CIMA REVISION CARDS Integrated Management David Harris Managerial Level Paper P5
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OXFORD TOKYO
Elsevier Butterworth-Heinemann Linacre House, Jordan Hill, Oxford OX2 8DP 30, Corporate Drive, Burlington, MA 01803 First published 2005 Copyright ß 2005, Elsevier Ltd. All rights reserved No part of this publication may be reproduced in any material form (including photocopying or storing in any medium by electronic means and whether or not transiently or incidentally to some other use of this publication) without the written permission of the copyright holder, except in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of a licence issued by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London, England W1T 4LP. Applications for the copyright holder’s written permission to reproduce any part of this publication should be addressed to the publisher. Permissions may be sought directly from Elsevier’s Science & Technology Rights Department in Oxford, UK: phone: (+44) 1865 843830, fax: (+44) 1865 853333, e-mail:
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Welcome to CIMA’s Official Revision Cards. These cards have been designed to:
. . . . .
Save you time by summarising the syllabus content in a concise form Jog your memory through the use of diagrams and bullet points Follow the structure of the CIMA Official Study Systems Refer to relevant questions found within the Preparing for the Examination section of the study system Provide you with plenty of exam tips and hints
Ensure exam success by revising with the only revision cards endorsed by CIMA.
TABLE OF CONTENTS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.
The nature of strategic management ............................................... Strategy, structure and culture ...................................................... Contemporary thinking on strategy ................................................. Projects................................................................................. People and projects................................................................... The project management process................................................... Identifying and selecting projects ................................................... Performing the project................................................................ Project management tools ............................................................ Management............................................................................ Management of groups................................................................ Control systems in organisations..................................................... Conflict and discipline .................................................................
1 19 35 43 49 53 57 61 67 75 85 93 99
The Nature of Strategic Management
Topics
Key study system questions 12 20 23
External influences Conflicting objectives Levels of strategy
. . . . . . .
What is strategy? The rational model of strategy development Alternatives to the rational model Resource-based vs. positioning views Stakeholders Mission and objective setting Competing objectives and governance 1
The Nature of Strategic Management
What is strategy?
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Common themes in strategy It is about the purpose and long-term objectives of the business It is concerned with meeting the challenges from the firm’s business environment It involves using the firm’s resources effectively, and building on its strategies to meet environmental challenges It is ultimately about delivering value to the people who depend on the firm, its stakeholders, such as customers and shareholders
Definitions Strategy – a course of action, including the specification of resources required, to achieve a specific objective Strategic plan – a statement of long-term goals, along with a definition of the strategies, which will ensure achievement of these goals
Study tip Many exam questions will look at the common themes opposite. Make sure you understand the issues involved
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–––––––––––––––––––––––––––––––––– The Nature of Strategic Management
What is strategy? The elements of strategy
You need to be able to discuss these three ‘aspects’ of strategy
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The Nature of Strategic Management
What is strategy? Organisation chart showing corporate, strategic business unit and functional strategies
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–––––––––––––––––––––––––––––––––– The Nature of Strategic Management
Functional strategy K
Acquisitions, mergers, sell-offs, or closure of strategic business units Conduct of relations with key external stakeholders Decisions to enter new markets, or embrace new technologies Corporate policies on public image, employment practices or information systems
Long-term management policies for individual functional areas (e.g. sales, production)
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Corporate strategy K
What is strategy?
