Chapter 2

Chapter 2
The Organizational Context:

Strategy, Structure, and Culture
Dr. Doaa Saleh
Chapter Outline
01 Projects and
Organizational Strategy 04 Forms of Organizational
Structure
02 Stakeholder
Management
05 Project Management
Offices
Organizational Organizational
03 Structure 06 Culture
Projects and Organizational Strategy
● Strategic management:
The science of formulating, implementing, and evaluating cross-
functional decisions that enable an organization to achieve its
objectives.
Strategic management consists of the following elements:

● Developing vision and mission statements
● Formulating, implementing and evaluating
● Making cross-functional decisions
● Achieving objectives
Projects Reflect Strategy
● projects are stepping stones of corporate strategy
● The organization’s strategic development is a driving force behind project
development
Some examples of how projects operate as strategic building blocks
Each of the examples illustrates the underlying theme that projects are the “operational reality”
behind strategic vision. In other words, they serve as the building blocks to create the reality a
strategy can only articulate
Relationship of Strategic Elements
The various strategic elements must exist in harmony with each other; that is, the
mission, objectives, strategies, goals, and programs must remain in alignment.
Missions
Objectives
Strategy Goals Programs
techytypes Company
Illustrating Alignment Between Strategic Elements and Projects
Missions
“the business of supplying system components to a
worldwide nonresidential air-conditioning market.”
Objectives
(a) 14.5% ROI (b) Nondecreasing dividends (c) Socially conscious image
Strategy Goals Programs

• Existing products in existing • Year 1: 8% ROI, $1 dividend, maintain • Product Cost Improvement Program
markets with image maintenance image, unit cost down 5% (PCIP)
• Existing products in new markets • Year 2: 9% ROI, $1 dividend, improve • Image Assessment Program (IAP)
(foreign, restricted) image • Product Redesign Program (PRP)
• New products in existing markets • Year 3: 12% ROI, $1 dividend, improve • Product Development Program (PDP)
(significantly improve image) image
• Year 4: 14% ROI, $1.10 dividend
Stakeholder Management
Stakeholders are all individuals or groups who have an active stake in
the project and can potentially impact its development positively or
negatively.
● Stakeholders can affect and are affected by

organizational actions to varying degrees.
● Stakeholder Analysis is a useful tool for

demonstrating some of the seemingly
irresolvable conflicts that occur through the
planned creation and introduction of new
projects.
● Just as stakeholder analysis is instructive for

understanding the impact of major strategic
decisions.
Identifying Project stakeholders
Internal stakeholders are people whose interest in a company comes through a direct
relationship, such as employment, ownership, or investment.
External stakeholders are those who do not directly work with a company but are
affected somehow by the actions and outcomes of the business.
Stakeholders can be divided to
Internal Stakeholder External Stakeholder
• Top management • Clients

• Accountant • Competitors
• Other functional managers • Suppliers
• Project team members • Environmental, political, consumer, and
other intervenor groups
Project Stakeholder Relationships
The challenge is further complicated by the need to communicate, perhaps using a
different business language, with the various customer stakeholder groups
Managing Stakeholders
Project managers and their companies need to recognize the importance of stakeholder
groups and proactively manage with their concerns in mind.
Block offers a useful framework of the political process that has application to stakeholder
management.
Block suggests six steps:

1. Assess the environment.
2. Identify the goals of the principal actors.
3. Assess your own capabilities.
4. Define the problem.
5. Develop solutions.
6. Test and refine the solutions.
Project Stakeholder Management Cycle
07
Implement a Stakeholder
01 management strategy
Identify
Stakeholders
06
Predict stakeholder
behavior
02
Gather Information 05
on Stakeholders Identify stakeholder
Strategy
03 04
Identify Determine Stakeholder
Stakeholders’ Mission strengths and
weaknesses
Organizational Structure
The word structure implies organization.
Consists of three key elements:

Designates formal reporting relationships
• number of levels in the hierarchy
• span of control
Identifies groupings of:

• individuals into departments
• departments into the total organization
Design of systems to ensure

• effective communication
• coordination
• integration across departments
Forms of Organization Structure
Functional organizations – Project organizations – Matrix organizations –

group people performing group people into project create a dual hierarchy in
similar activities into teams on temporary which functions and
departments assignments projects have equal
prominence
Functional Organizational Structure
(Figure 2.3)
Functional Organizational Structure
Strengths for Weaknesses for

Project Management Project Management
1. Projects developed within basic 1. Functional siloing makes it difficult to
functional structure require no achieve cross-functional cooperation.
disruption or change to firm’s design.
2. Lack of customer focus.
2. Enables development of in-depth
knowledge and intellectual capital. 3. Longer time to complete projects.
3. Allows for standard career paths. 4. Varying interest or commitment.

