Relationship of Project to Strategy of the Business

Relationship of Project to Strategy of the Business Order Instructions: Research paper on one of the following topics:

Relationship of Project to Strategy of the Business
Relationship of Project to Strategy of the Business

•Changing Organizational Priorities that change the scope of projects
•Change Management impact on Projects and/or Change management impact on operations management
•Lack of accountability on project requirements
•Unrealistic deadlines for project completion
•Relationship of the project to the strategy of the business

Guidelines:

•Relate your paper to a specific project or initiative (this can be a past or future project at your organization, a past project from another company or a future project you wish to undertake). In the review of all of the aspects of Project Management what one area do you believe will be your biggest challenge? Explain for the project chosen, explain, analyze, synthesize, and summarize the impact that the application of operations management will have. Provide examples of specific projects or operations failures for the chosen company, and relate how this conforms or deviates from effective project management standards/theory.

Relationship of Project to Strategy of the Business Sample Answer

Relationship of the project to the strategy of the business: Wal-Mart

Acknowledgment of the strategic significance of project management (PM) within the corporate world is on the rise. A major reason for this rapid acceleration is the fact that business leaders strongly believe that aligning PM with the strategy of the business could greatly enhance the attainment of the company’s objectives, strategies, goals as well as performance. According to Buys and Stander (2010), the strategy of the project should follow the strategy of the business. A lot of business organizations suffer from misaligned projects as well as a lack of an orderly method of aligning PM with the strategy of the business. Even though in many organizations projects are by and large the fundamental building blocks of business strategy, PM is not usually acknowledged as a functional strategy and is hardly ever viewed as a business process, which actually makes the attainment of business strategy/PM alignment even harder (Schmidt, 2012). This research paper provides an exhaustive discussion of the relationship of the project to the strategy of a business. The discussion is made in relation to a specific project that was undertaken by Wal-Mart.

Business strategy: in general, the definitions of business strategy are focused on how to deal with the competitor’s in a better way by developing competitive advantages; advantages which provide companies with the benefits that would sustain them when they attract clients and defend themselves against competitors (Srivannaboon, 2011). The main business strategy is Porter’s generic strategies. According to Porter, a company has to reinforce its selected strategies for it to attain a sustainable competitive advantage. There are 3 generic strategies that could result depending on the scope: focus, differentiation and cost leadership. Differentiation strategy – an organization that pursues a differentiation strategy seeks to position itself in the industry as a company with a unique and distinctive identity which meets their clients’ desires (Buys & Stander, 2010). Cost Leadership – an organization that pursues this strategy seeks to gain competitive advantage and increase its share of the market by being the lowest cost producer in its market. Stuck-in-the-middle – some organizations choose to combine cost leadership strategy and differentiation strategy in order to create a sustainable competitive advantage. For instance, they seek to address customer value and provide low-cost goods. When a company adopts more than a single generic strategy, it would perform below its capacity (Patanakul & Shenhar, 2012).

              Project Management: Project Management (PM), as Parker, Parsons, and Isharyanto (2015) pointed out, is a specialized form of management utilized in accomplishing various business strategies, objectives, as well as work tasks in a well-defined budget and schedule. Project management is essentially aimed at supporting the implementation of a company’s competitive strategy so as to deliver the desired outcome. Some scholars recognize PM as an essential business process (Allen et al., 2015). As per this viewpoint, an organization is defined as the process and describes PM as one of the vital business processes which allow an organization to execute value delivery systems. As such, when an organization links its projects to its business strategy, it would be better able to achieve its organizational objectives and goals (Allen et al., 2015).