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Marketing issues, such as product, price, promotion, place Decisions on production technology Staffing decisions
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Business strategy
These are just examples of the three levels of strategy. You need to be able to identify others in a scenario, and discuss them
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The Nature of Strategic Management
The rational model of strategy development A model of a rational strategy process
Study tip Make sure you understand, and can reproduce, this diagram
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–––––––––––––––––––––––––––––––––– The Nature of Strategic Management
The rational model of strategy development
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Stages in the rational model Mission and objectives Position audit Environmental analysis Corporate appraisal Strategic option generation Strategy evaluation and choice Strategy implementation Review and control
Study tip You need to know the issues that arise at each of these stages. Exam questions might ask about one or more
And also You might link the ‘strategic planning tools’ to each of the stages of the rational model; for example, PEST analysis and the competitive forces model are both used in environmental analysis
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The Nature of Strategic Management
Alternatives to the rational model
Organisations are incapable of having objectives Senior management should not be the only people involved in setting strategy In reality, strategy setting is not a simple, step-by-step process The strategies firms follow are not the same as the ones they set out in their plans Strategy is not something decided in advance by managers Strategy should not be a rational process
Alternatives Definitions Emergent strategies – patterns or consistencies realised despite, or in the absence of, intentions Logical incrementalism – a manager maps where he or she wants the organisation to go, and then proceeds towards it in small steps, being prepared to adapt if the environment changes or support is not forthcoming
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Criticisms of the rational model
This is sometimes known as ‘muddling through’, though logical incrementalism can be a deliberate strategic approach 8 —————————————————————————————————————————
–––––––––––––––––––––––––––––––––– The Nature of Strategic Management
Features
Drawbacks
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Formal business strategy
Designated team Formal information system for strategy Collective decision taking A communication and implementation process Regular review
Not dynamic Not radical or innovative Difficult to implement Loss of entrepreneurism Impossible in uncertain environment Too expensive and complex for small businesses
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Benefits Avoids short-termism Helps issue identification Goal congruence Improved stakeholder perception Basis for strategic control Develops potential and ensures continuity
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The Nature of Strategic Management
Positioning view
However, the resource-based view has been criticised because:
Believes that supernormal profits result from:
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Resource-based vs. positioning view
High market share, A differentiated product, or Low costs
Resource-based view
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Believes that supernormal profits result from the possession of unique skills or resources, and that the positioning view is invalid because: Competitive advantage is not sustainable Environments are too dynamic to position in It is easier to change the environment than to change the firm
It conflicts with the conventional product/ market-based view of strategy It challenges the rational model It conflicts with the notion of network organisations, as managers would not wish to share core competences
Study tip This debate is quite examinable. Make sure you understand the issues
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–––––––––––––––––––––––––––––––––– The Nature of Strategic Management
Stakeholders Definition Stakeholders – groups or individuals having a legitimate interest in the activities of an organisation
Study tip Make sure you understand, and can apply, the Mendelow matrix. It is a key stakeholder management tool
Mendelow’s Power–interest Matrix KKKKKKK
Stakeholders include Shareholders and other investors Management Employees Customers Suppliers Local community Government
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The Nature of Strategic Management
Mission and objective setting A goal structure
Study tip Make sure you understand, and can apply, this diagram
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–––––––––––––––––––––––––––––––––– The Nature of Strategic Management
Terminology
13 —————————————————————————————————————————
The Nature of Strategic Management
Terminology
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Mission Provides a basis for planning decisions Assists in translating purpose into objectives Encourages goal congruence Supports ethical behaviour Improves understanding of external stakeholders
Study tip These topics are all very examinable
Remember that objectives perform five functions (‘PRIME’):
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Should be ‘SMART’: Specific Measurable Attainable Relevant Time-bound
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Objectives
Planning Responsibility Integration Motivation Evaluation
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–––––––––––––––––––––––––––––––––– The Nature of Strategic Management
Critical success factor analysis
Definition Critical Success Factor (CSF) – the limited number of areas in which results, if they are satisfactory, will enable successful competitive performance
Critical success factors and key performance indicators
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The Nature of Strategic Management
Conflict occurs
Conflict solutions
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Competing objectives
Between financial and non-financial objectives Between profit maximisation and other goals Between the objectives of different stakeholders
Study tip Identify your own specific examples of stakeholder conflict
Prioritisation Weighting and scoring Creation of composite measures Satisficing Sequential attention Side payments Exercise of power
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–––––––––––––––––––––––––––––––––– The Nature of Strategic Management
Treadway and COSO
Rutteman
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Corporate governance reports
Audit committee Non-executive directors
Statement of directors’ responsibilities
Greenbury
Openness, integrity, accountability Guidance on reporting Audit procedures and report
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Cadbury Directors’ pay Remuneration committee
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Hampel Produced the ‘combined code’
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The Nature of Strategic Management
Corporate governance
Directors Remuneration Shareholder relations Accountability and audit
Study tip
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The Combined Code principles cover the following areas:
Try to relate the corporate governance rules in these four areas to potential conflicts between stakeholders
Note that corporate governance was necessary because of conflicting objectives
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Strategy, Structure and Culture
Topics
Key study system questions 15 17
Structure Meeting customer needs
. . . . . .
