THE
ORGANIZATIONAL
CONTEXT Chapter 2
Copyright ©2016 Pearson Education,
Ltd.
CHAPTER 2
LEARNING OBJECTIVES
After completing this chapter, you should be able to:
1.Understand how effective project management
contributes to achieving strategic objectives.
2.Recognize three components of the corporate
strategy model: formulation, implementation, and
evaluation.
3.See the importance of identifying critical project
stakeholders and managing them within the context
of project development.
4.Recognize the strengths and weaknesses of three
basic forms of organizational structure and their
implications for managing projects.
Copyright ©2016 Pearson Education,
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Ltd.
CHAPTER 2
LEARNING OBJECTIVES
After completing this chapter, you should be able to:
5.Understand how companies can change their structure
into a “heavyweight project organization” structure to
facilitate effective project management practices.
6.Identify the characteristics of three forms of project
management office (PMO).
7.Understand key concepts of corporate culture and how
cultures are formed.
8.Recognize the positive effects of a supportive
organizational culture on project management practices
versus those of a culture that works against project
management.
Copyright ©2016 Pearson Education,
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Ltd.
PMBOK CORE CONCEPTS
Project Management Body of Knowledge (PMBoK)
covered in this chapter includes:
Project Procurement Management (PMBoK 12)
Identify Stakeholders (PMBoK 13.1)
Plan Stakeholder Management (PMBoK 13.2)
Manage Stakeholder Engagement (PMBoK 13.3)
Organizational Influences on Project Management
(PMBoK 2.1)
Organizational Structures (PMBoK 2.1.3)
Organizational Cultures and Styles (PMBoK 2.1.1)
Enterprise Environmental Factors (PMBoK 2.1.5)
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PROJECTS AND
ORGANIZATIONAL STRATEGY
Strategic management – the science of
formulating, implementing and evaluating
cross-functional decisions that enable an
organization to achieve its objectives.
Consists of:
Developing vision and mission statements
Formulating, implementing, and evaluating
Making cross-functional decisions
Achieving objectives
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VISION AND MISSION
A mission statement is a short summary of an
organization’s core purpose, focus, and aims. This
usually includes a brief description of what the
organization does and its key objectives.
A vision statement is a short description of an
organization’s aspirations and the wider impact it
aims to create. The vision statement, meanwhile,
should clarify the aspirations of the organization and
define the direction it’s heading in.
In short: The mission is the “what” and the “how,”
and the vision is the “why.”
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INSPIRING MISSION AND
VISON STATEMENT EXAMPLES
mission vison
Tesla To create the most compelling car To accelerate the
company of the 21st century by world’s transition to
driving the world’s transition to sustainable energy.
electric vehicles.
Nike Create groundbreaking sports Bring inspiration and
innovations, make our products innovation to every
sustainably, build a creative and athlete* in the world.
diverse global team, and make a
positive impact in communities where
we live and work.
amazon We strive to offer our customers the To be Earth’s most
lowest possible prices, the best customer-centric
available selection, and the utmost company, where
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convenience. customers can find and
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PROJECTS REFLECT
STRATEGY
(TABLE 2.1)
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TOWS MATRIX
(FIGURE 2.2)
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STAKEHOLDER MANAGEMENT
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.
Project Stakeholders are defined as all
individuals or groups
who have an active stake in the project and can
potentially impact, either positively or negatively,
its development.
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IDENTIFYING PROJECT
STAKEHOLDERS
Internal External
Stakeholders Stakeholders
• Top management • Clients
• Accountant • Competitors
• Other functional • Suppliers
managers • Environmental,
• Project team political,
members consumer, and
other intervener
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PROJECT STAKEHOLDER
RELATIONSHIPS
(FIGURE 2.3)
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MANAGING STAKEHOLDERS
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.
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FORMS OF ORGANIZATION
STRUCTURE
Functional organizations – group people
performing similar activities into
departments
Project organizations – group people into
project teams on temporary assignments
Matrix organizations – create a dual
hierarchy in which functions and
projects have equal prominence
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FUNCTIONAL ORGANIZATIONAL
STRUCTURE
(FIGURE 2.4)
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FUNCTIONAL STRUCTURES
(TABLE 2.2)
Strengths for Weaknesses for
Project Management Project Management
1. Projects developed within 1. Functional siloing makes it
basic functional structure difficult to achieve cross-
require no disruption or functional cooperation.
change to firm’s design.
2. Lack of customer focus.
2. Enables development of
in-depth knowledge and 3. Longer time to complete
intellectual capital. projects.
3. Allows for standard career 4. Varying interest or
paths. commitment.
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PROJECT ORGANIZATIONAL
STRUCTURE EXAMPLE
(FIGURE 2.6)
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PROJECT STRUCTURES
(TABLE 2.3)
Strengths for Weaknesses for
Project Management Project Management
1. Project manager sole 1. Expensive to set up and
authority maintain teams
2. Improved communication 2. Chance of loyalty to the
project rather than the
3. Effective decision-making firm
4. Creation of project 3. Difficult to maintain a
management experts pooled supply of
intellectual capital
5. Rapid response to market
opportunities
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MATRIX ORGANIZATIONAL
STRUCTURE
(FIGURE 2.7)
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MATRIX STRUCTURES
(TABLE 2.4)
Strengths for Weaknesses for
Project Management Project Management
1. Suited to dynamic 1. Dual hierarchies mean two
environments bosses
2. Equal emphasis on project 2. Negotiation required in
management and order to share resources
functional efficiency
3. Workers caught between
3. Promotes coordination competing project &
across functional units functional demands
4. Maximizes scarce
resources
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ORGANIZATIONAL CULTURE
Unwritten
Rules of behavior
Held by some subset of the organization
Taught to all new members
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CASE STUDY – ROLLS-ROYCE
CORPORATION
Rolls-Royce is an example of a case based on new
strategic opportunities and an organization’s desire to
capitalize on market and technological developments. As
one of the premier manufacturers of jet engines of the
commercial and military markets, Rolls-Royce is facing an
opportunity to “piggy back” off Airbus’s newest airframe
design, the A-380, an enormous airplane capable of flying
up to 750 people. The case also demonstrates the
manner in which Rolls-Royce must identify and manage
their key stakeholder group for maximum effectiveness.
Question:
Who are Rolls’ principal project management
stakeholders? How would you design stakeholder
management strategies to address their concerns?
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Ltd.
SUMMARY
1. Understand how effective project management
contributes to achieving strategic objectives.
2. Recognize three components of the corporate
strategy model: formulation, implementation,
and evaluation.
3. See the importance of identifying critical
project stakeholders and managing them
within the context of project development.
4. Recognize the strengths and weaknesses of
three basic forms of organizational structure
and their implications for managing projects.
Copyright ©2016 Pearson 2-29
SUMMARY
5. Understand how companies can change their
structure into a “heavyweight project
organization” structure to facilitate effective
project management practices.
6. Identify the characteristics of three forms of
project management office (PMO).
7. Understand key concepts of corporate culture
and how cultures are formed.
8. Recognize the positive effects of a supportive
organizational culture on project management
practices versus those of a culture that works
against project management.
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