PROJECT MANAGEMENT

MODULE – 3
 TYPES OF ORGANIZATIONAL
PROJECTS

 Green Field Project

 Brown Field Projects
 Expansion Project
 Integration Project
 Diversification Project
 Modernization/ Replacement Project
 Divestment Project
 Capital Allocation
If we analyze the size and scale of most of the organization, it
seems to be large and widely spread.
And the requirement of the investment is immense.
But the availability of the capital is limited and a company cannot
invest this into each and every project. So they need to be
selective and decide judiciously and strategically.
And thus we require the techniques of capital budgeting to
implant.
 CAPITAL BUDGETING
●
Promising growth
Stage 1 opportunities identified through
Strategic Planning Techniques

●
Individual Investment
Stage 2 Proposal are Analyzed &
Evaluated
 STRATEGIC PLANNING
Strategy is well defined as “the determination of the basic
long term goals and objectives of an enterprise, and the
adoption of courses of action and the allocation of
resources necessary for carrying out those goals.
Strategic planning is an organization's process of defining
its strategy, or direction, and making decisions on
allocating its resources to pursue this strategy, including
its capital and people.
STRATEGIC PLANNING TECHNIQUES

 PORTFOLIO STRATEGIES

 BCG Matrix
 GE’s Stoplight Matrix
 SPACE
 SBUs
A business unit within the overall corporate identity
which is distinguishable from other business because it
serves a defined external market where management can
conduct strategic planning in relation to products and
markets.
A SBU can be one or more company division, a product
line within a division, or sometimes a single product or a
brand.
 CHARACTERISTICS OF SBUs
 It is a Single Business
 It can be placed independently of other Businesses.

 It has a distinct mission

 It has its own Competition
 It has a Responsible Manager
 It controls certain Resources

 It can be benefitted from Strategic Planning

 HUL’s SBUs
 Personal wash
Lux. Lifebuoy, Liril , Hamam, Breeze, Dove, Pears and Rexona
 Laundry
Surf Excel, Rin and Wheel
 Foods
Kissan, Annapurna, Knorr
 Ice-cream
Kwality Wall's
 Tea
Brooke bond, Lipton
 Coffee
Brooke bond, Bru
 BCG GROWTH SHARE MATRIX

HIGH
Market
Growth
Rate LOW

HIGH LOW
Relative Market Share
 GE Mc KINSEY MATRIX
 In consulting engagements with General Electric in the 1970’s,
McKinsey & Company developed a nine-cell portfolio matrix as a tool
for screening GE's large portfolio of strategic business units (SBU).
 This business screen became known as the GE-McKinsey Matrix.
 The GE McKinsey matrix is similar to the BCG matrix in that it maps
strategic business units on a grid of the industry and the SBU's position
in the industry.
 The GE matrix however, attempts to improve upon the BCG matrix in
the following two ways:
The GE matrix generalizes the axes as “Industry Attractiveness" and
“Business Unit Strength" whereas the BCG matrix uses the market
growth rate as a proxy for industry attractiveness and relative market
share as a prow for the strength of the business unit.
The GE matrix has nine cells vs. four cells in the BCG matrix
 SPACE
The SPACE matrix is a management tool used
to analyze a company.
It is used to determine what type of a strategy
a company should undertake.
The Strategic Position & Action Evaluation
matrix or short a SPACE matrix is a strategic
management tool that focuses on strategy
formulation especially as related to the
competitive position of an organization.
Unlike to the techniques we have discussed
till now, the SAPCE is four dimensional
analysis.
I. Company’s Competitive Advantage
Market share
Product quality
Product life cycle
Customer loyalty
Capacity utilization
Technological know how
Vertical integration
New product introduction
 II. Company’s Financial Strength
Return on investment ROI
Leverage
Liquidity
Capital requirements
Cash flows
Exit from markets
Economies of scale
 III. Industry Strength
Growth potential
Profit potential
Capacity intensity
Ease of entry into the market
Financial stability
Resource utilization
Technological know how
 IV. Environmental Stabilty
Inflation
Economic condition
Demand variability
Price range of competing products
 Application of SAPCE
It involves following steps
I. Numerically assign values to firms
factor which having a bearing on the
four dimensions.
 The scale for factors relating to Company’s
financial strength and Industry strength
may be from 0 to 7.
 With 0 reflecting the most unfavorable assessment and
7 most favorable assessment.
 The scale for factors relating to Company’s
Competitive advantage and Environmental
stability may be from -7 to 0.
 With -7 reflecting the most unfavorable assessment
and 0 most favorable assessment.
 Application of SAPCE
II. Average the values assigned to the
factors to get numerical value for each
dimension.
III. Plot the scores for the Four
Dimensions on the Axes of the
SPACE chart.
IV. Connect the scores so plotted to get a
Four-Sided Polygon, reflecting the
size and the direction of assessment.
 FS

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SPACE & Generic
Strategies
 FS
Status Quo Concentric Diversification

Conglomerate Concentration
Diversification
COST
FOCUS
LEADERSHIP Vertical
Diversification Integration
CONSERVATIVE AGGRESIVE
CA IS
DEFENSIVE COMPETITIVE
Divestment GA Concentric
M ON Merger
ES T I
M TI A
AN R N
Liquidation SH FE
I P I F Conglomerate
D Merger
Retrenchment
ES Turnaround
 MARKET GROWTH RATE
 Market growth axis, correlates with the product life
cycle pattern, and predicts the cash requirement a
business needs relative to the growth of that market.
 A fast growing market is generally considered
attractive and pulls a lot of organization’s resources in
an effort to increase gains.
Industry Sales this Year - Industry Sales last Year
Industry Sales last Year
 RELATIVE MARKET SHARE
 Here we analyze the business unit by comparing it against its
competitors.
 This is linked with the experience curve phenomenon that
when a business conducts its operations overtime, it develops
new ways in performing those task better which results in
lowering the operation cost.
 Thus the company have a cost advantage over its competitors
and enjoys a high relative market share.
SBU Sales this Year
Leading Competitors Sales this Year