Translating Corporate Risk Strategy Into Project Risk Strategy: Realizing Corporate Risk Strategy Through Project Management: The Applications From The Chinese Manufacturing Industry

.0 Introduction

Managers in charge of corporate face various challenges in their attempt to attain and maintain sustain growth of the business entities. These managers are responsible for the financial performance of the organization and hence accountable to various stakeholders about the financial performance of the organization. Stakeholders include shareholders, creditors, bankers, the government and even the public. It is important for these organizations to meet their respective objectives for them to have meet the expectations of stakeholders (Davies and Hobday, 2005). The success of a corporate entity is dependent on the success of different projects within the organizations. For in stance, a manufacturing entity will be successful if high quality raw materials are purchased at the most affordable price, the production process is conducted in the most effective manner and that the final products are delivered to end users within the required time. Due to the success of many manufacturing business entities in China, they will form the basis for this study (Ijzerloo et al 2000). This is only possible if various obstacles to this process can be identified and dealt with as early as possible. Risk management can be used to deal with this challenge. Risk management can be defined as the process of identifying, analyzing and either accepting or mitigating uncertainties associated with investment alternatives.

The overall performance of an organization is perceived as the total performance of individual projects. According to Martinsuo et al (2007), this is because it is the success of an organization’s individual projects that would in the end bring forth the success of the entire organization. Consequently, it is important for a business strategy to be translated into a project strategy. This would significantly influence the manner in which projects are managed thus leading to an improvement in the overall performance of projects with a subsequent positive impact on the organization’s overall performance. A corporate risk strategy can therefore be translated into a project strategy with the objective of brining forth an improvement in the organization’s risk management process. The overall aim of this research would be find out how a corporate risk strategy can be translated into a project risk strategy and the impact of this process on the overall performance of a corporate entity.

The specific objectives of this research include:

  • To examine the difference between corporate strategy and project strategy
  • To find out how a corporate strategy can be translated into a project strategy
  • To examine how a corporate risk strategy can be translated into a project risk strategy
  • To compare corporate risks and project risks
  • To evaluate the impact of translating a corporate risk strategy into a corporate risk strategy

This study will therefore seek to provide an answer to the following research questions:

  • What is the difference between a corporate strategy and a project strategy?
  • How can a corporate strategy be translated into a project strategy?
  • How can a corporate risk strategy be translated into a project risk strategy?
  • What are the main similarities and differences between corporate risks and project risks?
  • What is the impact of translating a corporate risk strategy into a project risk strategy?

This study would be beneficial to managers of different manufacturing businesses because they would be able to align their project risk strategies to the overall organizational strategy.

2.0 Literature Review

2.1 Introduction

In this section of the proposal, the author outlines how literature will be critically reviewed. The objective of this critical literature review would be to find out how a corporate risk strategy can be translated into a project risk strategy and the impact of this process on the overall performance of a corporate entity. The author would therefore review different sources of literary material in which the authors have examined the process of translating corporate risk strategy to project strategy (Anderson and Merna, 2003). The literature review begins with an overview of corporate and project strategies. The author examines the difference between corporate strategies and project strategies and the impact that each of these two strategies have on the performance of a corporate entity. This is then followed with a review of literature on how firms in different economic settings have been able to translate their corporate strategies to project strategies (Martinsuo et al 2007). The impact of this translation is also examined. This translation is examined in relation to risk management. The author also conducts a critical review of literature on the difference between corporate and project risks.

2.2 Corporate Strategy and Project Strategy

The main objective of business entities is to maximize profits. Corporate entities are managed by people who may or not may have any share of ownership in the corporation. The main objective of the managers of such entities is therefore to maximize the returns of shareholders among other stakeholders (Vos, et al 2006). This is only possible if the corporation is posting satisfactory financial performance. It is also important for the corporation to post favorable financial performance in order for it to continue operating as a going concern. Understanding a corporate strategy begins with the knowledge of the current situation of the organization; the desires future state of the organization and what specific actions that could be undertaken to enable the organization to attain the future desires state (Artto and Wikstrom, 2005). A corporate strategy can therefore be defined as a set of initiatives formulated by an organization’s management, which are aimed at moving an organization from the current state to a future desirable state. It involves the allocation of resources between different functional divisions of the organization and how these divisions work together to bring forth sustainable financial performance. A project strategy on the other hand involves planned initiatives aimed at bringing forth the success of a particular project. Each of these two sets of strategies is important to the organization’s overall success.

