TarraCog is a firm that produces GPS systems for outdoor activity. The company is very successful at what they do. But recently the market changed on how GPS systems work. People want real picture and better graphic so they can see how everything looks on their GPS system. When the technology became available TarraCog didn’t care for it, but the competitors started taking the market share for BirdsI view and customers really liked the products. After seeing what the future of the GPS system was, TarraCog wants to develop a product, which they can offer to their customers at a reasonable price. TarraCog’s team is running into production cost problem because it will cost them too much to produce the item. The competitors are offering it at a less price at which TarraCog can’t afford it. The sales team wants the company to figure out at way to cut cost so they can get sell the product at a reasonable price. The development team is saying that they have tried everything to cut cost. At the moment the development team is unable to cut the production cost because then the product will be less superior. This could give the company a bad reputation.
Company Background: The company started out in 1977, producing sonar equipment for fishermen and boaters. Then in 1990’s the company started producing GPS products for hunters, hikers and campers. TarraCog only produces high end products so their customers are limited. Producing high end product gave them an advantage because they did not need to advertise their products. The company name grew through word of mouth except doing commercials on TV or any other media.
How have departmental and individual objectives led to the current situation?
Having competition can be an advantage and a disadvantage to a company. In this case TerraCog had a disadvantage, having a competition product against their GPS (Global Positioning System) with Satellite imagery. With that TerraCog is losing shares to the competition. The company didn’t think the competitor was going to be as popular but once they noticed people like what they saw and it was in demand. TerraCog has to come up with new and better product to beat the competitor. Therefore the new product is going to be “Project Ariel” against Posthate BirdsI. At the end everyone ends up discussing Project Aerial, which all the parties need to agree on price that they can sell it at and cannot cost more than the competitor. Nonetheless, Allen Roth, director of design and development wasn’t as enthusiastic because they would have to put other exciting projects on hold due to timing. The big focus is to improve their product “Ariel” to make some cost savings. The team is being asked to come out with new and improved product by end of 2007. Which the whole team thought was possible, but once the product was being worked on they decided to change few things around to improve the quality. As the quality was improved the product priced raised to $475 but they were trying to keep it under $400.
What is the current decision-making process?
In the article, currently there is no decision making process. It seems like evaluation is being based on costs, pricing, and initial production volume. Partly, the cost is high because there were more employees involved in Project Aerial than in the past product launches. As Emma Richard, Ed Pryor, Allen Roth, production director Tony Barren, Cory Wu representing software and firmware, were attending the meeting. The meeting mostly consisted about budget. Since the product is exactly what they asked for, next thing on the list is cost. The product was expensive to build and needs to chosen on how much it can be sold for. If so where can they save money form or make any budget cuts. However the team who developed this is not able to compromise on anything more than they already have. In order for the product to be the best they have to make sure everything is working and is at its best. Now that