Strategy and structure Conventional structures Mintzberg’s structural configurations Organisational culture Improving effectiveness The network organisation 19
Strategy, Structure and Culture
Strategy and structure ‘structure follows strategy’ (Alfred Chandler)
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––––––––––––––––––––––––––––––––––––– Strategy, Structure and Culture
Structural characteristics
Structure depends on: KKKKK
Contingency theory
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Basic theory
Size Technology People Past experience and pattern of ownership Environment
Specialisation Standardisation Formalisation Centralisation Configuration
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Strategy, Structure and Culture
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Conventional structures Entrepreneurial Functional Divisional Matrix Complex
Study tip You need to know the advantages and disadvantages of each of the structures
And also You might be asked to recommend a change from one structure to another. Use a ‘contingency approach’ to select the most appropriate structure
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––––––––––––––––––––––––––––––––––––– Strategy, Structure and Culture
Conventional structures
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Advantages of entrepreneurial structure
Entrepreneurial structure
Flexibility Close control Speed of reaction to environmental change
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Disadvantages of entrepreneurial structure Span of control widens with growth Lack of formal elements may lead to de-motivation because of unclear roles
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Strategy, Structure and Culture
Disadvantages of functional structure
Advantages of functional structure KKKKKKKK
Functional structure
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Conventional structures
Requires cross-functional coordination Communication overload Inefficient integration Unclear responsibility for overall outcomes Interdepartmental conflicts Little creativity and innovation Difficult to identify unprofitable products
Specialisation Improved quality Division of labour Expert management Career structure Better communication between experts No duplication Suits stable environments 24
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––––––––––––––––––––––––––––––––––––– Strategy, Structure and Culture
Conventional structures
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Advantages of divisional structure
Divisional structure
Provides coordination across functional departments Employees identify with the product Suitable to dynamic environments
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Disadvantages of divisional structure Duplication of resources Isolation of specialists Competing demands lead to stress Coordination across divisions is difficult
25 —————————————————————————————————————————
Strategy, Structure and Culture
Conventional structures Advantages of matrix structure KKKKK
Matrix structure
Improved decision-making Direct contact rather than formal control Good for management development Improved coordination and communication Balances customer/product needs with specialist expertise
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Disadvantages of matrix structure Lack of clear responsibility Clash of priorities Functional specialists may lose contact Can limit career development Employee confusion Each member has two managers Management time wasted in meetings 26 —————————————————————————————————————————
––––––––––––––––––––––––––––––––––––– Strategy, Structure and Culture
Mintzberg’s structural configurations
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Five components Strategic apex Middle line Operating core Technostructure Support staff
Study tip Make sure you understand, and can discuss, the features, strengths and weaknesses of all the different structural forms
And also You might be asked to recommend a change from one structure to another
27 —————————————————————————————————————————
Strategy, Structure and Culture
Simple Machine bureaucracy Professional bureaucracy Divisionalised form Adhocracy
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Five structural configurations
You need to be able to draw the different diagrams using the notation proposed by Minzberg
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––––––––––––––––––––––––––––––––––––– Strategy, Structure and Culture
Organisational culture
Definition Culture – the way we do things around here
Study tip Culture can be seen as the informal aspects of structure
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A strong culture will Strengthen behaviour and norms Minimise perceptual differences Reflect the philosophy and values of the founder Have a significant effect on strategy and responsiveness
29 —————————————————————————————————————————
Strategy, Structure and Culture
McKinsey 7-S framework
Ouchi
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Organisational culture
Systems Structure Style Strategy Staff Skills Shared values
Theory A Theory J Theory Z
30 —————————————————————————————————————————
––––––––––––––––––––––––––––––––––––– Strategy, Structure and Culture
Organisational culture Peters and Waterman (the excellence principles)
Tough guy macho Work hard, play hard Bet your company Process
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Deal and Kennedy
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Harrison Power Role Task Person
A bias for action Close to the customer Autonomy and entrepreneurship Productivity through people Hands on, value driven Stick to the knitting Simple form, lean staff Simultaneous loose tight properties
Study tip Don’t just learn these points, make sure you can identify cultures and ‘excellence characteristics’ in descriptions of organisations
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Strategy, Structure and Culture
Centralisation
Decentralisation
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Improving effectiveness
Improved control Goal congruence Reduced risk Better co-ordination of activity Strong leadership and direction Faster decisions in a crisis
Lower costs of bureaucracy Parts of organisation adapt to local conditions Increased flexibility Senior managers concentrate on strategy Lower supervision may mean fewer managers Better motivation of lower level managers Better innovation and creativity Improved entrepreneurship
Study tip In order to optimise performance, the organisation must achieve the right balance between centralisation and decentralisation of authority
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––––––––––––––––––––––––––––––––––––– Strategy, Structure and Culture
The network organisation
Network organisations – organisations that rely on relationships with other organisations in order to carry out their work
Asset specificity KKKKKK
Definition
Site specificity Physical asset specificity Human asset specificity Dedicated asset specificity Brand name capital specificity Temporal specificity
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Forms of network relationship Contract staffing Use of specific capital assets Outsourcing Reliance on outsiders
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Contemporary Thinking on Strategy
Topics Key study system questions 11 13 25
Social responsibility Forward-looking information Virtual organisations
. . . . . .
