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Chap 2 Organization Strategy

  1. Organization Strategy and Project selection
  2. Strategic Management Process FIGURE 2. 1
  3. Strategy formulation and implementation in the strategic management process.
  4. Characteristics of Objectives EXHIBIT 2. 1 S Specific Be specific in targeting an objective M Measurable Establish a measurable indicator(s) of progress A Assignable Make the objective assignable to one person for completion R Realistic State what can realistically be done with available resources T Time related
  5. Portfolio of Projects by Type FIGURE 2.2
  6. Example: Calculating the Payback Period and Internal Rate of Return Both projects are estimated to have constant annual savings over the next 5 years. Payback criteria for this company- must be within 5 year horizon
  7. Example: Calculating the Net Present Value Reconsider the same 2 projects with a 15% discount rate, 5 year Time Horizon
  8. Project Screening Matrix Example FIGURE 2.3
  9. Project Screening Process FIGURE 2.5
  10. Project Portfolio Matrix FIGURE 2.7
  11. Possible Evaluation Criteria When Classifying And Ranking Projects Level of technical difficulty to successfully complete the project within given time and resource constraints Technical Difficulty / Risks Number of individuals and the length of time needed to complete the project Project Size / Duration Amount and type of resources the project requires and their availability Resource Availability Extent to which the project is viewed as improving profits, customer service, and so forth and the duration of these benefits Potential Benefits Extent to which the project is viewed as helping the organization achieve its strategic objectives and long-term goals Strategic Alignment Extent to which activities add value and costs when developing products and/or services Value Chain Analysis Description Evaluation Criteria

Notas del editor

  1. It wouldn’t be a project if it didn’t have an acronym!
  2. Compliance could be because of rules or regulations, or contractual obligations, or perhaps fixes to critical bugs or flaws in the existing products Most companies have a balance of these 3 Operational projects- support current operations (me- shorter term projects) Fine line between Operational and Strategic -IMHO
  3. Would we do either or both project? Both Which project appears to be better? IRR greater, payback shorter for A than B
  4. We would reject B, do A Common discount rates are between 15-20%
  5. Project 1: 1*2.0 + 8*3.0 + 2*2.0 + 6*2.5+ 0*1 + 6*1 + 5* 3.0= 66 How do we rank the projects? 5 is the best, 2 is the worst Can change the weights around. This method is somewhat arbitrary, if are going to use, consider changing the weights to see if the mix changes
  6. Note that X axis is … GIVEN success… but remember that success is not guaranteed, especially for low tech feasible projects