Unit - 1
Introduction of Project Management
Meaning and definition of Project:
A Project is a chapter of tasks that need to be completed at a stipulated time in order to accomplish a particular task. Projects can vary from simple to complex and can be managed by one people to hundred persons. A Project is generally deemed to be a success if it achieves the objectives according to their acceptance criteria, within an agreed timescale and budget. Time, Cost and Quality are the building blocks of every project.
Time: - Scheduling is a collection of techniques used to develop and present schedules that describes when task will be done.
Cost: - How are required amount of funds acquired and finance managed?
Quality: - How will fitness for purpose of the deliverables and management processes be assured?
Examples of projects may include the construction of a new bridge or building or developing software for an improved business process. A relief effort for a natural disaster, or setting up a strategy to break into a new sales geographic market are also projects.
Definition of Project Management
To define Project Management, one must define a project. Anything that has a start, a finish and produces a deliverable is a Project. Project Management, therefore, is the method by which a project is planned, monitored, controlled and reported on, in other words, managed.
Project Management is the process of enforcing the team work to achieve the goals at a time constraint. The primary challenge of project management is to accomplish all the project tasks within the given time period. This information is usually described in project documentation, created at the initial of the development process. The initial constraints are scope, time and budget. The secondary challenge is to utilize the sharing of necessary inputs and apply them to meet pre-defined goals.
A key factor that differentiates project management from just " management" is that it has this final deliverable and a definite time period, unlike management which is an ongoing process. Because of this a project professional needs a large range of skills, often technical skills and certainly people management skills and good business awareness.
Project Management is the art of arranging all the components of a project. For example, the launching of a new service, a marketing campaign, or the development of a new product are projects. In fact, even arranging a wedding is a project that requires management.
Project management is one of those things that looks easy until we try it. Below are the top ten needs of project management that will help us to answer the above arising questions.
a) Control scope creep and manage change: - Small changes in demands occur on every project. They come from management, the customer, our project team, suppliers or other shareholders. Individually, they may be acceptable, but as a whole these project demands can add up to an important project expansion (referred to as "scope creep" which can overturn our budget.
b) Deliver project results on time and on budget: - The project management process starts with a well thought out business case justification that generally comprises some type of cost calculation associated with Return on Investment (ROI). After these measures are established, the project manager ensures that on time, on budget performance is maintained, otherwise the project will never give the desired results.
c) Focus the project team on the solution: - The project team can easily go off the topic and spend their valuable time on the wrong tasks. A good project manager keeps the project team focused by using an intelligible and incisive project charter, sort out hurdles or cover the team work from unwanted difficulties.
d)Obtain project buy-in from disparate groups: - A good project manager uses the tools in the fundamental stage of project management to collect user requirements, project constraints and a feasibility study to build a strong business case justification. Utilizing input from various sources, the project manager overcomes dissent and obtains buy-in by communicating the project benefits as the different shareholders groups see them.
e) Define the critical path to optimally complete your project: - Every project is made up of a chapter of attached activities, each of which has its own limitations. The project manager identifies the critical path of activities - the optimal sequence of actions that best warrant the projects successful completion.
f) Provide a process for estimating project resources, time and costs: - Making use of project management software, earlier project experiences and a solid project fundamental stage can provide the discipline needed to decrease project estimating wrongs, increasing the likelihood that the project will finish on time and on budget.
g) Communicate project progress, risks and changes: - As a project progresses, shareholders must be kept informed of the outcomes, changes, etc. The need for project management exists partly because it creates a project communication plan to address these communication issues, provide a format and lay out a process for execution.
h) Surface and explore project assumptions: - Every project is based, to some extent, on assumptions. A good project manager searches into user requirements, project limitations and management expectations to understand what is said and not said.
i) Prepare for unexpected project issues: - Every project runs into unforeseen issues such as changes in market conditions and is hit with sudden cause variability. Accomplished project managers plan for the unexpected by lining up other courses of action.
j) Document, transfer and apply lessons learned from your projects: - The last phase of project management centre on "closing out" the project. The project manager reviews how well each prior phase - project initiation, project planning, project execution and project monitoring and control was performed.