Trends in management and structure New patterns of employment Competition – the five forces model An ecological perspective Social responsibility Ethics 35
Contemporary Thinking on Strategy
Trends in management and structure
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Changes in the business environment Multinational organisations Saturated markets Global markets Deregulation Increasing competition Flatter, leaner organisations Network organisations Global and international structures
Study tip These issues are more likely to form the background to a question, rather than be the topic of the question itself. Think about the impact of these issues on the organisation
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––––––––––––––––––––––––––––––––––– Contemporary Thinking on Strategy
Impact of flexibility on employment
Shamrock organisation (Handy)
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New patterns of employment
Contract-based flexibility Time-based flexibility Job-based flexibility Skill-based flexibility Organisation-based flexibility Pay-based flexibility
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Flexible time arrangements Flexible working hours Compressed hours Job sharing
Core (indispensable people) Interface (flexible labour force) Suppliers (outsourced key services)
Study tip Handy’s shamrock structure is just one example of how a flexible organisation might work; you should think of examples where this type of structure would be appropriate
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Contemporary Thinking on Strategy
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Competition – the five forces model Rivalry Bargaining power of suppliers Bargaining power of buyers/customers Threat of new entrants Threat of substitutes
Study tip You need to be able to draw the diagram, explain the forces, and apply the framework to industries described in question scenarios
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Barriers to entry Economies of scale Product differentiation Capital requirements Switching costs Access to distribution channels Cost advantages independent of scale Government policy
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––––––––––––––––––––––––––––––––––– Contemporary Thinking on Strategy
Rivalry
Bargaining power of suppliers
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The five forces
Few suppliers Differentiated supply
Threat of new entrants KK
Number of rivals Industry growth rate Fixed costs Differentiation or switching costs Strategic stakes Exit barriers
High impact of new entrants Forces maintenance of barriers to entry
Bargaining power of buyers/customers A substitute fulfils the same purpose or satisfies the same needs, but originates in: A different industry A different state of technology KK
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Threat of substitutes Few buyers Undifferentiated products Low buyer profits Alternatives available Low switching costs
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Contemporary Thinking on Strategy
An ecological perspective
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Areas to be monitored
Social responsibility
Production Environmental auditing Ecological approach Quality Accounting Economic
Definition Social responsibility – taking more than just the immediate interests of the shareholders into account when making a business decision
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Issues Pollution Safety Discrimination Renewable resources Social desirability Bio-degradable products and packaging 40 —————————————————————————————————————————
––––––––––––––––––––––––––––––––––– Contemporary Thinking on Strategy
An ecological perspective
Additional costs Reduced revenues Diversion of shareholder funds Waste of management time
Benefits of social responsibility KKKKK
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Conflicts between social responsibility and shareholder wealth
Become a sustainable enterprise Attract socially-conscious investors Attract socially-conscious customers Improve relations with government and regulators Reduced stress and improved morale
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Contemporary Thinking on Strategy
Ethics
Ethics – issues of moral rightness and wrongness of decisions and actions
Ethical issues KKKKKK
Definition
Advertising Pay and working conditions Exploitation of countries or peoples Product effects Oppressive governments Closures and redundancies
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Projects
Topics
Key study system questions 6
Iterative approach
. . . . .
