What Are the Project Strategic Management Frameworks?
The project strategic management frameworks can be used to gather information in the planning process. That includes VRIO analysis, PESTLE framework, SWOT analysis, and Industry analysis. It helps to identify many ways to deliver organizational breakthroughs.
Table of Contents
VRIO Analysis
The first project strategic management framework is the VRIO analysis. VRIO analysis can use to assess the competency of an organization’s internal resources, including physical and human resources.
- V – Value
- R – Rareness
- I – Inimitability
- O – Organization
Value
The firm can enhance its value through its resources Which are human resources, technological resources, and financial resources. A firm’s value helps to maximize opportunities and minimize threats.
Human resources help to increase productivity and adaptability. When decreasing productivity, the value of the firm gradually decreases. Adaptability is also important because, in crucial situations, you need to be able to make the decisions and adapt them. For example, in a coronavirus situation, most of the firms took the decisions and adapted them. By increasing the value of the firm can maximize opportunities and minimize threats.
If a firm has the latest updates in technological resources, that will help to maximize opportunities and reduce threats. As well as financial resources are also crucial to maximize the benefits and mitigate threats.
Rareness
How many competitors already have these valuable strategic capabilities?
If anything (resources) used by many firms, it will not create advantages. Accordingly, When a firm has resources which others do not have, such firms can maximize opportunities and minimize threats. If a firm’s resources are rare, the value of the resources will increase. For example, Oil-producing countries
Inimitability
According to the inimitability, when it is difficult or costly to imitate the firm’s resources for others, that will increase the firm’s value.
The following are the reasons for inability of the imitating.
- Path dependent ( history of firm’s resources for others. Ex. German automobile industry)
- Causally ( way of creating is not fully known. ex. Coca-Cola)
- Socially complex ( can not change in a short time. Ex. Organization culture)
Organization
Is a firm having an organized management system, policies, and process structures to exploit the full competitive potential of strategic capabilities?
So according to the above question, your firm should have a well-established management system, procedures, and policies to maximize opportunities and mitigate threats.
PESTLE Framework
The second project strategic management framework is the PESTLE framework. PESTLE Framework can use to identify the macro environment variables that could affect the project. That includes the political environment, economic environment, social and cultural environment, technological environment, legal environment, and environment.
- The political environment includes political stability, trade, and business policies.
- The economic environment includes the inflation rate, gross domestic product (GDP), and income distribution.
- The social and cultural environment includes a variety of social and cultural environments, values, and consumption habits.
- The technological environment includes product innovations, increasing research and development expenditures, and new communication technology.
- The legal environment includes increasing business legislation, consumer protection laws, and trade laws.
- The environment includes climate crisis, pollution, and more focus on environment conservation.
According to the PESTLE Framework, we can identify threats and benefits of the macro environment. That will help the project’s success.
SWOT Analysis
The third project strategic management framework is the SWOT analysis. A strategic tool can use for analyzing and scanning the project environment. That will help to make the best decision or establish a business strategy. SWOT stands for,
- S – Strengths
- W – Weaknesses
- O – Opportunities
- T – Threats
Strengths and weaknesses analysis focused on the internal environment. Opportunities and threats analysis focused on the external environment.
- A strength is a resource, asset, or capacity the organization can use effectively and efficiently to achieve its objectives and goals.
- A weakness is a limitation, fault, or bug in the organization that will keep it from achieving its objectives and goals.
- An opportunity is any advantageous situation in the organization’s environment. That will help to enhance the organization’s position by supplying it.
- A threat is any unfavorable or unexpected situation in the organization’s environment. That is probably damaging to its strategy. On the other hand, a threat may be an obstacle, barrier, or anything external that might cause problems or damage.
SWOT Matrix
SWOT Matrix is a framework for a systematic analysis of matching external opportunities and threats with internal weaknesses and strengths.
Industry Analysis – Michael Porter’s Five Force Model
The fourth project strategic management framework is the Industry analysis. Industry analysis can use to identify the micro environment variables that could affect the project.
According to the industry analysis, Michael Porter’s five force model is as follows,
Rivalry among existing competitors
- The rivalry is strong when competitors are high or equal in size and power.
- Exit barriers are high.
- Rivals are highly committed to the business.
The threat of new entrants
- If threats of new entry are high, reduce profitability/attractiveness.
- Threats of entry into an industry depend on the nature of entry barriers.
- When entry barriers are lower, the threat of new entrants is high.
The following are the sources of entry barriers.
- Legal barriers
- Unequal access of resources
- Capital requirement
- The threat of substitutes
A substitute performs a similar function as an industry’s product by a different means.
The following are the reasons for the threat of a substitute is high
- If they are good or close substitutes
- If it gives a similar satisfaction
- If the cost of using a substitute is very low
The power of suppliers
Suppliers group is powerful if,
- The number of suppliers is less
- The supplier group does not depend on the industry for its revenues
The power of buyers
Buyers are powerful if,
- There are few buyers
- Buyers get more benefits from other firms/substitutes
Strategic Implications of the five competitive forces
Michael Porter’s five forces is a model that identifies and analyzes five competitive forces in every industry and helps decide an industry’s strengths and weaknesses. Porter’s model can apply to any section of the economy to understand the situation within the industry. It will help to improve or enhance a company’s long-term profitability.
Conclusion
The project strategic management framework includes VRIO analysis, PESTLE analysis, SWOT analysis, and Industry analysis. These frameworks help to ensure that all primary and secondary stakeholders work toward the same goal. On the other hand, it provides a systematic format that perspicuously outlines end goals, approaches for achievement, and the aspirations of end goals within a business or organization.