Characteristics of Project Management: -
Nowadays, project management is regarded as a very high priority as all companies or organizations, whether small or large, are at one time or another involved in implementing new undertakings, creativities and changes.
Effective project management call for having the following attributes that are necessary in becoming an effective project manager.
a) Effective communication skills: - The project manager must vividly explain the project goals as well as each member's tasks, responsibilities, expectations and feedback.
b) Strong leadership skills: - The project manager must have strong leadership qualities such as power to motivate his team to give the best performance to accomplish the goals.
c) Good decision maker: - The project manager must have decision making skills as there will always have some important decisions that need to be acted on.
d) Technical expertise: - An effective project manager needs to have sound technical knowledge to understand the issues that are related to the technical aspect.
e) Inspires a shared vision: - An effective project manager can lead his team to the right direction if he can eloquent the vision to his team members very well.
f) Team building skills: - Project managers need to know how to give the team work the importance they need by focusing on their positive attributes. He has to be fair and just in the way he treats them.
g) Cool under pressure: - As the project continues, certain incidents could take place on the project's momentum which could test the manager's patience. Therefore, it is essential that a project manager keeps his patience at each step and not to lose himself that could adversely affect his relationship with the team.
h) Good negotiation skills: - In times, conflicts could arise due to differences in opinion, project managers need absolute negotiating skills to sort out the issue and maintain harmony and peace.
i)Empathetic: - Being grateful, understanding and caring are a few of the things that an empathetic leader shows to his members. It includes understanding the needs of the project and its shareholders.
j) Competence: - What a good manager is performing can initiate new projects as well as face the challenges that come with them.
It is essential for an effective project manager to have these characteristics for him to succeed in managing the project.
Importance of Project Management: -
Project management may seem like a loose term used to describe the management of projects. However, projects tend to be complex and multifaceted, in need of effective planning, organization and monitoring.
'Why is project management important?' is an interesting question that clients sometimes ask. They wonder if they really need project management because on paper it looks like an unnecessary tax and overhead as project managers don't really deliver anything and often get in the way of what they want the team to do.
Here, we have some of the importance of project management: -
a) Strategic alignment: - Project management is important because it makes sure what is being delivered, is right, and will deliver real value against the business opportunity. Every client has strategic goals and the projects that we do for them advance those goals.
b) Leadership: - Project management is important because it brings leadership and direction to projects. Without project management, a team can be like a ship without a rudder, moving but without direction, control or purpose. Leadership allows and enables team members to do their best work.
c)Clear focus & objectives: - Project management is important because it makes sure there's a proper plan for executing on strategic goals. Where project management is left to the team to work out by themselves, we will find teams work without proper briefs and without a defined project management methodology. Projects lack focus, can have vague or nebulous objectives, and leave the team.
d) Realistic project planning: - Project management is important as it warrants proper expectations are set around what can be delivered, by when, and for how much. Without proper project management, budget estimates and project delivery timelines can be set that are over ambitious or lacking in analogous estimating insight from similar projects.
e) Quality control: - Projects management is important because it warrants the quality of whatever is being delivered, consistently hits the mark. Without a dedicated project manager, tasks are under estimated, schedules tightened and processes rushed. The result is bad quality output as there's no quality management in place.
f) Risk management: - Project management is important as it warrants risks are properly managed and mitigated against to avoid becoming issues. Risk management is critical to project success. The temptation is just to sweep them under the carpet, never talk about them to the client and hope for the best.
g) Orderly process: - Project management is important as it warrants the right people do the right things at the right time -it makes sure proper project process is followed throughout the project lifecycle.
h) Continuous oversight: - Project management is important as it warrants a project's progress is tracked and reported properly. Continuous project oversight confirms that a project is tracking properly against the original plan, is critical to ensuring that a project stays on track.
i) Subject matter expertise: -Project management is important because someone needs to be able to understand if everyone's doing what they should. Project managers from their past experience will know a bit of delivering the projects they manage. They will build technical skills and subject matter expertise, they will know everything about the work that their teams execute, the platforms and systems they use etc.
j) Managing and learning from success and failure: - Project management is important because it learns from the successes and failures of the past. Project management can break bad habits and when one delivering projects, it's important not to repeat the same mistakes. Project managers use retrospectives, lessons learned, or upcoming project reviews to see what went fine, what didn't go so fine and what should be done in other way for the next project.