Relationship of business strategy and project

The projects that business organizations implement usually differ very much from one organization to another, even amongst companies that do businesses within the same industry. The projects that organizations decide to implement are partly determined by strategic planning (Martinelli, Rahschulte & Waddell, 2012). It is worth mentioning that strategic planning describes a process in which managers create business goals and develop a strategy for achieving those goals. Strategic planning is an essential aspect of business management given that it guides a company’s overall direction. In the process of strategic planning, a manager begins by first formulating a mission that serves as the organization’s fundamental guiding purpose and objectives which fulfill the mission. The manager then studies the company’s business environment and creates a business strategy which he or she believes would best allow the organization to achieve its mission and goals (Martinelli, Rahschulte & Waddell, 2012). The projects pursued by an organization are the implementations of a strategic plan. Simply put, a project is a concrete action taken by a company to implement its strategic plan; hence the relationship between project and business strategy. For instance, in the course of strategic planning, a manager may see a particular weakness in a competitor which they can take advantage of in order to gain more clients. Consequently, the company may launch a new advertising campaign that points out the weakness. The company’s advertising campaign, in this case, is a project which is executed due to the strategic planning process (Milosevic & Srivannaboon, 2013).

Researchers have reported that for projects to be successful, they have to link directly to the strategy of the business, and a project manager has to know how the project actually supports the strategy of the business (Patanakul & Shenhar, 2012). There are a number of factors that influence the failure or success of any given project, for instance, funding, resources, and schedules. Even so, studies have demonstrated that the single most significant factor that influences the success of a project is the connection of the project to the business strategy of the company and the project manager’s knowledge of how the project, in fact, supports strategy of the business (Petrevska, Poels & Manceski, 2015). Put simply, the tighter a project’s link to the strategy of the business, the smoother the project would progress. On the other hand, the more tenuous the connection between the business strategy and the project, the more difficulties the project would come across. In essence, the relationship of a project to business strategy is really the best determinant of the progress of the project (Petrevska, Poels & Manceski, 2015).

Companies typically focus on short-term results, for instance, immediate monetary goals. Even so, projects are usually anticipated to attain results which actually link back to the overall business strategy of the company. If projects undertaken in an organization are successful in aligning their efforts with the strategy of the business, they would better contribute to the company’s long-term objectives and goals (Patanakul & Shenhar, 2012). Strategic alignment, as Schmidt (2012) pointed out, is a 2-way process given that the overall strategy of the business informs project planning and project success, in turn, impacts the success of the business. A project’s strategic alignment takes into consideration team leadership, operational efficiency, and strategic focus. The degree to which a project focuses on each of these aspects determines the strategic maturity level for a particular project. Researchers have demonstrated that higher strategic maturity levels are linked to higher levels of project success (Srivannaboon, 2011).

It is important for project managers to know the strategy of the business organization and how the project actually supports the project. Alien et al. (2015) observed that many project managers do not always know the strategic nature of the projects which they are overseeing. As a result, some project managers do not have the context that is needed to flag whenever the project veers from its original intent and course-correct toward the planned strategic outcome. In addition, higher-performing Project Management Offices are 4 times more probable compared to lower performers to implement a planned strategy, 3 times more probable to succeed, and more probable to enable a company to perform well fiscally (Alien et al., 2015). Project Management Offices (PMOs) that ensure alignment with the company’s strategic goals are about two times as likely to become high-performing teams with the ability to implement successful strategies and create substantial value (Alien et al., 2015).

Researchers have reported that just a few projects ever attain project success: only 2.5% of multinational enterprises attain 100% project success (Parker, Parsons & Isharyanto, 2015). A key reason for the failure of many projects is that organizations mostly fail to ensure that each project they execute aligns with their core business strategies. If companies were to execute only those projects that aligned with their core strategic objectives and goals, then their rate of success would go up considerably. Most projects are not related to departmental and/or corporate strategic plans. As such, it is unsurprising that project failure is extensive as top managers are not providing support, direction or guidance to projects in their organizations. Moreover, most companies lack a methodical approach for prioritizing projects or connect them to strategic or corporate goals (Parker, Parsons & Isharyanto, 2015).

