Chapter 2 Flashcards
Four Activities of the Strategic Management Process
- Review and define the organizational mission
- Set long-range goals and objectives
- Analyze and formulate strategies to reach objective
- Implement strategies through projects
it identify the scope of the organization in terms of its product or service
Mission Statements
It provides focus for decision making when shared by organizational managers and employees
Written Mission Statements
characteristics of objective
S- Specific M- Measurable A- Assignable R- Realistic T- Time related
It translate the organization mission into specific, concrete,measurable terms
Objectives
SWOT
S - Strengths
W - Weaknesses
O - Opportunities
T - Threats
It ends with cascading objectives or projects assigned to lower divisions, departments, or individuals
Strategy formulation
It is risk contingency planning, without really moving organizational resources
Scenario Planning
it is a structured process of thinking about future possible environment that would have potential high impact to disrupt the way you do business, and then developing potential strategies to compete in these altered enviornment
Scenario Planning
- It requires every project to be clearly linked to strategy.
- Provides theme and focus of firm’s future direction
Strategic Management
the lack of understanding and consensus on strategy among top management and middle-level managers who independently implement the strategy
Implementation Gap
Project selection is based on the persuasiveness and power of people advocating the projects.
Organization Politics
Multiproject environments creates inter dependency relationship of shared resources which result in the starting, stopping, and restarting projects
Resources Conflicts and Multitasking
Steps in designing of a project portfolio system
- Classification of a project
- Selection criteria depending upon classification
- Sources of proposals
- Evaluating proposals
- Managing the portfolio of projects
Portfolio of projects by type
Compliance, Strategic projects and operational projects
- typically those needed to meet regulatory conditions required to operate in region
- Must do projects
compliance projects
projects that must meet the must do critetion
Emergency Projects
are those that are needed to support current operations
Operational Projects
are those that directly support the organization’s long-run mission
Strategic projects
Selection Criteria:
Financial models and non-financial models
model that measures the time it will take to recover the project investment. It emphasizes cash flows, a key factor in business
Payback model
Payback model formula
payback period(years) = estimated project cost/annual savings
this model uses management’s minimum desired rate-of-return to compute the present value of all net cash inflows
net present value(npv)
Limitations of Payback
- ignores the time value of money
- assumes cash inflows for the investment period (and not beyond)
- does not consider profitability
note1:
Positive npv project meets minimum desired rate of return and is eligible for further consideration.
the most frequently used method in selecting project has been _____.
Checklist
- it uses a list of questions to review potential projects and to determine their acceptance or rejection
- fails to answer the relative importance or value of a potential project and doesn’t allow for comparison with other potential projects.
Checklist Model
- it uses several weighted qualitative and/or quantitative selection criteria to evaluate project proposal
multi-weighted scoring model
deciding how well a strategic or operations project fits the organization’s strategy
Project Classification
applying a weighted scoring model to align projects closer with the organization’s strategic goals
- Selecting a model
advantages of selecting a model
- Reduces the number of wasteful projects
- helps identify proper goals for projects
- helps everyone involves understand how and why a project is selected.
- within the organization
- request for proposal(RFP) from external sources
Sources and Solicitation of project proposal
-Prioritizing requires discipline, accountability, responsibility,constraints, reduced flexibility and loss of power
Ranking proposals and selection of projects
- Senior management input
- The priority team responsibility
Managing the portfolio
Involve evolutionary improvements to current products and servies
Bread-and-butter Project
Represent revolutionary commercial opportunities using proven technical
Pearls
Involve technological breakthroughs with high commercial payoffs
Oysters
Showed promised at one time but are no longer viable
white elephants
mistakes caused by not understanding the role of projects in accomplishing strategy
- focusing on problems or solution with low strategic priority
- focusing on the immediate customer rather than the whole market place and value chain
- Overemphasizing technology that results in projects that pursue exotic technology that does not fit the strategy or customer need
- trying to solve customer issues with a product or service rather than focusing on the 20% with 80% of the value
- Engaging in a never-ending search for perfection only the project team really cares about.
it is often used to denote a project that a powerful, highranking official is advocation
- scared cow
