Aerial Facilitation Facilitating the Aerial Project Deadlock

Aerial Facilitation

Facilitating the Aerial Project Deadlock

TerraCog Global Positioning Systems is behind in their Market Entry for a Satellite Imagery Device, yet can't agree on how to proceed

Situation Analysis

TerraCog is a privately owned firm that specializes in various Global Positioning Systems (GPS) and sonar devices. At the time the case was published, the industry in which TerraCog operates was booming. Portable GPS devices had reached a price point in which they appealed to a broad consumer base and applications of these devices have become more common in the automotive market as well as outdoor and sports related applications. Although TerraCog isn't the market leader in this industry, they have successfully carved out a niche with a loyal customer base. These products are defined by a high level of quality as well as containing a unique set of features that appeal to many users in different applications.

Even though the company has had a successful strategy in their current strategy, the industry moves quickly as the level of technological sophistication in the portable devices rises quickly. The example of this trend that is illustrated in the case involves TerraCog's competitor Posthaste. This competitor has developed a platform for their devices that allows users to view satellite imagery of the terrain directly on their device. Previous generations of these devices, like the one TerraCog currently produces, only provide a limited graphical representation of the geographic area of interest. However, Posthaste has developed a device known as the BirdsI which has the capability of showing an actual satellite image of the desired GPS coordinates. These capabilities are also being introduced by others, such as the market giant Garmin.

Figure 1 - Comparison Screen Shots

The internal situation inside TerraCog can be characterized by a high level of disagreement regarding how to bring their version of the product with satellite capabilities, the Aerial, to the market. The design team has reduced costs as much as they believe they can without sacrificing quality and are admit that costs cannot be further reduced. However, on the other end of the spectrum, the sales executive is admitly opposed to bringing a product to market with any retail price over $425. In fact, the sales leader believes that an even lower price could help the company make up lost market share that was due to their late entry in the market with a satellite image capable device.

Therefore the central debate is between proceed with a new product design that meets most of the quality objectives with the lowest price possible (according to the design team) a price that is much higher than the sales team would like. This debate has been virtually deadlocked the project and each side of the controversy seems rather inflexible in their position. There is a wide array of possible outcomes for the project and the team must either come together in some decision or else the project could be scrapped and a completely new project could be instituted at a later time. The range of possible outcomes includes one side of the debate conceding their concerns and proceeding, a compromise between the parties, or an abandonment of the current project and different course taken. It is also possible to compromise now but continue to work on the design to meet cost targets at a later date.

Purpose, Participants, & Potential Issues

The situation involves a deadlock about to do with a newly designed product that does not meet cost targets. The purpose of the following meeting will be to determine if project members can reach a compromise to bring this product to market. Although the product design and the corresponding price might not be the ideal market entry, not bringing a product to market before the next holiday season also comes with a range of costs. For example, say the group decides bring the product to market at $450 and these devices net the company a profit of two million dollars. If the company chooses to wait until later to retry the project to better perfect the requirements then they would lose the potential income they would have otherwise had; sometimes perfect is the enemy of good. Ideally, there is a balance between the risks of premature entry and the missed opportunities of late entry (Lilen & Yoon, 1990).

The central debate involves Ed Pryor, the VP of sales, and Harold Whistler, the VP of Design and Development. Pryor's perspective is that the product cannot meet sales targets if the price exceeds $425. This perspective is based on his understanding of the market and the price landscape of competitors in this niche. Both Posthaste and Garmin are offering similar version priced in the neighborhood of $400 dollars and Pryor does not believe they will gain sufficient market penetration with a price that is substantially higher. Although, he does believe the sales and marketing team could have success at a slightly higher price of $425.

Whister, the VP of Design and Development, has firmly backed his team's appraisal that the costs cannot be further reduced without sacrificing a significant amount of quality. The case mentions a previous design that tried to hit a different price point that resulted in many quality issues. It is apparent that this instance has influenced the design team and they are not comfortable with any lower cost design because it would sacrifice quality of the product in a manner that could result in the same types of failures and quality issues down the road. There seems to be a culture of quality that has developed TerraCog and the design team isn't willing to any major sacrifices to their product design at the expense of producing a quality device. The team has already sacrificed processing speed in order to build a product that is even close to the desired price point. Even though sacrifices in quality might decrease the price initially, they can increase the expense to the company later through product returns, service, and warrantee issues (Huang, Liu, & Muthy, 2007).

Process

It will be up to Emma Richardson to attempt to facilitate compromise between the various conflicts found in the project team. She will undoubtedly have to undergo a significant amount of preparation in order to attempt to reach any level of consensus among the group. The three primary factors that are driving the dilemma are price, quality, and the company's margins. However, in the case, all of the information given about each of these factors is based upon subjective interpretations of these factors. With the information presented, there isn't much of an objective method of making a decision regarding the future direction of the project.