Key Takeaways:
Need for Project Management
While preparing project, view project into these three perspectives, it helps to give much better understanding of the whole process
1) How does project fit into the organization?
2) How the project will evolve over time?
3) What skills are required to manage the project successfully?
Let us have a closer look regarding the objectives of project management:
Functions of Project Management
As shown in the definition, planning, and control capabilities continue throughout the project. No matter how well your project is defined or planned, it is important to be aware that in the course of your project, changes may occur that require changes to scope, costs, schedules, or other constraints. In that case, the project manager reviews the activities contained in the project definition and plan.
Key takeaway:
Selection, Definition, Planning, Control, Risk Management, Quality Management, Close Out.
Principle 1: Project Objectives
In this principle of project management is understanding the objective.
In other words what you hope to accomplish or what’s the purpose of this initiative?
Determining what you intend to accomplish that will help you develop your overall project structure moving forward.
Develop project SMART goals. These goals need to be specific, measurable, achievable, relevant, and timely.
Determining your objective will also help you understand what deliverables you’ll need to complete to achieve your goals.
Principle 2: Budgeting
Once you determine the project, objective and goals begin planning how to accomplish your mission.
At this point, discover the constraints will affect your ability to achieve your project by the way you planned. One of those big constraints is your budget.
When you have your approved the budget consider the project priorities and determine which aspects are essential and which can be reduced or eliminated to still reach your goal.
Principle 3: Schedule and Estimate
Time is essential to develop a comprehensive calendar and work estimate for your project.
Developing a detailed schedule depicts the actual man hours is there at disposal, it also displays the difference in scope between a fully designed solution or just a minimum viable product.
The budget also plays major role in your overall project scope.
Principle 4: Milestones
Milestones signify the completion of your project
For instance, in an Agile, Scrum, or Kanban project management methodology, a milestone might be when specific cards in a larger project are removed from the board.
A transparent way to track progress, milestones can help increase team morale by calling out team member achievements.
Principle 5: Accountability and Responsibility
This principle of project management is important both for the project manager and each member of the team.
While the project manager will have a specific skill set to keep the team on task, all members of the team also need to hold themselves and each other accountable for the work they need to accomplish.
One of the best practices is through constant communication. Team members will need to communicate with each other about what they need and when they need it.
Project managers will need to communicate with stakeholders to provide necessary updates on the status of projects, and they’ll also need to relay any information or feedback back to their teams so there are no surprises.
Principle 6: Retrospect and Success
Key Takeaways:
In this principle of project management is understanding the objective.
Once you determine the project, objective and goals begin planning how to accomplish your mission.
Projects in this category are those which spring to mind most readily whenever industrial projects are mentioned. Once common feature is that the fulfilment phase must be conducted on a site that is exposed to the elements, and usually remote from the contractor's main office.
These projects incur special risks and problems of organisation. They often require massive capital investment, and they deserve (but do not always get) rigorous management of progress, finance, and quality.
b. Manufacturing Projects
Manufacturing projects aim to produce a piece of equipment or machinery, ship, aircraft, land vehicle or some other item of specially designed hardware.
The finished product might be purpose-built for a single customer, or the project could be generated and funded from within a company for the design and development of a new product intended for subsequent manufacture and sale in quantity.
Manufacturing projects are usually conducted in a factory or other home-based environment, where the company should be able to exercise on-the-spot management and provide an optimum environment.
Some manufacturing projects can involve work away from the home base, for example in installation, commissioning and start-up, initial customer training and subsequent service and maintenance. More difficult is the case of a complex product (such as an aircraft) that is developed and manufactured by a consortium of companies, very possibly overlapping international borders, with all the consequent problems of risk, contractual difficulties, communication, coordination, and control.
c. Management Projects
This class of projects proves the point that every company, whatever its size, can expect to need project management expertise at least once in its lifetime. These are the projects that arise when companies relocate their headquarters, develop and introduce a new computer system, launch a marketing campaign, prepare for a trade exhibition, produce feasibility or other study report, restructure the organisation, mount a stage show, or generally engage in any operation that involves the management and co-ordination of activities to produce an end result that is not identifiable principally as an item of hardware or construction.