The success of an organization is highly dependent on the manner in which corporate strategies are formulated and implemented. This is in turn influenced by the manner in which individual projects are undertaken within an organization (Martinsuo et al 2008). The success of individual projects within an organization has a significant impact on the overall performance of the organization. This is because individual projects are what makes up the whole production process or the service delivery process. This therefore, means that the ability of the organization to meet the expectations of consumers is dependent on the success of projects undertaken at different departmental levels of the organization.

2.3 Translating a Corporate Strategy into Project Strategy

2.3.1 Corporate Strategy

A corporate strategy defines actions that would be undertaken to ensure that an organizational goals and objectives are attained. A corporate strategy usually flows across different strategic business units within an organization eventually being implemented as projects or programs (Miller and Lessard, 2001). The implementation of specific projects and programs within an organization’s strategic business units has an impact on the attainment of the organization’s goals and objectives. A corporate strategy can therefore perceived as a representation of the direction, which an organization is expected to putting into consideration the amount of resources the organization is endowed with. If an organization is endowed with adequate resources, its management would be able to achieve its strategic goals and objectives with greater ease.

2.3.2 Project Strategy

A project strategy can be defined as an outline of what needs to be done to make sure that a project is successful. This involves an outline of resources will be allocated and the responsibilities of each member of the project management team. Project strategies can be classified into different groups depending on the independence of the project and the number of project stakeholders. Basing on these two dimensions, project strategies can be classified into four major groups. A project strategy can be an obedient servant or strong leader. Likewise, a project strategy can be flexible mediator or an independent innovator (Lampel and Jha, 2004). A project strategy is considered to be an obedient servant if its role is to act as vehicle through which the organization able to achieve its corporate goals and objectives. The parent organization is the most important to such a project. A project strategy is considered to be a strong leader if it creates its unique environment in which it cultivates a strong independent culture. Stakeholders are only involved in this project if they have some value to add to the project. The success of such a project strategy is measured by its ability to create a unique perspective of the world and formulation and achievement of its goals regardless of the influence of stakeholders.

2.3.3 Aligning a Project Strategy with the Corporate Strategy

Since project strategies differ from one another depending on the nature of the environment, translating a corporate strategy into a corporate strategy is a process that can only be undertaken following a thoughtful process. Indeed, it is relatively easy to align a project strategy to a corporate strategy if the former falls under the class of obedient servant project strategies (Miller and Lessard, 2001). Such project strategies are usually formulated and implemented as vehicles used by the organization in achieving corporate goals and objectives. Another characteristic of obedient servant project strategies is that they have one strong stakeholder, who in each cases usually the parent organization. This stakeholder dictates what ought to be done within the project in order to attain project success. In this case, project success is represents organizational success because a project is simply a vehicle used by the organization to achieve its objectives. The situation is different with other project strategies like strong leader and independent innovator.

2.4 Corporate Risk Strategy and Project Risk Strategy

2.4.1 Corporate Risk Strategy

Corporate risk refers to the circumstances or events, which may prevent a corporate entity from achieving its objectives. There are different risks faced by a corporate entity. The occurrence of such risks may adversely affect the current or future financial performance of the organization (Vos, et al 2006). They are classified into different categories based on the causes. There are market risks, personnel risks, third party risks and technological risks. Market risks are caused by the activities of player in the market including customers, competitors and even demographics. An example of market risk is a decline in a company’s revenues due to its failure to tailor its products to changes in consumer preferences. Suppliers and business partners cause third party risks. An example of a third party risk is the failure of a company’s partner to supply high quality goods and service to customers thus damaging the company’s reputation (Martinsuo et al 2007). It is the duty of risk managers to identify, analyze and mitigate or eliminate risks. This calls for a very effective corporate risk strategy. A risk management strategy employed by corporate entity would be dependent on the nature and severity of the risk in question.

2.4.2 Project Risk Strategy

A project risk strategy outlines specific actions to be undertaken to in order to identify possible risks to the project, evaluate their potential impacts and come appropriate responsive actions. Projects consume large amounts of resources and therefore it is important for project managers to formulate strategies that would ensure that these projects are successful (McGrath and MacMillan, 2000). Since the success of a project has a very huge impact on the financial performance of the organization, it is crucial for risk managers to make sure that the projects are conducted in manner that is most satisfactory to the organization. The management of project risks can be achieved in the four different ways. One of the ways is through avoiding the risk. In this case, the plans would alter in such away that the procedures that are associated with the risks are completely avoided. The second alternative is to reduce the likelihood of occurrence of the risk or its impact if it occurs (Miller and Lessard, 2001). Thirdly, risks could also be accepted especially accepting the risk is accompanied with attractive gains. Lastly, the risk could be transferred or we shared third parties who would then be charged with the responsibility of managing the outcome of the risk.