Project Organizational Structure example
(figure 2.4)
Project Organizational Structure

1. Project manager sole authority 1. Expensive to set up and maintain
teams
2. Improved communication
2. Chance of loyalty to the project rather
3. Effective decision-making than the firm
4. Creation of project management 3. Difficult to maintain a pooled supply of

experts intellectual capital
5. Rapid response to market 4. Team member concern about future

opportunities once project ends
Matrix Structures Example
Matrix Structures

1. Suited to dynamic environments 1. Dual hierarchies mean two bosses
2. Equal emphasis on project 2. Negotiation required in order to

management and functional share resources
efficiency
3. Workers caught between
3. Promotes coordination across competing project & functional
functional units demands
4. Maximizes scarce resources

Project Management Office (PMO)
Centralized units that oversee or improve the management of projects
Resource centers for:
o Technical details were offloaded from the manager

o Expertise in project management skills
o Repository of lessons learned, documentation
o Center for project management excellence
Each project manager can use the PMO as a resource, trusting

that they will make themselves responsible for all project
management innovations.
PMOs have been described as operating under one of three alternative forms
PMO Forms :
o Weather Station: monitoring and tracking
Under the weather station model, the PMO is typically used only as a tracking and monitoring
device.
exclusively on some key questions
• What’s our progress? How is the project progressing against the original plan? What
key milestones have we achieved?
• How much have we paid for the project so far? How do our earned value projections
look? Are there any budgetary warning signals?
• What is the status of major project risks? Have we updated our contingency planning
as needed?
PMOs have been described as operating under one of three alternative forms
PMO Forms :
o Control Tower: project management is a skill to be protected and supported

The control tower model treats project management as a business skill to be protected
and supported. It focuses on developing methods for continually improving project
management skills
it performs four functions:
o Establishes standards for managing projects
o Consults on how to follow these standards
o Enforces the standards
o Improves the standards
o Resource Pool : maintain and provide a cadre of skilled project professionals

Organizational Culture
The unwritten rules of behavior, or norms that are used to shape and guide behavior, is
shared by some subset of organization members and is taught to all new members of the
company.
Key factors that affect culture development
(Cultural Influences)
Reward
Technology Environment
systems
Geographical Rules and Key organizational

location procedures members
Culture Affects Project Management
• Departmental interaction
• Employee commitment to goals
• Project planning
• Performance evaluation
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The Organizational Context:

Strategic management consists of the following elements:

● Formulating, implementing and evaluating

● Making cross-functional decisions

Strategy Goals Programs

Strategy Goals Programs

● Stakeholders can affect and are affected by

● Stakeholder Analysis is a useful tool for

● Just as stakeholder analysis is instructive for

Stakeholders can be divided to

Internal Stakeholder External Stakeholder

• Top management • Clients

Block suggests six steps:

Consists of three key elements:

Identifies groupings of:

Design of systems to ensure

Functional organizations – Project organizations – Matrix organizations –

Strengths for Weaknesses for

3. Allows for standard career paths. 4. Varying interest or commitment.

Strengths for Weaknesses for

4. Creation of project management 3. Difficult to maintain a pooled supply of

5. Rapid response to market 4. Team member concern about future

Strengths for Weaknesses for

1. Suited to dynamic environments 1. Dual hierarchies mean two bosses

2. Equal emphasis on project 2. Negotiation required in order to

4. Maximizes scarce resources

Resource centers for:

o Technical details were offloaded from the manager

Each project manager can use the PMO as a resource, trusting

exclusively on some key questions

o Control Tower: project management is a skill to be protected and supported

o Consults on how to follow these standards

o Enforces the standards

o Improves the standards

o Resource Pool : maintain and provide a cadre of skilled project professionals

Geographical Rules and Key organizational

• Employee commitment to goals

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