Although management projects might not result in a visible, tangible creation, much often depends on their successful outcome. There are well-known cases, for instance, where failure to implement a new computer system correctly has caused serious operational breakdown and has exposed the managers responsible to public discredit. Effective project management is at least as important for these projects as it is for the largest construction or manufacturing project.
Key Takeaways:
Project failure mostly depends on the moment of time it occurs and the severity and consequences of the failure.
The reasons for project failure are:
Poor leadership
Leadership is critical – and a common success or failure point. The project manager can't go around complaining about the team being out of control.
The team shouldn't be left feeling that they don't know what to do or expect from one day to the next – it's a huge recipe for failure.
Make sure everyone knows what is expected of them, and hold them accountable for reaching those goals or completing those tasks.
Sometimes the team members who are consistently underperforming, haven't responded to feedback, and things are just not working - then there still lies a responsibility to raise the flag that you need to replace a team member or team members and the push to make that happen.
No team ownership
Project managers and the team must own the projects that they are working on.
Budget management
Scope oversight
Scope is one of those four letter words we usually struggle with and try to avoid bringing up unless we absolutely must. The worst thing that can happen is for the project manager to ignore the scope management part of his responsibilities, as the end result will usually be a project that experiences extra, non-paid and unplanned work driving the project over budget and over time.
Inadequate documentation and tracking
Inadequate documentations and tracking are the responsibility of the project manager. How you are going to know whether you are meeting expectations is known by tracking milestones. PM identify where they need more resources to complete a project on time by proper recording and monitoring.
Lack of preparations
You need to possess a transparent idea of what you're trying to try to. Otherwise, you'll end up upstream without a paddle. You would like to understand what your project's success will appear as if first. And you will not lose specialise in your project. If you do not have a transparent focus early within the process, you are making things difficult on your own. Even within the end of the day, meet with stakeholders to debate costs, time, and expectations for product quality. Understand the way to perform tasks to satisfy everyone's expectations.
Failures to define parameters and enforce them
It is imperative that the project manager work well with the team. If the task or goal does not meet the criteria, it should have an impact. Rank tasks by priority and assign them to the most skilled individuals.
Inexperienced Project Managers
You need to possess a transparent idea of what you're trying to try to. Otherwise, you'll end up upstream without a paddle. you would like to understand what your project's success will appear as if first. And you will not lose specialise in your project. If you do not have a transparent focus early within the process, you are making things difficult on your own. Even within the end of the day, meet with stakeholders to debate costs, time, and expectations for product quality. Understand the way to perform tasks to satisfy everyone's expectations.
How to Avoid these Common Causes
These are common reasons for project failure. Proper employee training, project management software, and management transparency lead to project success. Finding the right project management software is one of the easiest steps to get your project right and successful. These tools are essential to eliminate project failures. Users can easily manage tasks such as time tracking, cost tracking, and cost estimation. You can also increase your chances of a successful project by paying attention to the above causes.
Key Takeaways:
Project managers and the team must own the projects that they are working on.
3. Project Managers should not lack managing project financials
4. Scope is one of those four letter words we usually struggle with and try to avoid bringing up unless we absolutely must.
5. You need to possess a transparent idea of what you're trying to try to. Otherwise, you'll end up upstream without a paddle.
A project life cycle is the sequence of phases that a project goes through from its initiation to its closure. The number, the sequence of the cycle is determined by the management and various other factors like needs of the organization involved in the project, the nature of the project, and its area of application.
The phases have a definite start, end, and control point and are constrained by time. The project lifecycle can be defined and modified as per the needs and aspects of the organization.
The Initiation Phase: Starting of the project
The Planning Phase: Organizing and Preparing
The Execution Phase: Carrying out the project
The Monitoring and Controlling Phase
The Termination Phase: Closing the project
The Initiation Phase:
The initiation phase aims to define and authorize the project. The project manager takes the given information and creates a Project Charter. The Project Charter authorizes the project and documents the primary requirements for the project. It includes information such as:
Project’s purpose, vision, and mission
Measurable objectives and success criteria
Elaborated project description, conditions, and risks
Name and authority of the project sponsor
Concerned stakeholders
The Planning Phase:
The purpose of this phase is to lay down a detailed strategy of how the project has to be performed and how to make it a success. Project Planning consists of two parts:
In strategic planning, the overall approach to the project is developed. In implementation planning, the ways to apply those decisions are determined.