2.4.3 Managing Corporate Risks 

The management of corporate risks requires an effective way of identifying the risks. Once the risks have been identified, they would be assessed in order to establish their impact on the firm. The necessary actions would then be undertaken to handle these risks. Project risk management strategies can be employed by a corporate management to deal with its overall risks. This is possible especially when most of the organization’s projects are managed by use of obedient servant class of strategies.  This is possible because the management would make sure that the overall strategy of the organization is communicated to respective project managers. The project managers would then make sure that the projects being undertaken within the organization are successful and being implemented in line with the organization’s overall strategy (McGrath RG and MacMillan, 2000). Manufacturing firms in China face a number of risks. One of the risks is the variation in the quality of products. This is particular in relation to the textile apparel manufacturing industry. The variation in quality has a potential adverse impact on the companies’ overall performance. When consumers realize that the quality of goods to them is inferior, they would switch to competitors. This would in the long run lead to a drop in the company’s revenue and profitability. It is therefore crucial for the management to make sure that the quality of goods produced is high in order to meet the expectations of customers. The late deliver of products to customers is another risk that faced by companies in the Chinese manufacturing industry. If goods are continuously delivered late to customers, their loyalty to the organization is can easily diminish thus leading to a drop in sales and profitability. The management is therefore charged with the responsibility of identifying factors, which cause these risks and undertaking necessary strategic actions to overcome them.

2.5 Summary

In this section, the author has reviewed literature on corporate and project strategies. Extensive research has been conducted on the relationship between the corporate risk strategy and the project risk strategy. Project management can be used to enhance the growth of an organization thorough the implementation of its corporate strategy (McGrath and MacMillan, 2000). This therefore means that the success of the organization is highly dependent on the success of its portfolio of projects. The management of corporate risks begins with an identification of the risks, the evaluation of their impacts and proposition of the appropriate strategic actions to be undertaken. Project managers therefore play a very important role in bringing forth an improvement in the achievement of an organization’s corporate strategies. There are however a number of gaps within literature in reference corporate management strategies. This is the reason why this study would be conducted to examine how corporate risk strategies can be formulated and implemented through project management.

3.0 Research Methods

3.1 Research Methods

There are different research methods that can be used in conducting a study. These methods can either be primary or secondary methods. Primary research methods are used in situation when he research requires the collection of raw data from the field and analysis of the same in order to come up with an answer to the research problem (Johnson and Duberly, 2000). Secondary data on the other hand involves the use of published materials and reports of previously conducted studies as the source of data for the research. This therefore means that the investigator would not use raw data. In this study, data would be collected from both primary and secondary sources. Primary data would be collected by use of questionnaires that would be filled in by fifty project managers and strategic managers of ten manufacturing firms in China. Secondary data would be collected from annual reports of the ten manufacturing as well as documents of previous research that has been conducted on the subject.

 

3.3 Research Design

Different research designs can be used in management science. Among the most common research designs are cross sectional and longitudinal research designs. The cross sectional research design is used when the researcher is interested in carrying out a study on a particular phenomenon for a particular short period. It is the most appropriate research design in situations where the investigator has limited resources and is in need of a high quality study (Collis and Hussey, 2009). A longitudinal research design on the other hand is used when the investigator intends to investigate a particular phenomenon over a considerably long period. This type of research design requires more resources and consumes more time than the cross sectional research design. In this study, cross sectional research design would be used. The investigator will design questionnaires and send them to fifty project managers and strategic managers of manufacturing firms within China. The responded will then be given a period of one week to fill in the questionnaires and send them back.

3.4 Research Philosophy

According to Saunders et al (2007), research philosophy can be defined as the process of developing the nature of the research background and knowledge. A positivist research philosophy is an objective approach in which an investigator examines a particular phenomenon with the main objective generalizing the results to the whole population. This approach is more objective in the sense that it applies a scientific approach in which the data is collected and analyzed in order to arrive at valuable conclusion. An intepretivist research philosophy is an approach in which the investigator conducts an examination of social actors aimed at meeting the objectives of the research (Alvesson and Sköldberg, 2000). One of the differences between a positivist research philosophy and an interpretivist research philosophy is the fact that the former emphasizes the use of quantitative research methods while the latter employs qualitative methods. In this study, the author uses of positivist research philosophy. Quantitative data is collected and analyzed in order to assess how corporate risk strategy can be realized through performance management.