Definition and characteristics The project life cycle Iterative approach Why projects fail Strategy and scope 43
Projects
Definition and characteristics
Project – a human activity that achieves a clear objective against a time scale
Study tip You need to be able to explain these characteristics, and to identify them for real projects
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Characteristics
Definition
Stakeholders Uniqueness Objectives Resources Schedules Quality Uncertainty Finiteness Change
44 —————————————————————————————————————————
––––––––––––––––––––––––––––––––––––––––––––––––– Projects
Identification of need Development of solution Implementation Completion
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Problems Too slow Lack of user/customer involvement Assumes requirements are certain before the start
The iterative approach KKKKKKK
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The project life cycle
Use for smaller projects Use where needs are uncertain Involve users Create a ‘predictive model’ Try out the solution Repeat the life cycle until everyone is happy Reduces risk
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Projects
4-D
The 9 knowledge areas
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Other frameworks
Discover Dream Design Deliver
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The 5 process areas Initiating Planning Executing Controlling Closing
Integration Scope Time Cost Quality Resource Communication Risk Procurement
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––––––––––––––––––––––––––––––––––––––––––––––––– Projects
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Why projects fail Time/resource estimates unrealistic Objectives not clearly defined or measurable Project manager: poor communication skills Objectives changed during project Project manager: poor leadership skills Senior management: not showing strong support Stakeholders: not taking ownership of the project Role and responsibilities of the project team not defined Resources not identified/made available at the start Project team: did not work as a team
Study tip Find some examples of real projects that have failed for the above reasons
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Projects
Strategy and scope Definitions Strategy – a course of action, including the resources required, to achieve a specific objective Scope – the extent of work needed to produce the project’s deliverables
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People and Projects
Topics Key study system questions 5 9
Reports Problems
. . .
Project manager – role and skills Problems with teams Stakeholders 49
People and Projects
Roles
Skills
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Project manager
Organising Planning Controlling
Study tip
Leadership Communication Negotiation Delegation Problem solving Change management
Make sure you are completely comfortable with the roles and skills of the project manager – it is likely to be examined frequently
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––––––––––––––––––––––––––––––––––––––––––– People and Projects
Unclear team goals and objectives Lack of team structure Lack of definition of roles Poor leadership Poor team communication Lack of commitment
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Problems with teams
Watch out! This is a very examinable area. Problems make more interesting questions
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Stakeholders Project sponsor Project owner Customers/users Project manager Project team Suppliers
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The Project Management Process
Topics
. . . .
Definition Project management process Project plans Project constraints 53
The Project Management Process
Definition Project management – the integration of all aspects of a project, ensuring that the proper knowledge and resources are available when and where needed, and above all to ensure that the expected outcome is produced in a timely, cost-effective manner
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Project management process Initiating Planning Executing (leadership) Controlling Completing
Study tip Make sure you can explain each of these stages
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–––––––––––––––––––––––––––––––––––– The Project Management Process
Stages in planning KKKK
Project authorisation Time Cost Quality
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And possibly for: Resources Contingency Communication
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A project has plans for KKKK
Project plans
Divide the project into work packages Estimate time and resources Make a cost estimate Portray the activities graphically (network analysis) Carry out risk analysis Calculate a project schedule and budget
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The Project Management Process
Project constraints:
Study tip Make sure you can explain these constraints, and recognise the interrelationships between them
56 —————————————————————————————————————————
Identifying and Selecting Projects
Topics Key study system questions 4 22
Uncertainty Feasibility study
. . . .
Feasibility study Costs Risk and uncertainty SWOT analysis 57
Identifying and Selecting Projects
Types of feasibility
Costs
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Feasibility study
Types of cost KKK
Technical Social and ecological Business Financial
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You are unlikely to be expected to carry out a financial evaluation of a project, but you must be able to explain each of the evaluation techniques
Financial evaluation KK
Study tip
Capital Revenue Finance
Payback Discounted cashflow (net present value or internal rate of return) Accounting rate of return Return on investment
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–––––––––––––––––––––––––––––––––––– Identifying and Selecting Projects
Risk and uncertainty Ranking qualitative risk
Definitions Risk – the probability of an undesirable event Uncertainty – a situation where the probability of a contingent event is impossible to quantify
Value of quantitative risk ¼ P(E) p(L) M
Types of risk KKK
Study tip
Quantitative Socially constructed Qualitative
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Identifying and Selecting Projects
Risk management
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Steps
SWOT analysis
Identification Analysis Prioritisation Management Resolution Monitoring
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Risk management approaches Avoidance Transference Reduction
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Performing the Project
Topics Key study system questions 7
Excellence in project management
. . . .
