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Chapter 2  •  The Organizational Context

of 20 aircraft a year, suggesting that 2018’s catastrophic decrease will lead to large losses. Industry
analysts are convinced that despite Airbus’s protests that the A380 “is safe,” its fate is rapidly being
sealed and the aircraft could be off the market as early as 2020.
What ultimately went wrong for the A380? Much of the blame rests on the strategic decisions
taken by Airbus and its view of the future of global aviation. At the beginning of the millennium,
Airbus and Boeing executives each looked where their business was heading and saw similar facts:
air traffic doubling every 15 years, including estimates that the number of travelers would hit four
billion by 2020—and came to radically different conclusions about what these numbers implied for
their future. Airbus executives argued that global “megacities,” increasingly crowded hubs, and
Asian expansion were the wave of the future and would demand larger long-distance aircraft that
could carry significantly more people while linking these future destinations together. As Airbus put
it, the A380 was the “one and only solution for sustainable growth at congested airports.” Boeing’s
strategic vision was different. It believed medium-sized wide-body jets best matched future global-
ization pressures and anticipated higher frequency of travel among major and multiple growing
cities. Boeing’s strategic response was to build the 787 Dreamliner and expand use of its best-selling
777 model. Different visions led to different strategies, which ignited very different projects.1

Implementing Strategy Through Projects

LO 2.1  Understand how effective project management contributes to achieving strategic objectives.

For successful project management, the organizational setting matters—its culture, its structure, and
its strategy each play an integral part, and together they create the environment in which a project
will flourish or founder. For example, a project’s connection to your organization’s overall strategy,
the care with which you staff the team, and the goals you set for the project can be critical. Similarly,
your organization’s policies, structure, culture, and operating systems can work to support and
promote project management or can work against the ability to effectively run projects. Contextual
issues provide the backdrop around which project activities must operate, so understanding what
is beneath these issues truly contributes to understanding how to manage projects. Issues that affect
a project can vary widely from company to company.
Before beginning a project, the project manager and team must be certain about the structure
of the organization as it pertains to their project and the tasks they seek to accomplish. As clearly
as possible, all reporting relationships must be specified, the rules and procedures that will govern
the project must be established, and any issues of staffing the project team must be identified. For
example, General Electric’s recent acquisition of French conglomerate Alstom for $14 billion has
been an enormously complicated undertaking, involving the combined efforts of multiple business
units, financial analysis, and constant interaction with Alstom’s principle stakeholders, especially
the French government. GE believed that its power business would benefit from acquiring the
Copyright © 2019. Pearson Education, Limited. All rights reserved.

French turbine maker and integrating its operations into a larger power and energy enterprise. As
part of its strategy, GE identified the business groups that could be blended into the organization,
being units that were redundant to GE operations, divested itself of the turbine unit per European
Union requirements, and created a logical organizational structure to best link the combined orga-
nization together in as efficient a manner as possible. Integrating Alstom’s nearly 85,000 employees
and global business units with its own operations makes GE’s efforts a showcase in the project
management of a strategic acquisition.
For many organizations, projects and project management practices are not the operating norm.
In fact, as Chapter 1 discussed, projects typically exist outside of the formal, process-oriented activi-
ties associated with many organizations. As a result, many companies are simply not structured to
allow for the successful completion of projects in conjunction with other ongoing corporate activities.
The key challenge is discovering how project management may best be employed, regardless of the
structure the company has adopted. What are the strengths and weaknesses of various structural
forms, and what are their implications for our ability to manage projects? This chapter will examine
the concept of organizational culture and its roots, and will discuss implications for effective project
management. By looking closely at three of the most important contextual issues for project man-
agement—strategy, organizational structure, and culture—you will see how the variety of structural
options can affect, either positively or negatively, the firm’s ability to manage projects.
Pinto, J. (2019). Project management : Achieving competitive advantage, ebook, global edition. Pearson Education, Limited.
Created from unsw on 2022-03-08 08:24:06.