Chapter 2 Flashcards
(23 cards)
What are some mistakes caused by not understanding the role of projects in accomplishing strategy?
- Focusing on problems/solutions with low strategic priority
- Focusing on immediate customer rather than whole market place
- Overemphasizing technology
- Trying to solve customer issues with product rather than focusing on 20% of 80%
- Never-ending search for perfection
What is strategic management?
- Requires every project to be clearly linked to strategy
- Provides theme and focus of firm’s future direction
- Required strong links among mission, goals, objectives, strategy, and implementation
What are the 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 objectives
- Implement strategies through projects
What is the implementation gap
The lack of understanding and consensus on strategy among top management and middle-level managers who independently implement the strategy
What is organization politics
Project selection is based on the persuasiveness and power of people advocating the projects
What is resource conflicts and multitasking
Multiproject environment creates interdependency relationships of shared resources
What are the benefits of project portfolio management
- Builds discipline
- Links project selection to strategic metrics
- Prioritization based on common set of criteria
- Allocates resources to project that align with strategic direction
- Balance risk
- Justifies killing projects that do not support strategy
- Improves communication
What is the design of a project portfolio system
- Classification of a project
- Selection criteria depending upon classification
- Sources of proposals
- Evaluating proposals
- Managing the portfolio of projects
What are the financial selection criteria models
Paybak model and NPV
What is the Payback model
The time the project will take to recover the project investment
payback period = investment / annual cash savings
What are the limitations of the payback model
-Ignores the time value of money
- Assumes cashflow not beyong investment period
- Does not consider profitability
What is the net present value model (NPV)
Uses management’s minimum desired rate-of-return
What are the nonfinancial strategic criteria
- Capture larger market share
- Higher entry barriers
- Develop enabler product
- Reduce dependency on suppliers
- Prevent government intervention and regulation
- restore image or enhance brand recognition
- demonstrate commitment to corporate citizenship and support for community development
What are some multi-criteria selection models
Checklist model, multi-weighted scoring model
What is the checklist model
uses a list of questions to review potential projects and determine their acceptance/rejection
requires agreement on criteria
assumes all criteria are equally important
What is the multi-weighted scoring model
uses several weighted qualitative and/or quantitative selction criteria to evaluate project proposals
Requires agreement on criteria, weights for criteria, and score assigned to each criteria
What is project classification
deciding how well a strategic or operations project fits the organization’s strategy
What does senior management do in the management of the portfolio system
Provide quidance in selecting criteria that are aligned with the organization’s strategic goals
Decide how to balance available resources
What are the governance team’s responsibilities in managing the portfolio system
- Publish the priority of every project
- Ensure project selection is open and free of power politics
- reassess the organization’s goals and priorities
- Evaluate the progress of current projects
What are bread-and-butter projects
improvements to current projects/services
What are pearl projects
Commercial opportunities using proven technical advances
What are oyster projects
technological breakthroughs with high commercial payoffs
What are white elephant projects
showed promise at one time but are no longer viable