Performing and controlling the project Project management methodologies Post-completion review Continuous improvement 61
Performing the Project
Initiating Planning Executing (leadership) Controlling Completing
Controlling the project KKKK
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Performing and controlling the project
Monitor performance Compare to plan Report deviations Implement corrective action
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Need to determine The major work elements The resources required A time estimate
Study tip Make sure you can explain each of these stages
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––––––––––––––––––––––––––––––––––––––––– Performing the Project
Project management methodologies
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PRINCE2 Clear structure of authority and responsibility Management products Different types of plan Quality controls
Study tip You do not need to know the detail of any specific methodology, but PRINCE2 will be used for illustration by the examiner
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Other methodologies IDEAL PMBoK SixSigma
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Performing the Project
Post-completion review
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Stages of post-completion audit Extent to which quality has been achieved Efficiency of the solution vs. plan Actual cost vs. budgeted cost Time taken vs. plan Effectiveness of the management process Problems and solutions
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––––––––––––––––––––––––––––––––––––––––– Performing the Project
Continuous improvement
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The project management maturity model Level Level Level Level Level
1 2 3 4 5
– – – – –
common knowledge common processes singular methodology benchmarking continuous improvement
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Project Management Tools
Topics Key study system questions 21 26
Critical path Gantt
. . . .
Gantt charts Network analysis PERT Project management software 67
Project Management Tools
Gantt charts
68 —————————————————————————————————————————
––––––––––––––––––––––––––––––––––––––– Project Management Tools
Network analysis (activity on arrow method)
Study tip You need to be able to explain and draw network diagrams. Make sure that you practise lots of questions
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Network elements EET – earliest time at which any subsequent event can start LET – the latest time at which all preceding activities must have been completed to prevent the whole project from being delayed Critical path – the series of events that must be completed as planned for the project to be completed on time Elapsed time – the sum of the durations on the critical path (the planned duration of the whole project)
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Project Management Tools
A completed network (activity on arrow)
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––––––––––––––––––––––––––––––––––––––– Project Management Tools
Activity on node method
Study tip You can use either method to draw networks in this exam
71 —————————————————————————————————————————
Project Management Tools
A completed network (activity on node)
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––––––––––––––––––––––––––––––––––––––– Project Management Tools
PERT
Definitions
Contingency allowance
PERT – Project Evaluation and Review Technique – a methodology for completing network analysis which reflects risk
Study tip
Expected Time PERT will be examined quite infrequently. However, you need to be able to calculate the expected durations and contingencies, as many projects include risk
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Project Management Tools
Functions
Advantages
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Project management software
Accuracy Affordability Ease of use Ability to handle complexity Speed ‘What if’ analysis Timesheet recording
Problems KKKKK
Budgeting and cost control Calendars Graphics Multiple project handling Planning (work breakdown, network/CPA) Scheduling (Gantt chart) Resource planning Resource histograms Reporting
Emphasis on plan, not project Mythical man-month Estimates Skills Work breakdown
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Management
Topics
Key study system questions 14
Approaches to management
. . . . .
