Terracog Global Positioning System: ‘Conflict in the launch of project Aerial’

Case Analysis prepared by Mr. Prasenjit Paul, Roll No. epgpx02.037

Executive Summary:

TerraCog is a privately held company that produces Global Positioning Systems (GPS) and
fishing sonar equipment. TerraCog has been in this business since 1977 and over the years
has built themselves a reputation for manufacturing high end products, which they
specifically market to campers, hunters, hikers, and fishers. The company has always been in
a growth trajectory because of its uniqueness in translating retailers and user’s feedback in
designing exceptional products. In the past, the company has had no trouble not being the
first to market. They have been free to lag a bit behind the competition because of the quality
of their products which outperformed in the market and gathered significant plaudits from
their customer.

Situation Analysis/Problem Identification:

The problem began in 2006 when Posthaste, a competitor, introduced a new GPS
prototype “BirdsI”. BirdsI displayed satellite imagery by using static satellite photographs
and stitching them together to create one image. At the first instance, Terracog dismissed the
new technology introduced by Posthaste as they predicted that BirdI will fail to attract a
significant customer attraction.

BirdsI was launched in October 2006, successfully, earning impressive sell-through

rates nationwide. By the spring of 2007, TerraCog starts noticing customer’s inclination for a
GPS with satellite imagery like BirdsI. TerraCog realizes their mistake very lately and starts
plans for their own satellite imagery GPS, which they named “Project Aerial”. In order to cut
down on development time and costs, they decide to redesign their existing GPS product.

Amidst initial low response from the production team, the design team completed
Aerial by the end of 2007. After a couple of meetings with the higher-ups of the company,
there was a mix response by all the team members related to pricing for Aerial. The price was
previously fixed at $550/- but as these price was abruptly high considering its launch 2 years
later than BirdsI, the production and design team were suggested to cut short the price which
later dipped to $475/-. There was a heated discussion between the production and design
team with the Sales team on March 14, 2008. Mr. Ed Pryor, the Vice President of Sales is in a
fix that the price needs to be cut down further to $425/- but Mr. Allen Roth, Director of
Design and development along with Mr. Tony Barren, Production Director is of the view that
further reduction in price will compromise the quality. No team member could come to a one
point decision due to which they could not come to a consensus on the right path forward for
Aerial.

The group goal was to make a “go/no go” decision on whether or not to move
forward with the Aerial Project. However, Mr. Richard Fiero, the President has tasked
Emma Richardson, the recently promoted Executive Vice President with greater

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 Terracog Global Positioning System: ‘Conflict in the launch of project Aerial’
Case Analysis prepared by Mr. Prasenjit Paul, Roll No. epgpx02.037

operational alignment and increasing cross-department co-operation. With this Emma

Richardson needs to take the decision and push the team to a cognitive decision that will be
beneficial to the company in long run considering the present scenario.

Key Decision Areas:

(a) Short Term Decision areas: The team has to decide whether or not to launch the
product.
(b) Medium Term Decision areas: The team has to decide the correct pricing for their
product to gain the competitive advantage and in order to remain in market.
(c) Long Term Decision areas: To develop a unique product in parallel with the launch
of their pre-modified version that is cost effective and be a market leader.

Objective:

(a) To reduce the communication barrier. There is no clear cut agenda for a meeting.
Team was not clear about the price point where they will coherently agree upon for
better positioning the product in the market.
(b) To address the leader. There is no leader in the group and each individual is just
abruptly placing his views one over the other. In this manner, the meeting is lacking
direction and there is no clarity in decision making. It is desired that as a leader, Richard
Fiero, President of the company needs to give a proper direction to the entire team
member and direct duties accordingly.
(c) Inter group conflicts needs to be resolved and each member should stand united in
giving a right pricing decision for the initial launch of the product.
(d) To better position the product in the market and to gain a competitive advantage from its
peers.

Criteria/Need of the situation:

Shift from Departmental goal to Organizational goal: From the case study it is quite clear
that each department is aligned to their individual departmental goals rather than focusing on
overall organizational goal. The key unit managers are engaged in a pair of contentious
meeting that features anger, blaming each other and bewilderment. The need of the hour is
that to develop a cross departmental environment within the organization. For launch of a
new product, an inter department team needs to be made which should be monitored directly
by Richard Fiero or by Emma Richardson.

Possible Options to the Problem:

(a) Launch Aerial at $475/- and then redesign as suggested by Harold Whistler.
(b) Launch Aerial priced at $425 with no margin
(c) Abort the launch and try focusing in other market segment.

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 Terracog Global Positioning System: ‘Conflict in the launch of project Aerial’
Case Analysis prepared by Mr. Prasenjit Paul, Roll No. epgpx02.037

(d) Delay the launch by 3-6 months. During this period, redesign and then develop a
product that can be easily launched in the market.

Evaluation of options:

If we go by Option (a) and try to launch Aerial priced at $475 and keep on redesigning cost
effective model, it will be a costly affair as it will be hard for the sales team to introduce the
product in the market.

If we go by Option (b) and try to launch Aerial priced at $425 with no margin along with
simultaneously looking for new ways to improve the design in order to cut more costs but the
glaring problems with this is the decreased profit from the reduced price and it would also put
more pressure on the design team to reduce costs even further which will involve
compromise with the quality.

Option (c) is also an ideal option but it will affect its brand recognition for innovating and
developing exceptional products related to GPS.

Option (d) seems to be an ideal solution to the case analysis.

Recommended Decision:

Considering all these options, it is recommended to go through the Option (d), as it is a

renowned market brand which has significant discerning customer base which mainly prefer
their high-end products. Although it will take time to develop the new product but still it can
be designed with thorough research and at a desired launch price which will be jointly agreed
upon by all departments in TerraCog. Companies known for premium products can usually
lag behind the competition for a bit as TerraCog has in the past. They would lose some
money waiting for the new launch but if they manage to come up with a unique product, their
market share is sure to soar high. TerraCog’s reputation may tarnish if they chose another
option. With this decision, TerraCog would maintain their status as high-quality producers
and is sure to receive commendable applause from its customer.

Action Plan:

(a) As most of the team members could not agree to a price point at which the product
Aerial can be launched, it is suggested that presently it will be good to abort the
launch process and a unique product should be developed within next 6 months time.
(b) A cross functional team should be selected which will be directly involved in market
research and to find out the customer requirement.
(c) According a unique product will be designed with proper configuration along with a
strong focus on its market positioning.

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Case Analysis prepared by Mr. Prasenjit Paul, Roll No. epgpx02.037

(d) This will lead to a successful launch of the product which will be unique in nature and
meet the customer requirement and add value to the company’s brand image that it
has gained since its inception.

Contingency plan:

In the event of failure of the recommended plan, Terracog has nothing to lose. It is already
attained a brand image for itself and it can continue to look forward for other market
segments by capitalizing on growth in cycling and fitness GPS application i.e. Option (c ).