Project Management: Definition of Strategic Management Process - Essay Example

? Project Management Project Management Definition of Strategic Management Process Strategic management process refers to the process of formulating; implementing and evaluating departmental decisions that enable the organization achieve its set goals. It provides the path through which the firm goes about achieving its mission, either in the short term or long term. Through this process of strategic management, the organization is moved from its present position to a future strategic position with the aim of securing a sustainable competitive advantage (Kerzner, 2013). The processes of formulation, implementation and evaluation form the three key stages that define strategic management process. Activities that are involved in the formulation process include the setting up of firm’s vision and mission, and performing an environmental scan in order to identify the external opportunities and strengths. As regards the process of implementation, activities that are involved include budget preparations, developing a strategy-supportive culture and creating the right organizational culture. The evaluation stage involves measuring and evaluating performance in order to determine the viability of the project. With the ever-changing environmental factors, change is inevitable for any strategy developed. As such, a review of internal and external factors is always necessary as well as taking corrective actions. How project management in integrated into strategic management process Given the high level of importance that has been attached to strategic management process, necessary tools have to be put in place to ensure the success of this process. According to (Macmillan & Tampoe, 2001), turning strategy into reality is not an easy thing. It requires constant investment in management resources. This is where project management comes in. It is the application of knowledge, skills, tools and techniques to the project activities to meet project requirements (Hill & Jones, 2012). Application and integration of project management processes into strategic management process takes different forms. Planning is one process that integrates project management into strategic management process. The process entails understanding the key success elements, identifying stakeholders, their roles and their responsibilities. It also involves identifying performance management goals and developing a management plan. On the project management side, planning involves stakeholders agreeing to project objectives, scope and plans for carrying out the project which has been formally funded and resourced. The other process that integrates project management into strategic management process is the monitoring process. This process measures and assesses the project performance in order to respond to variances and risks (Macmillan & Tampoe, 2001). This is possible if performance measures have been identified and selected and measurement scorecards developed. Under this process, a re-verification of critical success factors is done as well as re-planning of the project. This may include changes in resource allocation or the scheduling of events and activities. The result of this may be changes in the strategies and objectives of the organization which requires performance reporting. Performance reporting falls on the performance management side and it involves developing of a communications plan and communicating performance results to stakeholders. How organizational culture influences the selection of a project management structure Culture incorporates beliefs, behaviors, and assumptions shared by individuals within an organization (Hill & Jones, 2012). In trying to explain how organizational culture influences the selection of a project management structure, various factors have to be considered. They include whether or not decision-making is done in command and control environments or by self-directed teams, how functional units work with each other and many other factors. How functional units work with each other dictates the type of project management structure chosen by the firm. In a situation where these functional units work independently with little coordination, functional organizational structure may not be the best option. This is because functional organizational structure requires a lot of interrelationships between various departments. The departments work more as competing units than cooperating units. In this case, dedicated teams would be more appropriate because leadership is provided by the full-time project manager. In a case where functional units work in an almost perfect harmony, then functional organization would me more appropriate because coordination of these departments would be much easier. In a situation where decision-making is done in a command and control environments, choosing a project management structure is much easier. This is because the employees have little say when it comes to choosing the right structure. The top management can decide to use the functional organization, dedicated teams or matrix structure; whichever they find appropriate. In this case, the management is the final say and works by imposing new changes on employees. If decisions are made in self-directed teams, then the choice of the project management structure will depend on the prevailing circumstances. This is because the employees have the freedom to choose what they feel is appropriate. A five year project has a projected net cash flow of $15,000, $25,000, $30,000, $20,000, and $15,000 in the next five years. It will cost $50,000 to implement the project. If the required rate of return is 20%, conduct a discounted cash flow calculation to determine the NPV. Solution: NPV = Io + Summation of [Ft/(1 + k)t Io = $50000 = -50000 + 15000 + 25000 + 30000 + 20000 + 15000 (1+0.2)1 (1+0.2)2 (1+0.2)3 (1+0.2)4 (1+0.2)5 = -50000 + 15000 + 25000 + 30000 + 20000 + 15000 1.2 1.44 1.728 2.0736 2.4883 = -50000 + 12500 + 17361 + 17361 + 9645 + 6028 = -50000 + 62895 = 12895 NPM = $12895 The Custom Bike Company has set up a weighted scoring matrix for evaluation of potential projects. Projects being considered are listed below. Using the scoring matrix below, which project would you rate the highest and the lowest? Criteria Strong Support Supports Business Strategy Urgency 10% of Sales from new products Competition Fill Market gap Weighted Total Weight 2.0 5.0 4.0 3.0 1.0 3.0 Project 1 9 4 2 0 2 5 Project 2 3 5 2 0 5 1 Project 3 6 8 2 3 6 8 Project 4 1 0 5 10 6 9 Project 5 3 10 10 1 8 0 Solution: The weights and scores are multiplied to get a total weighted score Project1: = (2*9)+(5*4)+(4*2)+(3*0)+(1*2)+(3*5) = 18+20+8+0+2+15 = 63 Weighted Total = 63 Project2: = (2*3)+(5*5)+(4*2)+(3*0)+(1*5)+(3*1) = 6+25+8+0+5+3 = 47 Weighted Total = 47 Project3: = (2*6)+(5*8)+(4*2)+(3*3)+(1*6)+(3*8) = 12+40+8+9+6+24 = 99 Weighted Total = 99 Project4: = (2*1)+(5*0)+(4*5)+(3*10)+(1*6)+(3*9) = 2+0+20+30+6+27 = 85 Weighted Total = 85 Project5: = (2*3)+(5*10)+(4*10)+(3*1)+(1*8)+(3*0) = 6+50+40+3+8+0 = 107 Weighted Total = 107 Answer: Highest rated project = Project 5 at 107 Lowest rated project = project 2 at 47 References Hill, C., & Jones , G. (2012). Strategic management: An integrated approach. (10th ed.). Stamford: Cengage Learning. Kerzner, R. (2013). Project management: A systems approach to planning, scheduling, and controlling. (11th ed.) Hoboken, NJ: Wiley. Macmillan, H., & Tampoe, M. (2001). Strategic management: Process, content, and implementation. New York, NY: Oxford University Press. Read More