Key definitions Leadership and management Theories of management Managing in different cultures Information gathering 75
Management
Key definitions
Power – the ability to exert an influence Authority – the right to exercise power Responsibility – the expectation of being held to account for success or failure
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Sources of power
Definitions
Reward power Coercive power Referent power Expert power Legitimate power
Delegation – the passing of authority and work to a subordinate
Study tip These definitions are tricky. Make sure you can explain each term, and the differences between the concepts
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––––––––––––––––––––––––––––––––––––––––––––––– Management
Personality traits
Management styles (Lewin)
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Leadership and management
Impulse Integrity Self-awareness Human sympathy Tough-mindedness
Democratic Laissez-faire Authoritarian
77 —————————————————————————————————————————
Management
Management styles (Likert)
Management styles (Blake & Mouton)
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Leadership and management
Exploitive-authoritative Benevolent-authoritative Consultative Participative
Country club Middle-of-the-road Authority-compliance Impoverished Team
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––––––––––––––––––––––––––––––––––––––––––––––– Management
Scientific management (Taylor)
Principles of management (Fayol)
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Theories of management
Developed a science of work Used science to select and develop staff Prompted the mental revolution Introduced co-operation and consultation Introduced specialisation
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Scope of management (Fayol) Planning Organising Coordinating Commanding Controlling
Division of labour Authority and responsibility Discipline Unity of command Unity of direction Personal interest Remuneration Scalar chain Material and social order Equity Stability of tenure
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Management
Motivational factors (Herzberg)
Hygiene factors (Herzberg)
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Theories of management
Challenging tasks Achievement Responsibility Personal growth Advancement Recognition
Rules Environment Work breaks Supervision Wages and benefits
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––––––––––––––––––––––––––––––––––––––––––––––– Management
Theories of management
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Bureaucracy (Weber) Specialisation Hierarchy Rules Impersonality Appointed officials Career officials Full-time officials Public/private division
Watch out! Bureaucracy is not necessarily bad. At the time of Weber’s work it was clearly preferable to the sort of chaos that then constituted management in most organisations
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Management
Burns and Stalker
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Mechanistic organisation Task specialisation Clear definitions of authority Coordination and communication Emphasis on hierarchy Local recruitment
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Organic organisation
Study tip All this management theory can seem a bit tricky, but it’s just different groups of writers trying to understand why different organisations work in different ways. In an examination question, just take a contingency approach and ‘steal’ the most appropriate parts from each theory
Skills recognised as valuable Integration of effort Consultative leadership Commitment to task Variety of employee sources
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––––––––––––––––––––––––––––––––––––––––––––––– Management
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Managing in different cultures (Hofstede) Power distance Uncertainty avoidance Individualism/collectivism Masculinity/femininity Time orientation
Study tip Managing in different cultures is very topical, due to the growth in international and multinational organisations
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Cultural factors Language Religion Attitudes Social organisation Education Ethnocentrism
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Management
Managing in different cultures (Hofstede)
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Information gathering techniques Interviews Questionnaires Observation
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Management of Groups
Topics Key study system questions 5 9 10 22
Progress reports Team problems Negotiation Team meeting
. . . . . . .
Group development Team roles Problems with groups Communication Meetings Reporting Negotiation 85
Management of Groups
Types of group
Group formation (Tuckman)
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Group development
Study tip Do not forget that organisations and project teams are examples of formal groups. That makes this theory very examinable
Forming Storming Norming Performing
Factors affecting group integration KKKKKKK
Reference group Informal group Formal group
Homogeneity Alternatives Size Other groups Task Isolation Climate
86 —————————————————————————————————————————
––––––––––––––––––––––––––––––––––––––––– Management of Groups
High performance work teams (Vaill) K K
Chairman Shaper Plant Monitor-evaluator Company worker Resource investigator Team worker Completer-finisher Expert
KKK
Team roles (Belbin) KKKKKKKKK
Team roles
Perform excellently against standard and past performance Perform beyond what is thought to be their best Are judged to be better than comparable groups Achieve results with fewer resources than are thought necessary Are seen to be exemplars of the culture
Study tip You need to be able to identify these roles from a scenario
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Management of Groups
Problems with groups Definitions Conformity – a member is pressured to conform, particularly to agree to decisions that are clearly wrong
Study tip Each of these could form the topic of a question or requirement in the exam
The Abilene paradox – group members conform through silent acceptance, and the belief that others support the behaviour Groupthink – the homogeneity of objectives and thinking carried to the ultimate, and often disastrous, extreme Risky shift – the group seems willing to take decisions that are more risky than any member would take alone
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––––––––––––––––––––––––––––––––––––––––– Management of Groups
Communication
KKKKKKK
Examples Meetings Telephone conversations Videoconferencing Memos Email Reports Presentations
Study tip Make sure you are familiar with ‘best practice’ for each of these communication methods, and can identify when performance described in a scenario does not achieve it
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Management of Groups
Project meetings
Effective meetings
KKK
KKKKKKKK
Meetings
Status review Design review Problem solving
KKKKK
Meeting roles Chairperson Facilitator Secretary Protagonists Antagonists
Determine the purpose Establish attendance Determine agenda Make arrangements Facilitate discussion Manage action plan Summarise Publish minutes
Study tip Watch out for questions relating to problems with meetings
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––––––––––––––––––––––––––––––––––––––––– Management of Groups
Reporting
KKK
Different project reports Project initiation document (PID) Progress report Final report
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Management of Groups
Phases
Methods
KKKK
KKKK
Negotiation
Preparation Opening Bargaining Closing
Focus on objectives, not detail Settle for what is fair Listen and compromise Trade-off wins and losses
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Control Systems in Organisations
Topics
. . . . . .
