Without a unified goal and a lack of leadership and communication, TerraCog has found itself in a tough situation on whether to sell its new GPS system, dubbed Project Aerial, at a competitive price or at a higher price. Their main competitor, Posthaste, has been slowly taking shares from the company with their satellite imagery GPS system that has been on the market for almost two years. As the threat of this competition continues to pressure the company, TerraCog seems to be straying away from its core competency of producing higher quality products compared to its competitors. Internal issues also arise as personal goals within departments interfere with other department goals, hindering the success of their main objective. Emma Richardson, the Executive Vice President, now must make a final decision on how to price the Aerial.
With Harold Whistler, the VP of Design and Development, near retirement, Allen Roth, a current director within the same department, aims to take on the role of vice president. Project Aerial has been taking away time from Roth to complete more exciting projects that he could use to promote himself as a strong candidate for the soon to be available VP position. This is an example of Value Theory of Job Satisfaction: a theory suggesting that job satisfaction depends primarily on the match between the outcomes individuals’ value in their jobs and their perceptions about the availability of such outcomes. Without the opportunity to complete the projects he prefers, and his high level of valence towards the vice president position, Roth is dissatisfied with the current Project Aerial. During the Aerial pre-launch meeting, Roth addresses his concerns and mentions that his other projects have been put on hold, but is ignored. At the following meeting a week later, Roth responds to Whistlers suggestion for a redesign by saying, “That’s wishful thinking.” This remark doesn’t add any value to solving the issue. Instead of taking the idea into consideration, he ignores what Whistler had proposed because he does not believe anything additional can be done with the current requirements given by the sales team. Roth believes that he has done his part by meeting the initial requirements and is frustrated that he cannot get back to work on his own projects. Roth needs to realize that his actions within Project Aerial could also help him achieve his goal of becoming the next vice president. He needs to focus on the task at hand.
Tony Barren, the current director of production, is also slowing down Project Aerial because of personal matters from a previous project. Barren is being asked to continue to cut down the cost of production, but ignores this request because the last time he was told to be aggressive in cost cutting measure, the project was unsuccessful. This has caused a fundamental attribution error for Barren. The company president, Richard Fiero, blames Barren for the failure of the previous project, causing him to look at Barren as a liability. He even mentions to Richardson that Barren is on thin ice. Since it is Barrens goal to not lose his job, he has become narrow-minded and closed off by the suggestions of his teammates. This has also created a negative impact on how he speaks during the meeting as he uses phrases such as, “Well, we don’t perform miracles,” and, “You can’t wish away the costs.” This tone is unnecessary during an important meeting, especially when there are already a plethora of problems to address. Barren needs to learn how to better communicate his concerns while separating his personal matters from the assignment on hand.
Understanding the costs is the main concern for Cory Wu, Manager of Software & Firmware Design. He continually commented on how the costs are not justified as he attempts to see the correlation between inputs and outputs on the Aerial. After a taking a look at the shaved costs of eight percent, Wu uses an unimpressed yet surprised tone when addressing his lack of understanding of the costs. This occurred a week after Barren and the design team reexamined the Aerial in search of cost cutting opportunities. With such a response, this can cause Wu’s fellow employees to become frustrated with him as he undermines their work. At the same time, Wu can also be addressing a serious concern on whether Barren and the design team are working hard enough, especially with Barren attempting to protect his position. It seems that there is a significant lack of transparency between the sales department and the other departments, causing much confusion and misunderstandings of what they need to accomplish.
Ed Pryor, VP of Sales, is especially driven by his own personal desires over the other TerraCog employees. Pryor mentions that compensation plans have already been changed for the sales team and if the sales targets are not met, they would suffer a loss. More importantly, he adds the phrase “including me,” as he mentions this. Pryor is driven by the compensation plan and wants to be able to achieve proper sales margins so that this plan will not suffer any more than it already has. For this reason, he constantly asks other departments to cut costs, although he does not communicate this in a constructive manner. In addition, Pryor displays a lack of cooperation when he announces to the entire room that he will not try to sell it if the costs are not cut to reach his desired margin. There were many instances where Pryor is putting other departments to blame for not being able to meet his figures. He is also too focused on quickly selling what they already have, rather than taking the time to produce a product that better justifies its premium. Pryor needs to be able to compromise with other employees as well as listen.
