Saturday, 7 February 2015

Business Case

Business case key Philosophies:
The business case represents the optimum mix of information used to judge whether the project is (and remains) desirable,viable and achievable, and therefore worthwhile investing in. A business case must drive the project,it should justify the reason for embarking on the project and why it is worth investing in. If the business case is not satisfactory then you should not embark on the project, and should justification disappear during the project,then stop the project.

The business case is owned by the executive,and it should be developed at he beginning and maintained throughout the project. The focus of the business case should be on totality of business change.

Types of Business cases or projects
  • Compulsory project: A compulsory project is a project that must be done and is essential for the survival of the company.

  • Not for profit project: This might be a project to fulfill a corporate social responsibility or for goodwill whereby the company is not looking to earn profits from it.

  • Customer/Supplier project: This is a project that is initiated by a customer and fashioned to the customer's specifications. The organization seeks to earn profits from such projects.

  • Multi-organization project: As the name implies,it is a project between two or mor organizations for a specific purpose. For example a joint venture.


Business case Contents

1) Expected benefits: This would be a list of each business case benefits the company stands to gain by the project's outcome. Benefits may be measured by financial or non financial metrics. Each benefit should be aligned to strategy and objectives mapped from outputs and outcomes quantified with tolerances measurable assigned.

The PRINCE2 senior user is responsible for identifying the business case benefits in the first place and will be held to account by corporate or programme management that these benefits are eventually realised.

2) Expected dis-benefits: A dis benefit is a negative outcome of carrying out a project. It can be called a side effect or consequence. For example a project that involves the manufacturing a product might come with a dis benefit of air pollution and also noise pollution.


3) Timescale: This is the timeframe on which cost benefit analysis would be based upon.,the time when benefits will be accrued and the earliest time or latest feasible start and completion dates.

4)  Costs: The cost should be linked to the corporate strategies and objectives, it should include details of on-going operational and maintenance costs. This section of the business case should also include the funding arrangements.

5)  Investment Appraisal: A business case should contain a comparison of the development, operations and maintenance costs against the value of the benefits over a period of time. Some of the techniques that can be used for an investment appraisal include:
1) Return on investment
2) Discounted cash flow
3) Payback period
4) Net present value
5) Internal rate of return.



Major risks: in order for the business case to make a balanced business justification,it must consider and include the risks, and these should be balanced against those benefits and costs.




PRINCE 2 principles

PRINCE 2 principles
PRINCE 2 which means projects in controlled environments ii is principles-based. If a project does not adhere to these principles,that means it is not being managed using PRINCE 2.

The seven PRINCE 2 principles can be summarizes as:
  • Continued business justification
  • Learn from experience
  • Defined roles and responsibilities
  • Manage by stages
  • Manage by exception
  • Focus on product
  • Tailor to suit project environment.



1) Continued business justification: A PRINCE 2 project should have continued business justification. A project's justification is documented in a business case. The business case represents the optimum mix of information used to judge whether the project is (and remains) desirable, viable and achievable and therefore worthwhile investing in. Although the justification should remain valid, it may change. If the project can no longer be justified, the project should be stopped.


2) Learn from experience: in PRINCE 2, project teams learn from experience. They reflect back on previous projects or stages carried out, so lessons are sought,recorded and acted upon throughout the life of a project. In PRINCE 2, learning from experience should be used in three stages which are
a) When starting the project
b) As the project progresses
c) As the project closes.



3) Defined Roles and Responsibilities
A PRINCE 2 project has defined roles and responsibilities within an organization structure that engages all stakeholder interests. These stakeholders being the Business, Users and Suppliers.


4) Manage by Stages
A PRINCE 2 project is planned,monitored and controlled on a stage by stage basis. Management stages provide senior management with control points. It is required that there should be a minimum of two stages which are the initiation stage and one or more further management stages.

5) Manage by exception
A PRINCE 2 project has defined tolerances for each project objective to establish limits of delegated authority. If tolerances are forecast to be exceeded or are exceeded,they are immediately escalated to the next management layer. Tolerances can be set against six objectives for the respective level of plan. These six objectives are time, cost,quality,scope,risk and benefit


6) Focus on products:
A PRINCE2 project focuses on the definition and delivery of products, in particular their quality requirements. A PRINCE2 project uses product descriptions to define each product's purpose,composition,derivation ,format,quality criteria and quality method.