Internal control Levels of control Health and safety Dismissal and redundancy Time management Mentoring 93
Control Systems in Organisations
Internal control
Internal control – the whole system of controls, financial and otherwise, established by the management in order to carry on the business of the enterprise in an orderly and efficient manner, ensure adherence to management policies, safeguard the assets and secure as far as possible the completeness and accuracy of the records
Levels of control KKK
Definition
Strategic Tactical Operational
Study tip Make sure you have lots of examples of specific controls at each level
KK
Framework of control Control environment Control procedures
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–––––––––––––––––––––––––––––––––––– Control Systems in Organisations
Health and safety at work
KKKKK
Employer obligations
Study tip
Risk-free equipment and systems of work Safety in use, storage, transport and handling Information, training, instruction and supervision Safe workplace Safe working environment
You do not need to know UK legislation, it is just used as an example of best practice
KKKKKK
Safety issues Safety committee Managing safety Working with contractors Health and safety training Managing health Stress
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Control Systems in Organisations
Dismissal and redundancy
KKKKK
Valid reasons for dismissal Conduct Capability Breach of statutory duty Other substantial reason Redundancy
KKK
Valid reasons for redundancy Cessation of business Relocation of business Cessation of type of work
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–––––––––––––––––––––––––––––––––––– Control Systems in Organisations
Time management
KKKKKKKKK
Values All time is to be used Satisfaction can be gained Enjoy whatever you do Build on success Learn from mistakes Look for ways to free up time Revise goals continually Develop confidence in your plan Be willing to ask for help
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Control Systems in Organisations
Mentoring Definition Mentor – a guide, tutor or trainer
KKKK
Benefits of mentoring Improved motivation Lower staff turnover Faster career progress Fewer disputes
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Conflict and Discipline
Topics Key study system questions 24
Discipline
. .
Conflict Discipline 99
Conflict and Discipline
Conflict
Conflict – activity between groups or individuals that presumes direct interference with goal achievement
KKKK
Characteristics Diversion of energy Altered judgement Loser effects Poor coordination
Conflict is caused by KKKKKKKKKK
Definition
Environment Size Technology Goals Structure Goal incompatibility Differentiation Task interdependence Uncertainty Reward system
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––––––––––––––––––––––––––––––––––––––––– Conflict and Discipline
Study tip You need to be able to identify the symptoms of conflict, and recommend how to deal with it. Remember that some degree of conflict may be tolerated or encouraged to achieve a better solution
KKKKK
Conflict symptoms Problems being delegated upwards Hostility and jealousy between groups Poor communications, vertically or horizontally Widespread frustration at lack of progress Problems polarised around people and personalities, rather than issues
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Conflict and Discipline
Handling conflict (Thomas)
Managing conflict
KKKKK
KKKKKKKKK
Conflict symptoms
Competing Collaborating Compromising Avoiding Accommodating
KKKK
Resolving conflict Alter Alter Alter Alter
the the the the
context issue relationship individuals
Bargaining Satisficing Sequential attention Priority setting Confrontation Third party consultation Member rotation Superordinate goals Inter-group training
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––––––––––––––––––––––––––––––––––––––––– Conflict and Discipline
Discipline
Definition Discipline – when the members of the enterprise follow goals or objectives sensibly, without overt conflict, and conduct themselves according to the standards of acceptable behaviour
Disciplinary procedure 1. 2. 3. 4.
Informal talk Verbal warning Written warning Disciplinary action
KKKKK
Discipline problems Poor timekeeping, lateness or absenteeism Poor work Breaking rules Refusing work Poor attitude
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Conflict and Discipline
Fairness
KKK
Modern view
Diversity and equal opportunities
No expectation of lifetime contracts Appropriate reward in line with contribution Opportunity for career
KKK
Psychological contract Coercive contract Calculative contract Cooperative contract
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