At this stage the most important activities are:
Split your project into smaller components (WBS)
Setting deadlines and presenting milestone charts
Consists of a Gantt chart showing work plans and deadlines
Resource estimation and collection
Definition of method and communication mode
Establish results and delivery for each step
Risk assessment and forecasting
The Execution Phase:
In this phase, the decisions and activities defined during the planning phase are implemented. During this phase, the project manager has to supervise the project and prevent any errors from taking place. The execution phase of a project can be quite time consuming and requires a lot of attention to the project manager. They direct the performance of the team and manage the technical and organizational aspects of the project. Project managers often carry out quality evaluation activities at this stage, either officially or informally. Then, using the estimation results, you need to do the following:
Correction activities to match team performance to the project plan.
Preventive action to anticipate and mitigate possible adverse effects associated with project risk.
Repair defects to resolve ongoing issues during the project, or stop project development altogether and change direction in a particular way.
Communication with stakeholders is an important part of the execution phase. Regular meetings with team members and stakeholders can help you avoid misunderstandings and better coordinate your work process for results. Of course, if the team is remote, this presents additional challenges to keep everyone up to date. Therefore, it is best to use the appropriate tools and techniques first.
Monitoring and Controlling Phase
The project monitoring and control phase is often implemented alongside the project execution phase. This happens shortly after the team gets the first deliverable or has already completed the work.
This phase aims to measure project development and its performance according to the project plan.
Key performance indicators (KPIs) are key measurable values at this stage that define the success of a project. Project KPIs are based on project reports that monitor:
Quality level
Budget allocation
Project schedule and deadline
And other values.
For effective performance during the monitoring and control phase of your project, we recommend that you automate the reporting process rather than assigning this task to a specific team member. For this you can use work management software such as time tracking apps, Gantt charts, burn-up and burn-down charts.
The Termination / Closing Phase
This is the last phase of any project, and it marks the official closure of the project.
The project manager can include the following activities at this stage:
We ensure that the project is implemented and that customers, product owners, and all stakeholders are satisfied with the results of the project and approve the end of the project.
Post-Meeting — A meeting at the end of the project that summarizes the feelings, opinions, and experiences of stakeholders gained during the project.
Dissolution of the team. This means that team members are ready to abandon this project and start a new one.
Celebrating achievement is an important team-building step in project management to encourage team members to participate in the next project and simply celebrate a well-done job.
Archive of project documents for further use as an example of other projects or other possible needs.
Cost Components
Cost Components
The inputs include
The output includes
Key Takeaways:
The Initiation Phase: Starting of the project
The Planning Phase: Organizing and Preparing
The Execution Phase: Carrying out the project
The Monitoring and Controlling Phase
The Termination Phase: Closing the project
3. In this phase, the decisions and activities defined during the planning phase are implemented
4. Cost is comparing baseline cost for each deliverable against the actual cost.
Project Management Book of Knowledge (PMBOK)
Project management knowledge areas coincide with the process groups, which are project initiation, project planning, project execution, monitoring and controlling, and project closing. These are the chronological phases that every project goes through.
The knowledge areas take place during anyone of these process groups. Think of the process groups as horizontal, while the knowledge areas are vertical. The knowledge areas are the core technical subject matter, which are necessary for effective project management.
Project Integration Management
Project integration management holds the project together, which includes such fundamental plans as developing a project charter that is created during the initiation phase. This is the document that sets up the project and assigns the project manager.
Another aspect of this area is the project roadmap for the project to reach a successful end. Once created, the project plan is approved by stakeholders and/or sponsors, and then it’s monitored and tracked through a change log as the project progresses.
The project integration area also includes the directing and managing of the project work, which is the production of its deliverables. This process is monitored, analyzed and reported on to identify and control any changes or problems that might occur.