To align projects with the strategy of the business, the following need to be done: review every project that is currently ongoing in the company and those that were completed over the last 12 months; come up with a methodical approach for prioritizing every project; and align every project to departmental or corporate strategic plans (Petrevska, Poels & Manceski, 2015). If a number of projects failed due to a lack of resources, then the resources needed for completing projects in the future must be considered as a criterion for determining the validity of a project. If a project needs a lot of resources, it might rate low basing on this criterion. However, if the senior executives decide that the project is a strategically significant one, then they would have to make sure that the required resources are provided for the project so that it does not fail (Martinelli, Rahschulte & Waddell, 2012). Projects which are somewhat not related to business strategy or have low priority should be terminated. Terminating them right away would make sure that they do not cost the company time, resources, lost clients or money any longer. A project that is not related to the strategy of the business does not add any measurable or quantifiable value to the company (Schmidt, 2012).

All in all, the result of project failure is wasted money which steals profits of the investors and has an adverse impact on the bottom-line of the company. Aligning projects with the company’s strategic goals is of great importance for the success of the project and proper return on investments (ROI). Srivannaboon (2011) noted that the superior performance of the business depends upon effective project management and creating a culture which supports projects. As such, top executives should contribute more of their effort and time to sponsoring projects and prioritizing them based on their strategic fit. Whenever a project is in alignment with the strategy of the business, that project would be able to meet targets of profitability and produce the needed ROI (Alien et al., 2015).

A past project was undertaken by Wal-Mart 

Wal-Mart is one of the biggest corporations globally in terms of revenue and is, in fact, the largest retailer globally. This retailer has operations in over 60 countries internationally and has its head offices in the state of Arkansas (Green & Stead, 2013). Wal-Mart formulated the business strategy in which it seeks to accelerate efficiency. By December 31, 2020, Wal-Mart wants to decrease the energy per square foot intensity needed for powering its buildings worldwide by 20% versus its 2010 baseline (Wal-Mart, 2016). Wal-Mart has a strategic business goal of using 100% renewable energy and has a long-term commitment to making renewable energy a part of its business well into the future (Gilchrist, 2015).

The project implemented by Wal-Mart was undertaken by a project team that Wal-Mart calls world-class renewable energy team. A part of Wal-Mart’s goal is to be supplied by one-hundred percent renewable energy – the company envisions a world in which citizens utilize renewable electricity which is actually good not just for people, but for also this earth as a planet (Wal-Mart, 2016). As this retailer expands its international operations to satisfy the quickly growing demand for retail services – for instance, healthier, safer foods which necessitate a cold supply chain – the company strives to be the most sustainable and efficient retailer possible (Helman, 2015). As such, the renewable energy activities of Wal-Mart focus on 3 main objectives: (i) to develop and install new renewable energy projects at scale; (ii) to secure stable, cost-effective renewable energy pricing which actually beats or meets the pricing of utility power; and (iii) reduce the cost of renewable energy (Wal-Mart, 2016). Wal-Mart’s approach is in line with its mission and business strategy and would steer the most sustainable, quickest, and largest quickening of novel renewable energy projects worldwide (Ghazzawi, Palladini & Martinelli-Lee, 2014).

To achieve its business goal of being supplied 100% by renewable energy, Wal-Mart decided to implement the project of installing solar power on no less than 1,000 facilities and rooftops by the year 2020. As part of this renewable energy project, Wal-Mart also develops wind energy technologies, fuel cell technologies in addition to other technologies (Wal-Mart, 2016). This project is current because it is still ongoing and would be completed in the year 2020. Wal-Mart’s management believes that finding more affordable and cleaner energy is crucial to everyday low cost. By using renewable energy as the source of its electricity, Wal-Mart hopes to lower the prices of its products.