7) Tailored to shit the project environment:
PRINCE 2 is tailored to suit the project's environment size,complexity,importance,capability and risk.

PRINCE 2 Themes

PRINCE 2 Themes
There are seven PRINCE2 Themes and they are
1) Business case
2) Organization
3) Quality
4) Plans
5) Risk
6) Change
7) Progress

Now let's briefly look at each of the themes.
  • Business case: To begin a project, an idea must be born that would be considered to have potential value for the organization. A business case is therefore a justification for a proposed project or undertaking on the basis of its expected commercial benefits.

  • Organization: Describes the roles and responsibilities in the temporary PRINCE2 project organization required to manage the project effectively.

  • Quality :This explains how to understand and deliver the quality attributes of the products.

  • Plans: Plans are the focus for the communication and control throughout the project, it describes the steps required to develop plans and the PRINCE 2 techniques that should be applied.

  • Risk: In a project, there are uncertainties because it is susceptible to change. So the theme of risk addresses how project management manages the uncertainties in its plans and in the wider project environment.

  • Change: This describes how project management assesses and acts upon issues. Issues may be unanticipated general problems, requests for change or instancee of quality failure.

  • Progress: Addresses the ongoing viability of the plans and it explains the decision manking process for approving plans, the monitoring of actual performance and the escalation process if events do not go according to plan.

Project Organization

Project Organization
The organization theme serves a main purpose of defining and establishing the project's structure of accountability and responsibility. PRINCE 2 is based on a customer/supplier environment. A successful project organization should have three characteristics which are:

a) Have business,user and supplier stakeholder representation

b) Ensure appropriate governance by defining responsibilities for directing,managing and delivering the project and clearly defining accountability at each level.

c) Have an effective strategy to manage communication flows to and from key external stakeholders.


The three Project interests:
There are three project interests in organization,and they are:

  • Business: The products of the project should meet a business need which will justify the investment in the project. The project should satisfy the value for money criteria to make it worthwhile.The executive role is defined to look after the business interests.

  • User: The senior user will represent this stakeholder interest on the project board. The senior user specifies the needs of the project, ensures user liaison with project management team,commits user resources, monitors products against requirements and specifies benefits and are held accountable for forcasted benefits realization. The user view point should represent those individuals or groups who will operate,maintain or support the project's outputs.

  • Supplier: The supplier viewpoint should represent those who will provide the necessary skills and produce project product. The project may require both in-house and external supplier teams to construct the project product. The senior supplier will represent this stakeholder interest on the project board.

Organization Levels.
In the organization theme of project management under PRINCE 2, there is a distinction between the direction and management of the project and the delivery of the project's output.

The project Management structure has four levels, three of these represent the project management team while the fourth sitting outside of the project.

  • Corporate or program management: This is the topmost level of the project management structure,it sits outside the project management team but will be responsible for commissioning the project, including identifying the executive and defining the project-level tolerances within which the Project Board will work.

  • Directing: The responsibility of directing is entrusted with the project board, it is responsible for the overall direction and management of the project within the constraints set out by corporate or program management. The project board escalates problems outside the tolerance level to the corporate or program management and it is accountable for the success of the project.

  • Managing: The project manager is responsible for the day to day management of the project within the constraints set out by the project board. The project manager is expected to ensure that the project is completed and produces the required output in accordance to the time,cost,quality, scope, risk and benefit performance goals.

  • Delivering: This is vested with the team members. They are responsible for the day for delivering the project's products to an appropriate quality, and within a specified timescale and cost.




Project Board
Duties of the project board includes:
  • Being accountable for the success or failure of the project in terms of the business,user and supplier interests.

  • Providing unified direction to the project.

  • Providing the resources and authorizing the funds necessary for the successful completion of the project.

  • Facilitating integration of the project management team with the functional units corporate or external organizations

  • Ensuring effective decision making

  • Providing visible and sustained support for the project manager.

  • Ensuring effective communication to project team and external stakeholders.


Four characteristics of a good project board:
  •  Authority: A project board should be able to make strategic decisions about the project. It should have the power and right to make decisions and to provide resources to the project. The managerial level required to fill the roles will depend on factors such as the budget, scope and importance of the project.

  • Credibility: Within organization will affect the ability to direct the project.
  • Ability to delegate: Project board should not be involved in the detail of how the project is managed, nor in the specialist content of the project, but they should delegate this to the project manager and give enough space to manage the project by keeping the project board activity at the right level.