3.5 Data Collection 

Primary and secondary research will be used in this study. Data would be collected by use of questionnaires. The investigator would select project managers within the manufacturing industry in china in order to collect data from them. The interview process would be guided by the use of short structured questionnaires. It is therefore important to note that the population of under study is composed of project managers and strategic managers. The selection of the project managers would be done using convenient sampling strategy. A sample will consist of fifty project managers and strategic managers from  ten Chinese manufacturing firms. This is because the quality of the data collected would be determined by the people chosen as respondents. The questions would be design in such a simple way that it would be easy for them to provide answers. This according to Franklin (2012).is because when questions used in a research are complex, the respondents would not be able to effectively respond to the questions. Designing simple and structured questionnaires would go a long way in enabling the investigator to collect adequate data from respondents. This is would enable the investigator to carry out a high quality research (Johnson and Duberly, 2003). Secondary data would be collected from the manufacturing firm’s annual reports as well as documentations of previous research conducted on the subject. The combination of primary and secondary research methods is used to improve the quality of research.

3.6 Data Analysis

The analysis of data would be conducted using quantitative methods. Excel software would be used in the analysis process. this would involve the determination of frequencies and calculation of percentages. The use of these data analysis methods would play a very important role in bringing forth a high quality research. This is because the data that would be collected would be quantitative. According to Bryman and Bell (2007), quantitative data can only be effectively analyzed when quantitative research methods are used. The determination of percentages would be done in order to ascertain the impact of translating corporate risk strategies into project risk strategy on organizational performance. This would be useful in the sense that the financial success of an organization is highly dependent on the manner in which projects are undertaken. It would therefore advisable for the investigator to use quantitative data analysis methods. Quantitative research method would therefore play a very important role in the success of this study (Srivastava, 2011). Once the percentages have been determined, the investigator would also use come up with charts and figures to present the outcome of the study. The use of charts and graphs would improve the quality of the presentation thus making it easy for the reader to understand the findings and implications of the study.

3.7 The Project Timeline

This project will be conducted within a period of three months. In the first month, the investigator will design the research plan, design questionnaires and seek the contacts of project and strategic managers of ten Chinese manufacturing firms. Data would be collected and sorted in the second month while analysis and presentation of the findings will be done in the third month. This can be illustrated as shown below:

 

Time

Activity

Week 1

Choosing the topic

Week 2

Coming up with the research plan

Week 3

Designing questionnaires and seeking

Week 4

Seeking Respondents’ email addresses

Week 4-8

Data collection

Week 8-12

Data Analysis and presentation

Fig 3.7 The Project Timeline

4.0 Ethical Considerations

The investigator would put in mind various ethical considerations when carrying out this study. The first ethical issue that the investigator would face is the need to make sure that the identity of the respondents is withheld. This according to Mark et al (2007) is important because the project managers in various manufacturing firms in China may not be authorized to provide any information regarding the firms’ corporate risk strategies. It would therefore not be advisable for the investigator to disclose the identities of the respondents. The second ethical consideration regards the manner in which information collected from the organization is used. Information about a firm’s corporate risk strategy and project risk strategy is very sensitive (Denzin and Lincoln, (2011). This is because the success of many firms in manufacturing firms is highly dependent on the manner in which projects are handled. This is in turn influenced by the quality of the company’s risk management strategies. It is therefore crucial for the company’s information to be kept in the most confidential manner. The investigator will therefore have a major role to play in ensuring that the confidentiality of company information is maintained.

It would also be important for the investigator to make sure that respondents are not coerced into taking part in the study. The respondents will only participate in the research after they have agreed to do so. The investigator would therefore be required to inform the respondents that they are at will to participate in the research. It would be important for the investigator to inform potential respondents that if they are unwilling to participate in the study, no one would force them to take part. This is important because it would enable the respondent to gain adequate confidence in the researcher and the study as whole (Kothari, 2004). This would lead to an improvement in the quality of data collected because the respondents will be taking part in the study at their will. Getting the respondents’ consent is very important because it has a huge impact on the quality of research. It would also be important for the investigator to make sure that the questions posed to respondents do not interfere with their private life. Asking respondents questions, which touch on their private life, may not be advisable. This is because it would discourage respondents from providing information on the respondents (Thadeus, 2012). Managers will be required to make sure that the questions designed do not touch on the private life of respondents. Questions regarding sensitive issues should be avoided by the investigator. This is important because it would significantly influence the quality of data being collected. Taking care of ethical issues is a very important process in a successful research. This not only influences the respondents’ attitude towards the researcher but also influences the quality of data collected. If poor quality data is collected from respondents, the overall quality of the research is diminished.

 

 

 

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