In terms of Porter’s generic strategies, Wal-Mart retailer employs the cost-leadership strategy. Wal-Mart has succeeded in making use of its strategy of every day low prices in attracting shoppers (Helman, 2015). Through the idea of every day low prices, Wal-Mart consistently offers product items at a cheaper price in comparison to the competition, instead of depending on sales. The retailer manages to accomplish this owing to its efficient and extensive supply chain. It is notable that this retailer sources its goods from low-wage overseas such as Vietnam and China markets and cheap domestic suppliers. This has allowed Wal-Mart to sell its products at low price rates and to make profits from thin margins at high volume (Green & Stead, 2013).

The renewable energy project that Wal-Mart is undertaking relates to its business strategy of cost-leadership – that is, every day low prices – in that by operating all its buildings and facilities with electricity from renewable energy sources such as solar and wind, Wal-Mart would be able to lower its energy and electricity costs. Wal-Mart would then transfer those reduced costs to its customers through further decreases in the prices of its products inside the stores. This way, the renewable energy project will have been aligned with Wal-Mart’s business strategy and helped the company achieve its strategy of every day low prices which enables the company to attract even more clients (Wal-Mart, 2016).

In this Wal-Mart project, the project has so far had very few challenges primarily because the project has a clear strategic value. The project undertaken by Wal-Mart has direct strategic value for attaining the objectives and goals of Wal-Mart stores. All in all, this project is progressing smoothly to completion due to the tighter link that it has with the business strategy of Wal-Mart stores (Wal-Mart, 2016). Furthermore, the project manager for this project understands the business strategy and the way the project supports that business strategy. In other words, the project manager understands the strategic value of the Wal-Mart project which he is overseeing. Consequently, the project manager has the context to flag whenever the Wal-Mart project appears to veer from its original intent and can course-correct the project toward the right strategic outcome. As an organization, Wal-Mart connects portfolio management and project selection to the strategic planning process in order to ensure that the projects it chooses to undertake are in fact quantifiably strategic. This also helps to prevent shifting priorities from hindering the success of the project (Patanakul & Shenhar, 2012).

ArThe area that would present the biggest challenge

In the review of each of the Project Management aspects, one area that would be the biggest challenge is project scope. The scope of the project is essentially what is in the project and what is not in it. A major killer of projects is scope creep, which could present the biggest challenge for Wal-Mart’s renewable energy project. Scope creep refers to a sequence of minor scope alterations which made to the project devoid of using appropriate or relevant scope-change management techniques. According to Schmidt (2012), a lot of projects fail not because of estimating or problems with skills of team members, but rather because of the team members of the project working on major and small project deliverables which were in fact not part of the original business definition or project plan. Even though Wal-Mart’s project may have in place effective procedures for scope-management, there are 2 noteworthy aspects of scope-change management which should be properly comprehended by the project manager in order for the project to succeed: scope creep and knowing who the client is (Allen et al., 2015).

To effectively guard against scope creep, the project manager at Wal-Mart will need to know how to invoke scope-change management procedures in case he or she is asked to include a major new deliverable or function to the renewable energy project. Even so, it may occur that the project manager is not aware of the minor scope changes which are included to the project over time. With scope creep, various small changes could accumulate and have a substantial overall impact on the project (Srivannaboon, 2011). Wal-Mart’s renewable energy project could fail owing to scope creep. For this reason, the project manager has to be diligent and watchful in protecting against scope creep.

Impact of the application of operations management

Operations management basically relates to managing the activities which create the core products or services that a company provides. In essence, operations management is a continuous function of an organization that carries out activities to supply services or produce products, for example accounting operations, production operations, Information Technology service management, and manufacturing (Buys & Stander, 2010). Operations management at Wal-Mart stores is focused on approaching strategic and everyday business issues in a systematic way. Through the application of operations management in Wal-Mart’s renewable energy project, operations and project management experts at Wal-Mart were concerned with analyzing the design, control as well as improvement of operations and projects carried out by the retailer. Through operations management, Wal-Mart seeks to ensure that it offers retail services and sells its products using operations that are as energy efficient as possible by means of renewable energy sources. Solar panels and wind turbines are installed to generate electricity that powers Wal-Mart’s buildings and facilities (Wal-Mart, 2016).