  • Availability: To make decisions and provide direction to the project manager.


Project board roles:
  • Executive: The executive is tye key decision maker of a project, he is accountable for the project's success. The executive is the owner of the business case and is focused throughout its life on achieving its objectives and delivering a product that will achieve the forecasted benefits. The executive is appointed by the corporate or program management during the pre-project process of starting up a project.

  • Senior user:The responsibilities of the senior user include:a) Specifying the needs of those who will use the project's products. b) User liason with the project management team. c) Monitoring that the solution will meet those needs within the constraints of the Business case in terms of quality, functionality and ease of use. d) Committing user resources.


  • Senior supplier:The senior supplier represents the interests of those designing,facilitating,procuring and implementing the project's products. The role is accountable for quality products and technical integrity. They provide supplier resources,ensure proposals for design are feasible and realistic and also mostly represents the maintenance interest post implementation.


Change authority:
The change authority has the following responsibilities
a) Changes approved by project board unless many changes are envisaged.
b) May include the project manager, project assurance, technical experts and users.
c) Approves request for changes and off specification
d) severity and authority of changes defined in Configuration Management Strategy
e) Appointed during initiating a project.


Project Assurance:
Project assurance is appointed where project board has insufficient time or requires expertise. Some of the responsibilities include:
a) Provide advise to the project manager but independent of the project manager
b) ideally should have 3 different role representing the business, user and supplier
c) Ensures correct people are involved with quality review and approval
d) Assist with the appointment of the quality review chairperson.



Project Manager:
The project manager manages the prpject from a day to day basis, it normally comes from tge customer environment but may also be from supplier.

The project manager is responsible for all PRINCE2 processes except directing a project. The project manager is appointed by the executive at starting up a project . The project manager delegates responsibility to the team managers and project support, and they are responsible for liaison with the project board and project assurance.


Team manager
Tge team manager is responsible for the production of the assigned products and reports to the project manger. The appointment of the team manager is influenced by the project size, specialist skills required and the geographical location.

The team manager agrees with the project manager on work packages delivery, reporting, cost, time.

Project support. The project support is delegated by the project manager unless performed by corporate or programme management. Project support may include specialist functions such as planning or risk management. Project support is responsible for configuration management procedure and tools defined in configuration management strategy. The project support must be kept independent from project assurance.

Wednesday, 4 February 2015

Production Management

ProductionManagement

Production management is the function of business which selects, designs, operates, controls and updates a production system.
production is the process of producing goods and services from raw materials and other resources.

Function of production management
1) Deciding the type of machines and process to be used for production 

2) Determining the right methods of production

3) Scheduling jobs and allocating resources

4) Setting standards,monitoring performance and comparing actual performance with set standards.

5) Revising the system as demand and organizational goals change.


Production planning and control is the direction and coordination of the firm's material and physical resources towards the attainment of pre-specified production goals in the most efficient way.



Objectives of production Planning
1) Ensure smooth coordination of production activities

2) To ensure efficiency of the plan

3) To ensure effective utilization of production

4) To ensure proper delivery schedules.

5) Ensure existence of adequate stock of raw materials, work in progress and finished products.



Types of production

  • Job production or custom production: it is also called a "one-off" or make complete production. It consists of small scale production to meet customers' individual requirements. It involves the manufacture of a single complete unit by an operator or group of workers. It ensures that customer's specification is adhered to in the production of the goods. Example include aircraft,ship, bridge building.


  • Batch production: It is the commonest type of production. It requires the division of production work into parts of operations and each operation is taken to an end throughout the whole batch before the next operation is commenced. Examples include production of electronic equipment, transformers etc.


  • Flow production/ Mass production: It involves the continuous and progressive processing of materials. It is a production method which has no lost time. It eliminates non-producing time. Ie. as the work on a batch is completed to a stage, it is passed to the next stage without completing work on the whole batch. Examples: soft drink, beer, flour mills. textiles etc.

Tuesday, 3 February 2015

Theories of Motivation

Theories of Motivation
Individual performances make organizations what they are, individual performance in any organization is determined by three complementary factors:
1) His knowledge of the job
2) His skill in performing the job
3) His attitude towards the job.

The organization's training procedures can influence an employees resolve of the first two factors,while the last one is as a result of the focus of motivation in the organization.
Motivation may be defined as a goal seeking behaviour,the driving force within a person or group of persons that drive them to evolve actions that would result in the achievement of desired objectives. It usually involves needs, expectations, personalities and perception.


