
allow comparison other potential project
Apply Selection Model
Project Classification
decide how good a strategic/operational project fit organization strategy
Selecting Model
apply Weighted Scoring Model > align project closer organization strategic goal
reduce no wasteful project
identify proper goal
help up understanding project selected
Project Proposal
Source and Solicitation Project Proposal
within organization
request proposal (RFP) from external source (contact & vendor)
Raking Proposals & Selection of Project
prioritizing require discipline, accountability, responsible, constraints, reduced flexibility, loss of power
Manage Portfolio System
Senior Management Input
give guidance in selecting criteria
decide how to balance resources
Governance Team Responsibilities
publish priority project
ensure project selection process
open & free politic
reassess organization goal & priority
evaluate current project progress
Balancing Portfolio Risk & Type of Project
Bread-and-Butter Project
evolutionary improvement current product
Pearl
revolutionary commercial opportunities > proven technical advances
Oysters
technological breakthroughs with commercial payoffs
White Elephants
promise at one time, |> no longer viable