One potential project failure that Wal-Mart’s renewable energy project may face is inadequate resources. In essence, it is important for the business organization to make sure that a sufficient amount of resources in terms of equipment, funding, time and people are available. Internally, this involves the company’s Human Resources department hiring the required personnel for the project, the Information Technology department providing the required software or hardware, and the Facilities department giving pertinent support such as providing offices. In addition, a project should have allocated finance and budget in addition to suitable timelines for it to be completed successfully (Martinelli, Rahschulte & Waddell, 2012). Every project activity in Wal-Mart’s renewable energy project has an associated cost, which could be in the operational costs in its undertaking, resources spent, or any items which have to be purchased for instance hardware. This renewable energy project could fail because of inadequate resources for instance the allocated finance/budget may not be enough to complete the project successfully; it may fail because of the lack of relevant skilled personnel for the project who possess the required skill set; or it may not be delivered within the stipulated timeframe, that is the year 2020.

Relationship of Project to Strategy of the Business Conclusion

In conclusion, there is a strong relationship between the project of an organization and the strategy of a business. Strategic planning is a vital facet of business management since it guides a company’s overall direction. The projects pursued by a company are actually the implementations of a strategic plan. For projects to be successful, they have to connect directly to the strategy of the business, and a project manager has to know how the project supports the strategy of the business. In essence, the tighter a project’s link to the strategy of the business, the smoother the project would progress. Aligning and linking projects with the company’s strategic goals is critical for the success of the project and the proper return on investments.

Relationship of Project to Strategy of the Business References

Allen, M., McLees, J., Richardson, C., & Waterford, D. (2015). Project Planning and Best Practices. Journal Of Information Technology & Economic Development, 6(1), 1-15.

Buys, A. J., & Stander, M. J. (2010). Linking projects to business strategy through project portfolio management. South African Journal Of Industrial Engineering, 21(1), 59-68.

Ghazzawi, I. A., Palladini, M., & Martinelli-Lee, T. (2014). The Wal-Mart stores, Inc.: An American dream that touched the world. Journal Of The International Academy For Case Studies, 20(1), 9-32.

Gilchrist, R. (2015). Focus on renewable energy. Chain Store Age, 91(1), 25.

Green, H., & Stead, D. (2013). Wal-Mart: Let the sun shine in?. Businessweek, (4018), 14.

Helman, C. (2015). Everyday Renewable Energy. Forbes, 196(7), 66-68.

Martinelli, R., Rahschulte, T., & Waddell, J. (2012). Aligning a program with its organization’s business strategy. PM World Today, 14(1), 1-4.

Milosevic, D. Z., & Srivannaboon, S. (2013). A theoretical framework for aligning project management with business strategy. Project Management Journal, 37(3), 98-110.

Parker, D. W., Parsons, N., & Isharyanto, F. (2015). Inclusion of strategic management theories to project management. International Journal Of Managing Projects In Business, 8(3), 552-573. doi:10.1108/IJMPB-11-2014-0079

Patanakul, P., & Shenhar, A. J. (2012). What project strategy really is: The fundamental building block in strategic project management. Project Management Journal, 43(1), 4-20. doi:10.1002/pmj.20282

Petrevska N. R., Poels, G., & Manceski, G. (2015). Bridging Operational, Strategic and Project Management Information Systems for Tactical Management Information Provision. Electronic Journal Of Information Systems Evaluation, 18(2), 146-158.

Schmidt, T. (2012). Strategic Project Management Made Simple : Practical Tools for Leaders and Teams. Hoboken, N.J.: Wiley.

Srivannaboon, S. (2011). Linking project management with business strategy. Project Management Journal, 37(5), 88-96.

Wal-Mart . (2016). Wal-Mart ’s approach to renewable energy. Retrieved from http://forumblog.org/2012/11/the-secret-to-affordable-renewable-energy/

 

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