THEORIES OF MOTIVATION
Some of the theories of motivation include:



1) Abraham Maslow Hierarchy of needs
Maslow in his theory saw needs as occurring in hierarchial order,the first being:
Physiological needs: These concern the basic needs of human existence e.g. food,clothing,shelter,sex.

Safety and security needs: These are needs that focus primarily on the protection of individuals from harm in his environment.

Social or love needs: These are needs or desires to associate with others within a group and being accepted for desired relationship.

Esteem needs: These are needs for reputation,recognition or self worth,respect and admiration.

Self actualization needs: These are needs to realise personal goals a person would deem important to give a feeling of pride and achievement.



2)Fredrick Herzberg two factor theory:
The theory was proposed in 1959 by Frederick Herzberg. He grouped needs into two. One group contains company policy and administration,supervision and working conditions,interpersonal relations,salary, security,personal life and status. He called these factors dissatisfiers, maintenance or hygiene factors which are not motivators. It is believed that their existence in the work place does not motivate, but their absence would definitely create dissatisfaction.

The second group comprises satisfiers and motivators including: Factors of achievement,recognition,challenging work,advancement and growth on the job. These are job content factors whose existence in the workplace will motivate and will not be effective tools if the hygiene factors are absent.



3) Douglas McGregor Theory X and Y
Douglas McGregor explained two opposing behaviours of the managers towards the subordinates. The first set of assumption called theory X assumed that :
The average human being has inherent dislike for work and would want to avoid it if possible.
The average human being avoid responsibilities where possible,generally unambitious and prefers to be directed.

Workers must be coerced,controlled,directed and punished in order to get them to put in their best
These assumptions encourage managers to recommend "carrot and stick" style as a means of ruling the workers. Ie. to control strictly and reward the work where necessary.


Theory Y sees man in a more favourable manner,managers regard employees as human beings. Theory Y's assumptions are:

The expenditure of physical and mental efforts in work is as natural as play or rest.

External control and the threat of punishment are not only means for bringing about effort towards organizational objectives. People will excercise self direction and self control in the service of objectives to which they are committed.

Commitment of objectives is a function of the rewards associated with their achievement.

Under proper conditions average human beings learn not only to accept but to seek responsibility.

The capacity to exercise a relatively high degree of imagination,ingenuity and creativity in the solution of organizational problems is widely and not narrowly distributed in the population


Under the conditions of modern industrial life, the intellectual potentialities of the average human being are only partially utilized.






4) David Mc-Clealand Theory of needs.
He identified three types of basic motivating needs which are

Need for power
Need for affiliation
Need for achievement

According to this theory, people with high need for power usually seek position of leadership in order to influence and control. They are mainly people who are forceful,outspoken,hard headed and demanding,who enjoy teaching and public speaking

Those with high need for affiliation are usually concerned with maintaining good personal relationship,enjoy a sense of intimacy and understanding,have preparedness to console and help others who are in need and most of all enjoy friendly interaction with others.

People with the need for achievement are known for strong desires for success coupled with fear of failure. They usually wang personal responsibility,moderate difficult goals and acceptable realistic levels of risk taking .





Reinforcement Theory (Operant Conditioning)
This theory was developed by a psychologist .F Skinner.
Reinforcement theory explains a behaviouristic approach which focuses on the fact that reinforcement conditions behaviour. An event is said to be reinforcing if the occurrence of the event following some behaviour makes the behaviour more likely to be repeated. For example, if an employee is paid a percentage of his weekly wage extra each time he meets a particular target set by his superior,he would always want to meet this target. In this way, the extra pay has acted as a reinforcer. Events become reinforced if they are tried overtime and the consequences recorded.

There are four different kinds of situations involved in the reinforcement theory which are positive reinforcement, negative reinforcement,punishment and extinction.

a) Positive Reinforcement: It is a reinforcement in which a desirable event is given to someone as a reward for following a specific behaviour,such desirable events may include bonus,higher pay.

Negative Reinforcement: A negative reinforcement refers to a situation where a behaviour results in removal or withdrawal of undesirable or unpleasant event. An example may be issuance of queries on lateness to work by an employee, then the employee might change durle to the queries. In this case,consistent queries acted as a negative reinforcer.

Punishment: It is a situation whereby an undesirable effect occurs as a result of a bebaviour less likely to be repeated. If a manager suspends a subordinate from duty for one week with loss of pay,he does this with the hope that this will deter the subordinate from similar behaviour in future.


