Relationship of project to strategy of the business
Research paper on one of the following topics:
�Changing Organizational Priorities that change 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 project to 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
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: WALMART 2
Relationship of project to 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 project to the strategy of a business. The discussion is made
in relation to a specific project that was undertaken by Wal-Mart.
RELATIONSHIP OF PROJECT TO STRATEGY OF THE BUSINESS: WALMART 3
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 through 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 a 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
RELATIONSHIP OF PROJECT TO STRATEGY OF THE BUSINESS: WALMART 4
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
RELATIONSHIP OF PROJECT TO STRATEGY OF THE BUSINESS: WALMART 5
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 overall
strategy of the business informs project planning and project success in turn impacts 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
RELATIONSHIP OF PROJECT TO STRATEGY OF THE BUSINESS: WALMART 6
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 resources
needed for completing projects in future must be considered as a criterion for determining the
RELATIONSHIP OF PROJECT TO STRATEGY OF THE BUSINESS: WALMART 7
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 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 basing 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).
Past project undertaken by Wal-Mart
Wal-Mart is one of 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
RELATIONSHIP OF PROJECT TO STRATEGY OF THE BUSINESS: WALMART 8
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 of 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
- 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 prices of its products.
RELATIONSHIP OF PROJECT TO STRATEGY OF THE BUSINESS: WALMART 9
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 everyday low prices in
attracting shoppers (Helman, 2015). Through the idea of everyday 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, everyday 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 everyday
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 a
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
RELATIONSHIP OF PROJECT TO STRATEGY OF THE BUSINESS: WALMART 10
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).
Area that would present biggest challenge
In review of each of the Project Management aspects, one area that would be 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).
RELATIONSHIP OF PROJECT TO STRATEGY OF THE BUSINESS: WALMART 11
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).
RELATIONSHIP OF PROJECT TO STRATEGY OF THE BUSINESS: WALMART 12
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.
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 proper return on
investments.
RELATIONSHIP OF PROJECT TO STRATEGY OF THE BUSINESS: WALMART 13
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