Finally, Fiero seemed to only have one thing in mind; to launch the product as soon as possible. Given the competition, Fiero is concerned with pushing the product out as fast as possible. It is also mentioned that Fiero has the tendency to make quick decisions. He displays self-efficacy. Fiero is trying to keep the recognition of the company high; however, if he is making rash decisions without the consideration and expertise of the team, it will hurt the company instead. An important factor to keep in mind about goal setting is whether or not a task is realistic and attainable. To launch a product with the same or higher quality of its competitors, at a low cost, in a short amount of time is not realistic. Furthermore, we can see the false consensus effect here. That is, people tend to see their own views as more common than they really are which leads them to believe that others share their views. For example, the sales team does not believe that Fiero wants them to produce the same product as its competitor. Fiero believed that customers would choose quality and durability of their product rather than to have a satellite imagery feature, although it is later discovered that this is exactly what the customers wanted. Fiero also jumps to conclusions. After hearing grumbling from Ed and the sales team about being frustrated with the production team, he quickly puts Tony Barren to blame. This frustration coming from sales could have been due to any person within the production team, but since Barren had his previous project mishap, he is immediately targeted. Fiero needs to uncover the entire picture before jumping to conclusions or making rash decisions as well as taking the time to consider more suitable options. In addition to individual issues, TerraCog lacks a sense of leadership. The many departments seem to continue bickering with each other with no one able to make a final decision. Richard Fiero, as president, needs to give directions to the employees as well as increase his level of leadership. It is evident in several instances in which he fails to do so. First, he didn’t react fast enough to the launching of “BirdsI”. If the company didn’t ignore the idea of shifting to satellite imagery, the damage would’ve been minimized. Second, he made the decision to launch Aerial based on Ed Pryor’s information without consulting with the rest of his team members. Lastly, he did not consult with Whistler on the project when he was already involved in new products. In reference to exhibit 5, we can see how there is no clear leader by the positioning of the seating. The members were divided according to their department. The way everyone conversed made it seem as if it was departments were separated and locked in a battle. Another essential part of the issues at TerraCog is the lack of communication. The meetings didn’t have a fixed agenda. The meetings are highly disorganized and seem to produce a chain of additional problems with no side willing to budge. There was even a point where the sales team did not want to discuss the positioning side of the project, ignoring concerns of other departments. Without a proper authority figure, there was a lack of cohesiveness in the meeting. Although not every meeting requires a leader to head it, this particular case would highly benefit from having one. Richardson showed slight glimpses of being an authority during the meetings by bringing the meeting back on track; however, she needs to assume this role more in order to keep the focus on making a decision for the Aerial launch. Also, a higher level of transparency needs to be addressed. Perhaps clearer cost reports will give a better understanding to each department as to why the price is set to where it currently is. Giving a brief summary of what each departments approach is to finding a solution can make the overall picture to clearer to all employees. Finally, compromises need to be made. In addition to the cost cutting measures by the design team, sales needs to be more flexible with the sales margin. More time must also be given to the overall project. TerraCog needs to find a balance from all departments when continuing work on the Aerial. TerraCog should also focus on itself rather than letting competitor actions dictate their every move.
In order to move forward, let us look at possible strategies that can be implemented. TerraCog may continue to launch Aerial at the price of $475. Even with the added new feature of satellite imagery, the premium that will be charged would not be justified because the speed will be reduced significantly. With the current design, this option would not be a good response to meet consumer needs while setting it apart from the competition. This would not represent TerraCog’s reputation of quality, which is the reason the reason behind the company’s previous success along with late launches. Another option would be selling the product competitively at $375. Although the price could be the driving force in sales, profit margins would be cut while the TerraCog brand would be tarnished by an inferior product. The sales team will be unhappy having to readjust their compensation plans again and the design team will be unsatisfied with releasing a subpar product. Our recommendation is to delay the launch by six months in order to properly develop the Aerial. This may seem long since the competing BirdsI would have already been on the market for two years, but TerraCog needs to have their initial launch of a satellite GPS device done properly. Since TerraCog depends on the features and quality they offer, this will be an opportunity to develop an enhanced version of the current model that can satisfy the customers. Customers will perceive the new Aerial to be better than BirdsI and remain loyal to TerraCog, gaining market share. The increase in price will be justified as well as have the potential to increase profit margins. If TerraCog is still undecided on how to price their product, having two versions of the Aerial simultaneously released at a later date can be beneficial in expanding their capturing of the market as well as better justifying the more expensive version through contrast.
For future products, TerraCog should consider larger-scaled methods of reducing manufacturing and shipping costs by investing in closer plants as well as developing better distribution channels. In addition, TerraCog may also want to have a strong research and development team in order to capture demand ahead of time and not let an incident like the BirdsI occur again. But as of right now, TerraCog must focus on fixing its internal problems, which will result in its overall success in the long run.