Any change control will be carried out. That might require request forms, approval from stakeholders and/or sponsors or another admin. This area is also part of the project closure at the end of the project.
Project Scope Management
Scope relates to the work of the project. So, that includes plan scope management, which is part of the project management plan.
Validate scope during the project, which means making sure that the deliverables are being approved regularly by the sponsor or stakeholder.
C. This occurs during the monitoring and controlling process groups and is about accepting the deliverables, not the specs laid out during planning.
D. The scope statement is likely going to change over the course of the project to control the scope, such as if a project falls behind schedule.
Project Time Management
Once the schedule is made, plan to control the schedule are necessary. Earned value management is performed regularly to make sure that the actual plan is proceeding as it had been planned.
Project Cost Management
Project Quality Management
Project Human Resource Management
Project communication Management
Project communication management is that the process of designing, collecting, storing, and updating project information. This text is a component of a PMP learning guide that summarizes the knowledge areas of communication management.
The area of communication management knowledge that project managers spend most of their time. In fact, over 90% of project manager time is spent communicating.
The 3 processes within communication management are:
Risk Management
Risk is an uncertain event that may or may not occur in the future. Risk can be positive or negative. Risk management involves the process of identifying and analyzing new risks and planning and implementing risk response. There are seven processes in risk management, which are:
Procurement Management
If your project team can't create something in-house, you'll need to hire a third-party vendor to create it. The process required to acquire and manage a vendor is called procurement management.
The three processes of procurement management are as follows:
Stakeholder Management
A stakeholder is someone who is interested in (or has an interest in) a project. Stakeholder management involves the processes required to identify stakeholders in a project, analyze their power and impact, and develop appropriate strategies to effectively manage them.
The four processes that belong to stakeholder management are:
Identify stakeholders
Project management Institute and Certified Project Management Professionals (PMP)
PMI
PMP
Benefits
It serves as an unprejudiced endorsement of your Project Management knowledge and professional experience at a global level.
Its benefits include high market value, increased credibility and in many cases, a higher pay.
Key Takeaways:
Importance of organizational Structure in Management-
A project operates in with people, process and technology of an organization. Projects have an impact on the culture, policies, procedures and other aspects of an organization.
The organizational structure has a major influence on the execution of the project. The organizational structure decides the resources, communication methods and other aspects of project management.
Different types of organizational structures include:
Functional
Instead of product lines, organizational structures are arranged according to functional areas. Experts in a particular skill are grouped into separate units of functional structure. Ideal for organizations that manufacture certain uniform products. Organizations with a single major core product are best suited for functional structures, as all subunits of the structure will be specialized in performing a particular set of actions. This type of organizational structure is inflexible, but economically efficient. Different functional areas face difficulties in communicating with each other.
Functional or centralized structures are the most widely used because they are the cheapest and simplest of all other alternative organizational structures. Specific tasks and activities are assigned to different groups based on the specific capabilities of the organization, such as marketing, production, R & D, finance / accounting, and computer information systems. If the university decides to create a functional structure as an organizational structure, group its activities into the following functions:
There are certain other potential benefits related to the functional structure of an organization.
Divisional Structure
When an organization is divided into various self-contained business units, it shows a divisional structure in which each subunit of the organization acts as the center of profit. The sector structure is based on the market, the product, or a combination of both. Each department unit operates on specific basic functions such as finance, corporate planning, and human resources, and may also have several functional areas or product lines. Department units are typically centrally managed through the headquarters of the organization.
American companies used a decentralized sectoral structure. Expanding organizations find it difficult to manage different products and services in different markets. There are certain types of departmental structures that can be very helpful in managing operations, motivating employees and successfully competing in different locations. There are four ways to organize a departmental structure.
Functional activities are carried out both centrally and departmentally within the department structure.
There are obvious benefits related to the organizational structure of the department. The main advantage is clear accountability. This means that the department manager holds responsibility for the department's sales and profits. Extensive delegation of authority is the basis of the department structure, so employees and managers can easily see the results of bad or good performance. As a result, employee morale is increased, which is not possible with a centralized structure. In addition to these advantages, the split structure has several other advantages. Departmental managers have many career development opportunities. Local conditions are effectively managed on a department-by-department basis. The organization has a competitive environment. New products and businesses can be easily added by department structure.