Extinction: Sometimes when the pleasant or desirable event is removed,it results in occurrence that may not be repeated. For example if a worker is paid overtime each time he or she stays behind after closing hours to do some jobs,he or she sees as urgent and important,when the managers stops paying this overtime,he or she may stop going this extra mile.

From the above,we can conclude that positive reinforcement is likely to be the most effective one that managers can use to influence behaviour. One great advantage and characteristic of positive reinforcement is that it heightens the occurrence of effective job behaviour on the part of subordinates.

Punishment and extinction are less effective because they only reduce the frequency of ineffective performance by employees. They hardly teach employees what to do.

Negative reinforcement has a lot of disadvantage as it has some undesirable side effects on the employee. The employee may grow angry or feel frustrated when subjected to the necessary unpleasant situations.


Man Power Planning

Manpower Planning
This is a process designed to ensure that the human resource needs of an enterprise will be constantly and appropriately met.



Objectives of Manpower planning
1) Recruitment and retention of human resources of required number and quality


2) Forecasting employee turnover,minimizing the turnover and filling up consequent vacancies


3) Meeting the needs of expansion,diversification etc.


4) To improve discipline, standards,skills,knowledge and ability


5) To assess the surplus or shortage of human resource and take measures accordingly


6) To ensure optimum use of human resources.


7) To estimate the cost of human resources.


8) To minimize the imbalance caused by non-availability of human resources.


9) To maintain good industrial relations by maintaining optimum level and structure of human relations.




Manpower planning process
This involves
1) Determination or analysis of organizational goals


2) Translation of organizational goals into man power needs. The needs of the various departments are determined here.



3) Determining the current stock of human resources in the enterprise .



4) Correction of man power shortfall or shortage.



5) Implementing the manpower chosen option.



6) Evaluation of actions taken by asking the following questions
  •  Do the employees perform their tasks satisfactorily?
  •  Are there new needs for human resource arising from operations
  •  Do all the employees exhibit well the expected skills.


Benefits of Manpower Planning

1) It gives human resources department and manager the clear view of future human resources needs of the enterprise.


2) It helps to ensure employee's development through its training and development programmes.


3) It reduces personnel cost because it ensures that only the most essential staff are employed.


4) Employees' needs like promotion, better condition of service, transfers etc are satisfied through human resources planning.



5) It brings about the improvement of staff welfare facilities ed canteen,clinics,quarters, stores etc.



6) It helps to check redundancy.



7) It enables management to estimate total salary bills.



8) It acts as a control on corporate planning of the enterprise.


Job Enlargement,Job Enrichment and Job Rotation

Job Enlargement,Job Enrichment and Job Rotation

Job Enlargement
A job is enlarged when the tasks being performed in the job are merely increased ; when employee carries out a wider range of tasks of approximately the same level of difficulty and responsibility as before.



Job Enrichment
A job is enriched when tasks being done by many people are created into one job so that one individual starts and ends the job. That is,when the employee is given greater responsibilities and scope to make decisions and he is expected to use skills he has not used before. For example when a radio unit is given to one operator to assemble instead of many operators and the worker is expected to use his discretion in carrying out the job.



Effects of Job enlargement and job enrichment
Both job enlargement and job enrichment are examples oj job extension. Both are attempts to build opportunities into the employee's job for the satisfaction of ego and self actualization needs. Both of them increase the job satisfaction of employees. A greater range of tasks or decisions makes the employee feel more important, give him a sense of achievement and make more use of his abilities . He therefore receives satisfaction from the job itself (I.e intrinsic satisfaction) as well as many and fringe benefits (I.e extrinsic satisfaction)

But the problem is that it is easier to extend the job of a non-manual worker (ie manager), whose responsibilities .
Responsibility and actions are often not precisely described than to extend the job of a manual worker whose tasks may be highly specialized and precisely defined because they are part of a complex production process. Also, there may be a conflict between specialization and development of specific skills required for efficient operation of the process and the construction of a job sufficiently enlarged or enriched to give greater satisfaction to the employee. In order to make the job significant to the worker it may be extended so much that the extension seriously effectively affects productivity. The result therefore may be a compromise between efficiency and job satisfaction in which the worker, instead of doing one meaningless task would now have to do several meaningless tasks.

