Mastering Portfolios and projects
What business strategy do you believe your company follows? Please provide examples to back up your reasons.
In simple words, a business strategy explains how a company plans to compete in a market and how it intends to grow at a profit. It is a high-level plan that helps a business achieve its goals. The existence of a strategy is a critical success factor for any business. Essentially, it reflects the strengths and weaknesses of the company and answers how the company plans to respond to the threats and opportunities in the market in which it operates. A strategy considers the resources at hand and how to best deploy them to achieve its set objectives. (Heubel, 2021)
Harvard Business School professor Michael E. Porter identified three types of generic strategies that businesses can choose from when defining their competitive advantage (Heubel, 2021):
Cost Leadership: Cost leadership refers to a company’s ability to produce a product at the lowest cost in its industry.
Differentiation: In a differentiation strategy, a firm seeks to create a unique offer that is valued by its target customers. Buyers must perceive the offer as far more valuable compared to other alternatives in the industry. In return, a company is able to demand higher prices for its products.
Focus: The generic strategy of focus aims at only a small number of target market segments. Porter’s matrix defines the competitive scope in these cases as narrow, as a firm only aims at a small portion of the wider market segment.
I believe my employer follows the differentiation strategy. They marketed the business as a true Montessori school which followed traditional Montessori education principles and philosophy. They showcased their classrooms as authentic Montessori environment for students to learn and grow in. They charged substantially more fees than traditional daycares or elementary/middle schools. The customers (parents of students) definitely perceived the school more valuable compared to the competition and were willing to pay higher prices.
Share two examples of a program or portfolio, determine the business strategy and explain if the program is aligned or not aligned to the strategy. Please provide your references.
A program is a group of related or similar projects managed in a coordinated way to get the benefits and control not available from managing them individually. This means that in a program, you will have multiple projects, which are either similar or related to each other, and you manage them at a higher level. (Wrike, n.d.)
Example 1. Assume there are two projects: the first is to construct a school building and the second project is to construct an office building. Since these two projects are similar, they can be grouped together and managed as a program. The program strategy would be cost leadership where the construction company will produce a product at the lowest cost. If I assume that the school district is planning to construct the school and office building, then I believe this program is aligned to the business strategy.
Example 2. There are three related projects such as designing a new lawn mower, testing it, and putting together an internet advertisement to introduce it. All these projects will be grouped as a program and managed by a program manager. Under the assumption that this is a regular lawn mower, then, it would be a cost leadership strategy. But if the company plans to build an automated, robot lawn mower, then they would be moving towards the differentiation strategy which buyers might perceive as more valuable compared to the alternatives in the industry and will be willing to pay more.
A portfolio is the management of multiple programs (which are made up of multiple related projects within them) and have an underlying strategic objective. Projects and portfolios are grouped under a portfolio to manage them more effectively to achieve the common objectives. (Eby, 2017).
The purpose of a portfolio is to establish centralized management and oversight for many projects and programs. A portfolio also helps establish standardized governance across the organization.
Example 1. A clothing company has a portfolio that serves strategic goals of improving the effectiveness of IT, introducing new brand of teen-clothing, reducing inventory costs, and increasing user satisfaction. (Shenoy, 2018)
Example 2. In an automobile company, a portfolio will include all the cars, trucks, and SUVs in its product line. The effort to develop a new SUV model would be a program and individual projects to design the engine, interior, exterior, etc. are part of the new SUV program. (Eby, 2017)