There are some restrictions on the departmental design of the organizational structure. The main limitation is that it is very expensive for many reasons. The first reason is that each highly paid and rewarding departmental unit needs a functional specialist. Second, there is duplication in specific activities for each departmental unit, such as personnel, facilities, and staff services. Third, each high-paying department unit requires a qualified manager, as it requires proper delegation of authority effectively managed by qualified professionals. Another reason the department structure is expensive is the need to extend the headquarters-led control system. Another limitation of the departmental structure is that some customers, regions, or products require special treatment, making it very difficult for an organization to consistently maintain national practices. However, for most organizations, the benefits of departmental structure go beyond that limitation.
Strategic Business Structure
A Strategic Business Unit (SBU) has everything you need to be considered a complete corporate business entity, including a vision and mission statement, a specific external market with the right products and customers, and management of that business unit. The business unit is able to carry out strategic planning. If your organization grows to a very large scale, it is better to be involved in a strategic business unit structure.
Strategic factors that affect the performance of similar SBUs can be better controlled by large organizations. The SBU is considered a self-contained planning unit that requires the development of a separate business strategy. An SBU is a complete company with a particular product line and market, or a smaller unit of a particular company formed to perform a particular task. In addition, there are seven SBU competitors, individual objectives and strategies that are significantly different from those of the parent company.
As departments grow in size, number, and diversity, it becomes more difficult for strategists to manage and evaluate expanded departmental operations. Increasing sales volume does not improve profitability. At the top level of the organization, the scope of control is very large. For example, the CEO of a complex that includes 90 departments cannot remember the name of the department's president. Strategy implementation work is greatly facilitated by the multi-department SBU.
Similar SBUs are grouped as departments of the SBU, and delegation of authority and responsibility is given to senior management in each unit who reports directly to the CEO. This structural change makes it easier to implement strategies by improving coordination between different departments and making specific business units accountable.
There are two drawbacks associated with the SBU structure. First, salaries have increased due to the addition of a layer of management. Second, the role of Vice President of the Group is largely ambiguous. However, the advantages of SBU construction always outweigh the disadvantages.
Matrix
The matrix structure is the most complex of all other options because it is based on both horizontal and vertical flow of communication and authority. The structure of departments and functions, on the other hand, is based on the vertical flow of communication and authority. Due to the large number of managers in the matrix structure, the overhead is significantly increased. Other matrix structures that increase structural complexity, such as dual sources of punishment and reward, double lines of budget authority, dual reporting channels, shared authority, and potential and effective communication system requirements. Has certain features.
Although the matrix structure is very complex, it is still used in many industries such as healthcare, construction, defense and research. There are certain benefits related to the matrix structure, such as a clear purpose of the project, many communication channels, an employee's clear view of their performance, and an easy end to the project.
Authority/Responsibility Relation
In a balanced matrix, the power is equally balanced between the project manager and the functional manager.
Management by Objectives
Management by objectives (MBO) is a strategic management model that aims to improve organizational performance by clearly defining objectives that are agreed to by both management and employees.
According to the theory, having a say in goal setting and action plans encourages participation and commitment among employees, as well as aligning objectives across the organization.
The strategy was formulated by Peter Drucker in the 1950s, following five steps that organizations should follow.
Features:
Management by objectives (MBO) is the establishment of a management information system to compare actual performance and achievements to the defined objectives.
Practitioners claim that the major benefits of MBO are that it improves employee motivation and commitment and allows for better communication between management and employees.
However, a cited weakness of MBO is that it unduly emphasizes the setting of goals to attain objectives, rather than working on a systematic plan to do so.
In his book that coined the term, Peter Drucker, objectives are laid out with the help of employees and are meant to be challenging but achievable.
Employees receive daily feedback, and the focus is on rewards rather than punishment. Personal growth and development are emphasized, rather than negativity for failing to reach objectives.
Drucker believed MBO that it gives organizations a process, with many practitioners claiming that the success of MBO is dependent on the support from top management, clearly outlined objectives, and trained managers who can implement.
Key Takeaways:
References:
