Terracog Case Study Essays

Terracog Case Study Essays Terracog Case Study Paper Terracog Case Study Paper TerraCog Case Study Background TerraCog, Inc. is a privately held company specializing in high quality GPS and fishing sonar equipment. Although TerraCog was not always first to market with their new products, they were known for surpassing their competitors in addressing consumer needs because of their innovation in creating exceptional product design and functionality. In 2006, TerraCog’s competitor, Posthaste, launched BirdsI, the only handheld GPS with satellite imagery. Caught off guard by the product’s success, TerraCog President, Richard Fiero, makes a snap decision to satisfy the â€Å"gadget† appeal of BirdsI by launching the company’s own version of the competing GPS called Aerial. However, as TerraCog moved forward with the initiative, the estimated costs of developing Aerial threatened to thwart the launch. Needing to finalize decisions on cost, pricing and initial production volume, key department managers gathered in a series of dubious meetings laced with frustration, disagreement and reluctance, but produced no effective conclusion. In the end, the onus fell to Emma Richardson, a newly-promoted Executive Vice President to push the group toward a go/no-go decision. Problem Definition TerraCog Inc. is suffering from a stalemate in the development and execution of Project Aerial brought on by poor decision making and an ineffective team structure. Relevant Theories and Models The overall decision making process at TerraCog seems a bit puzzling. Management’s decision to underestimate consumers’ response to the satellite imagery technology featured in BirdsI led to a valuable loss in time and market share. As a result, Fiero, under the sole advice of Vice President of Sales, Ed Pryor, hastily chose to start Project Ariel without the due diligence of consulting with key stakeholders to understand the implications of producing such a product. There was no discussion regarding the technological capabilities that Project Aerial would offer leading to a major disconnect in pricing Aerial. Furthermore, there was no consensus around the timing of implementing Project Aerial given that the product team was already working on several other projects. As a result, departments greeted the decision to launch Aerial with a not so enthusiastic response. Because group decision making generates more complete information and knowledge and offers an increased diversity of view, the executives would have benefitted more by meeting with stakeholders and explaining the challenges the company faced with not initially responding to BirdsI and discussing the go forward plan to develop a competing product. When choosing group decision making techniques, the best approach for TerraCog seems to be the interacting group technique. This approach is most effective for achieving commitment to a solution which in this case, is the decision to launch Aerial. When stakeholders participate in decision making, they are more likely to enthusiastically support the decision and encourage others to accept it. Not only was there a weakness in the decision making process at TerraCog, Project Aerial was also operating with a working group and not a true working team. A work group’s goal is to share information leaving each individual accountable for their own work while the group’s synergy is neutral, sometimes negative. Furthermore, the group lacked cohesiveness as each department worked in individual silos. The sales team did not have input into the product, nor was the production team given a chance to review the design and offer recommendations on managing product cost. The handoff approach from product development to production to sales meant that the problem was not discovered until the launch date was at risk of being missed. There was also a lack of clarity around who should be on the team and the nature of each individual’s role. At each key meeting regarding Aerial, there seem to be an absence of key stakeholders present. The inconsistency of participation at each meeting suggests that this is not a dedicated team but rather a manifestation of individuals forced to complete a task. As a result, TerraCog should implement a cross-functional team to effectively allow individuals from different departments to exchange information while promoting cohesiveness. Moreover, the establishment of a team leader is imperative to Project Aerial’s success as it operates in a multi-team system that allows different teams to coordinate their efforts to produce a desired outcome Alternatives There are three alternatives that Emma Richardson should consider when identifying the go forward plan of Project Aerial. The first alternative is to launch Aerial at the full retail price of $475. The advantage of launching at this price point is that TerraCog would again be a competitive force in the industry and would be answering the call of Posthaste’s launch of BirdsI with a superior product. This would allow TerraCog to remain the leader in innovation and prove that they are in fact successful in satisfying consumer demands. The disadvantage of launching at this price point is the price itself. Although TerraCog is a reputable name in the industry and may receive some product acceptance because of this, the price would more likely lead to lower sales causing a major loss in profit. Furthermore, retailers may not even give Aerial shelf space as they’re not only selling an expensive product, they’re late to market. Internally, the product development and production teams would carry the blame of failure since they were not able to produce a stellar product that was competitive in price and higher in quality during the time period required. Another alternative that Richardson should consider is launching at the lower price point suggestedat $400 per unit. Again the advantage here is answering consumer demands at a quicker rate than taking the time to develop a feasible product with low price and high quality. At this price point, TerraCog should be successful in recapturing lost share from going to market so late. Because the sales team was already promised by Fiero that Aerial would be priced at $400, that’s one team that would be on board with the project. The disadvantage of retailing the Aerial at $400 is the lost of margin and production costs. Furthermore, in order to recapture any loss revenue, launching at $400 would also mean TerraCog should lower the quality of Aerial. Internally, the production team would suffer the most since they’ve been reprimanded in the past for producing a low quality product. Moreover, given that TerraCog’s business was built on quality performance and innovation, the company’s reputation would take a huge hit when Aerial’s technology doesn’t perform to desired consumer standards. The last alternative that should be considered is to abandon the launch of Aerial altogether and focus on the other more exciting projects that the product team was initially working on. The pro to this alternative is that TerraCog could capitalize on the grown in cycling and fitness GPS applications and become a competitive force there. TerraCog could realize the inability to quickly make a quality product at a competitive price by cutting its losses now rather than realizing a greater hit when going to market. The con to this approach is that the company would suffer sunk costs with the amount of time and money already invested in the project. Moreover TerraCog would miss out on potential sales and new customers. They may also lose their valued reputation as they could be considered incompetent by not having the ability to create a competing product to BirdsI. Solution Given all of the possible alternatives for the go forward decision of Project Aerial, Emma Richardson should decide to move forward with the launch of Aerial at a reduced price of $425 while simultaneously working on a product redesign to re-launch a new and improved Aerial at a later date. The pro to this solution is that the price would allow TerraCog to remain a viable competitor while recapturing lost market share. Additionally the product team will still be able to explore more advanced technology to re-launch Aerial 2. 0. The con is that TerraCog would still be launching a lower end product which could ultimately turn off customers and not want them to even buy the future redeveloped product. Next steps is for Richardson to develop a cross-functional team by reeling the group back in to work more cohesively. To improve decision making, a clear vision needs to be clarified and agreed upon by all parties. Rather than arguing during meetings, the team should brainstorm objectives, discussed amongst the team, but ultimately decided upon by Fiero and Richardson. Both Fiero and Richardson should improve their leadership skills and be more confident articulating goals and supporting the team.