Another problem is that extension of jobs may meet with trade union opposition because demarcation lines between skills are eroded. It will almost certainly necessitates increases in pay; wider or deeper responsibilities must be recognized by an increase by an increase in the monetary worth of the job, a measured by job evaluation. An employer might therefore hesitate before introducing job extension because the benefits to him would be somewhat uncertain,whereas the cost might be considerable.




Job Rotation
Some of the difficulties the employer finds in job extension can be avoided if job rotation is used instead. In job rotation,employees are trained in several minor skills and exchange jobs with each other at intervals. Greater satisfaction is obtained because the employee has a greater understanding of the work process through experiencing several jobs within it,and the increased versatility of the workers is useful to management when sickness absence is high. It is not necessary to redesign production methods and rise in pay,if any of them happen to be small.

Monday, 2 February 2015

Total quality Management

Total quality Management

Total quality management (TQM) is a business philosophy that embodies the belief that the management process must focus on integrating the idea of customer driven quality throughout an organization (Zikmund, 1994). With customer as the organization's main focus, improvement of product quality and service delivery. Managers improve durability and enhance a product with additional features as the product matures in age. Managers also try to improve the ecommerce interface and speed up deliveries and improve other services in order to remain competitive.


The philosophy underlying the implementation of a Tqm strategy is to see customers and clients as the vital key to organizational success. Organizations that emphasize total quality management see their business through the eyes of their customers and clients and then measure their organization's performance against customer or client expectations.

Effective total quality management implies that the product must not be considered as being merely acceptable but must go beyond this for a given price range. For example a customer should not just feel that there was nothing wrong with the product and it was just able to perform what it was made for,but the customer should have some delightful surprises from the product and the product should provide some unexpected benefits.


The level of product quality is the degree to which a product or service is equal to or greater than customers' or clients' expectations. The formular being LPQ>CE where LPQ= level of product quality and CE= Customer / client expectation.



A Tot quality management strategy requires considerable survey research (Zikmund 1994) it expresses the conviction that in order to improve quality,the organization must regularly conduct surveys to evaluate quality improvement. The Tqm process begins with a commitment and exploration stage during which management makes a commitment to total quality assurance.

In the exploration stage,researchers are employed to to explore the needs of internal and external customers. The research must encompass thd products or service that are considered most useful by the customers,the problems of customers with the products,what aspects of the product or service have disappointed customers,what the company is doing right and what the company is doing wrong.

Then benchmarking follows the identification of the needs of customers. Business research must establish qualitative measures that can serve as benchmarks or points of comparison to evaluate future efforts. The research must establish initial measures of overall satisfaction,frequency of customers problems and quality ratings for specific attributes. The third stage in the the total quality management process is the initial Quality improvement stage. during this stage a company must establish quality improvement process within the organization. Management and staff must translate quality issues into the internal language and culture of the organization. The company must establish performance standards and expectations for improvement.

The last stage in the TQM process is the Continuous quality improvement stage. Continuous Quality Improvement (CQI), is sometimes referred to as Performance and Quality Improvement (PQI),Continuous improvement is an ongoing effort to
improve the quality of products, services or processes. Continuous quality improvement requires that management allow its staff to initiate problem-solving without red tapism. Staff should be able to initiate proactive communications with customers. To be successful at CQI,Management must reward performance by recognising individual staff members and groups that work dilligently towards achieving the standards set.

It should be noted that TQM should measure performance against customers' or clients' standards,not standards determined by the company's quality engineers.

McKinsey's Three Horizons of Growth


  Mckinsey's Three horizons of Growth


This framework developed by Mckinsey suggests that as companies mature,innovation stagnates,and so in order to achieve a consistent level of growth throughout their corporate life,companies must attend to existing businesses while still considering areas they can grow in the future.


Mckinsey developed the three horizons of growth to stand as a structure for companies to assess potential opportunities for growth without neglecting performance in the present.



Horizon one depicts the company's core business,the business it built its name on and can be easily Identified to and it is that which provides the greatest profits and cash flow. The focus of the company here should be to improve performance to maximize the remaining value.

Horizon two contains opportunities that may be capital Intensive but are likey to generate substantial profits in the future.

Horizon three contains ideas for profitable growth down the road for example small ventures such as research projects,or minority stakes in new businesses.

The x-axis represents the time, it should not be interpreted as a prompt for when to pay attention,rather it suggests the cycle by which businesses move over time. The y-axis represents the growth in value that companies may achieve by attending to all three horizons simultaneously.