The
senior management of your company has already made the strategic decision to
allocate annual funding to each of the strategic business units (SBUs) within
the company. A new executive (your Instructor) has been hired to head up your
strategic business unit. This new executive was hired from another company in
another industry, so he is still learning about your industry, your company,
and your SBU.

You
are a member of the organization responsible for the management of a product
portfolio in this SBU. There are a number of projects already in progress, but
there has not been a good portfolio management process in place.

The
first major act of your new executive was to establish a portfolio management
group to develop and implement a portfolio management process for your
organization’s SBU. You are a member of that team.

Your
first task in this project is to develop Part I: Project Proposal of the module
project. This is due no later than the end of week 4.

Part I: Project Proposal – due at end of week 4:

You
should immediately:

1. Choose an industry (your
   choice—but it is preferable for you to be familiar with the industry).
2. Choose any company in the
   industry. You will need to be able to derive the company’s high-level
   mission and strategies (from annual report, etc.). It does not necessarily
   need to be the firm that you work for, but you need to have some
   familiarity with the company. Your current or a past employer could be a
   good candidate.
3. Invent a strategic business
   unit (SBU) that has some specified portfolio of products. This does not
   necessarily have to match the real world; make up a scenario if necessary.
4. Invent the mission and
   strategies of the SBU. They should be consistent with the company mission
   and strategies, but they do not have to match the real world—i.e., make
   them up if necessary.
5. This SBU, its mission, and its
   strategies are then the basis for the development of the project selection
   criteria and the portfolio management process.

Submit
the combined Section A and Section B of Part I (the Proposal) to your
Instructor, who will review the proposed scenario to see that you have created
a reasonable scenario you can work with on the project for the rest of this
course. You should summarise this portion within 2–3 pages.

Following
approval from your Instructor, you should begin to address Part II of the
project, which will detail the specific portfolio management process and
criteria you would recommend to the management of the firm that you have
selected. The specifics of Part II of the project are detailed below. Your
submission will be due at the end of Week 6 of this course.

Your
second task in this project is to develop Part II of the following project.
This is due no later than the end of Week 6.

Part II: Project Outline – due at end of week 6:

In
Part II of the project, you are asked to develop a set of project selection
criteria and a high-level process for applying the criteria and managing the
portfolio. In developing the criteria and process, you should follow the
examples and the design of various systems that are contained in Kerzner
(Chapters 15 and 16), in Rothman (Chapters 4 and 5), and in Morris and Pinto
(Chapter 5). In general, it is expected that you will choose criteria that will
improve shareholder value, which is driven by the four basic ‘Value Rivers’:

1. Revenue Growth: Growth in the
   company’s ‘top line’, or payments received from customers in exchange for
   the company’s products and services.
2. Operating Margin: The portion
   of revenues that is left over after the costs of providing goods and
   services are subtracted—the key measure of operational efficiency.
3. Asset Efficiency: The value of
   assets used in running the business relative to its current level of
   revenues—the key measure of investment efficiency.
4. Expectations: The confidence
   stakeholders and analysts have in the company’s ability to perform well in
   the future—the key measure of investor confidence.

In
addition, as illustrated in the examples in Kerzner and in the discussion in
Rothman and in Morris and Pinto, there are other criteria that can be added at
this point, such as strategic fit, degree of linkage to corporate strategy, and
enablement of achievement of overall business objectives (e.g., market share,
position in the market, etc.).

At
this point, you may not have enough financial data or information to do
rigorous calculations of NPV or other financial measures (this will come
later). Therefore, your process should be similar to those in your three
textbooks—especially in the examples in Kerzner and in the discussion in
Rothman. That is, the processes should be higher level—and probably a
point-based system.

The
criteria that you choose should be consistent with the business environment for
your industry, with your company’s overall mission/strategies, and with the
mission and strategies of your strategic business unit. You are proposing a
process, not individual projects.
The deliverable for Part II is a written recommendation for the project
selection criteria and a high-level description of a proposed portfolio management
process. Since your manager is new to the industry, the company, and the SBU,
you may need to provide more context/background info that he has not yet
assimilated.

The
proposal should be in the form of a memorandum to your manager (your
Instructor) outlining your proposal. The memorandum should be no more than 12
pages, including figures and tables. It should be double-spaced, in 10- or
12-point font, and with one-inch margins. This is a summary for an executive,
so be concise and to the point. The use of appropriate grammar, spelling,
punctuation, and sentence structure will be part of your grade. You should not
include any specific projects in this part; you are developing a selection
process.

Part
II: Project Outline should include necessary background information (no more
than 2 of the 12 pages). Remember, your manager (your Instructor) is not yet
familiar with this and has been kind of slow to grasp your proposal. It should
include the following information.

• A brief description of the
  industry and the key aspects of the environment of that industry
• A brief summary of the mission
  and strategies of the overall company
• A brief description of the
  mission and strategies of the SBU
• A brief description of the
  existing organisational structure

In
addition to the above, Part II: Project Outline should also include:

• A description of the proposed
  portfolio process and the reasons it was selected (tie to strategies as
  appropriate)
• A description of the proposed
  selection criteria, the method for applying the selection criteria, and
  the justification for both

What
implications does the current organisational structure have on the
implementation of this proposal, and what if any changes to organisational
structure may be necessary?

Please make sure that you cite and reference all
your outside sources properly, as per the Harvard Referencing System.