Professional Documents
Culture Documents
Microwave Ovens
Arun Shan S Pankaj Kesarwani Paul joseph Priyank Srivastava Sowmiya V Sowmya Borra
AGENDA
Case Facts Core Issues Factors for Poor Performance Stage Gate Model Product Selection & Development Plan of Action
CASE FACTS
Microwave oven History
1940 - RADAR(Radio Detecting and Ranging) 1946 - Magnetron and Chocolate Bar 1947 - The first commercial product hit the market 1952 - First home microwave model at $1295
Door
Controls
10%
10% 10% 15% 100% 40%
5%
3% 100%
RECENT DEVELOPMENTS
Advances in wave-guide and cavity design. Combi-ovens - A combination of microwave and other cooking modes (steaming, browning and grilling) Accessories - Allows users to cook specific types of food with greater consistency Intelligence - Fuzzy logic (new control technique)
27.7
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
LE PETIT CHEF
Founded in 1989 by Laurent Laferriere Product line includes Mixers, coffee machines, griller/toasters and microwave ovens Egalite & LiberteHigh end segment micro ovens Combi-ovens Microwave ovens 85% revenues Largest Markets France & Rest of Western Europe Appliances sold in 12 European countries
EXISTING
Back Ground
PIC
o The European Microwave oven has an average household penetration of 58% by 1999. o The buyers also prefer higher end products.
Focus
PRODUCT MIX
TURNOVER
BY
GEOGRAPHIC REGION
7% 15%
Microwave ovens Breakfast appliances Mini ovens
8% 8% 8% 41%
Western Europe France
17%
61%
35%
Food preparation
STRATEGY
Encouraged strong inter-functional coordination and cooperation Operating structure High conformance quality, reliable order deliveries and low costs Differentiated through (High investment in R&D) - Technological Innovation - Performance features
PROJECT SELECTION
Opportunity Development
Series of R&D led meetings with Marketing & sales to sense customer needs Lead Technical developers to identify new technical directions Manufacturing to scrutinize promising process enhancements
Opportunity Refinement
R&D screens ideas into a no of viable projects and documents as formal development proposals Gathering inputs from Marketing, Sales and Manufacturing as needed Prepares pro-forma NPV worksheet
Opportunity Selection
Director of R&D selects the projects to be funded Taking into consideration the projected returns from the available resources
PROJECT EVALUATION
A cross-functional working group was set up to project execution process
Individual projects were organized with clear leadership from the R&D unit
and included members of other units Project plan include the NPV analysis, a project charter and the detailed sequence of project activities for review by head of the departments
CRISIS
Trade off b/w cost & quality Lack unit volumes for each product offering Manufact Increased manufacturing complexity uring
Delay in launch of new model Lack of visible product differentiation Marketing Increased expense impacting budget
GAGNES DILEMMA
New intelligent line of oven featuring Fuzzy logic 306 people; 18 months; 7,000,000; extensive R&D
Cost reduction of Egalite to introduce a low cost, low end Fraternite line
Develop Liberte express quick heating model by upgrading to powerful magnetron Add larger cavity model to Liberte line
CORE ISSUES
Steady decline in performance for past 5yrs despite high investments and increased product lines Drop in margins due declining prices of Microwave oven in the market
Profit %
16
14
12
10
Profit %
0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999(e)
Stage Gate
Initial Screen
Preliminary Assessment
Second Screen
Definition
Decision on Business
Developme nt
Validation
o
o
Cost and Time to execute All ongoing projects which are taking more than 6 months are kept in pool for later analysis, based on companys growth/ shrinkage
PROPOSED PROJECTS
ONGOING PROJECTS
To meet improved cooking performance of the competitors Larger cavity design in stack
Larger Cavity
Customer Reaction
o Wants Le Petit to have all features that competing brands have in common
STAGE 2 - DEFINITION
Wishlist to technologically and economically feasible solutions
o Quality Function Deployment
Financial analysis
o Ensure the previous sacks were justified
PROPOSED PROJECTS
ONGOING PROJECTS
Product Protocol
Decision to spend heavily Go/ Kill Target Market Definition
o Premium segment with highly innovative product Competitive advantage for Le Petit o Survival needs targeting Price Sensitive market
Product Concept
o Concept sheet for Innovative Liberte o Concept of Modified Egalite
Positioning Strategy
o Innovative Liberte - For premium segment, based on Quality
o Modified Egalite - Existing brand, no promotion required, targeted to lower segment for sales volume (Aiming Profit margin)
PROPOSED PROJECTS
ONGOING PROJECTS
Benefits
Pricing Offering Varieties Availability
Modified PIC
Background o Profit margin declining due to lowering price to compete the Japanese and
European players and R&D at standstill due to lot of projects and resource
limitations Focus
Guidelines
o The products are highly innovative and first to market. o Reduce cost wherever possible without compromising much on quality.
Competitive Comparison
o Quality
Augmentation Dimension-
Timing
o Developed and Launched in 12 months
Market Requirement
o Cross Functional Team to integrate R&D and Marketing Team o New promotional and Advertising Strategies.
Financial Requirement
o Artificial Intelligence and Sensors should not exceed 70lakhs(FF) with 20% tolerance o Quick Heating Model Should not exceed 155lakhs (FF) with 10% tolerance
Production Requirement
o Quality should be given utmost importance
o Efficient logistics and transportation to reduce cost(where ever possible) and avoid delays
Corporate Strategies - Serve upper end market with supreme quality product at competitive price through:
o Lower cost design o Automated Manufacturing Facility o Improvement in operation o Global Component Sourcing
STAGE 3 DEVELOPMENT
Testing, Marketing and Operational Dimensions
STAGE 4 VALIDATION
Product, Production, Consumer Acceptance User/ Field Trials
STAGE 5 COMMERCIALIZATION
PLAN
OF
ACTION
Short Term Goals More Sales Volume Increased Profit Margin Financial Support for R&D
Consumer Acceptance
One touch cooking and expand recipe offerings(to compete with current models)
LONG TERM
Time Period- Reduces from 18 months to 12-14 months.
POOLING
o Marginal Cost Incurred o Remaining time of Completion o Market response
OF
RESOURCES
All the selected ongoing project are shortlisted on the basis of two parameters:
Modified Egalite
o Resource Required- 72 person month (72/6=12).Therefore,12-6=6 more people are required. o Cost incurred- 2 Crores + 10% o Additional Comments-Some human resource (R&D) can be liberated from by dropping other projects
DECISION ON PROJECTS
ONGOING MICROWAVE OVEN R&D PROJECTS No Project Description Number of Months Reqd 5 Orginal NPV Comments of Project (FF) 16,000,000 Market feedback from retailers Sales & Service feedback. All major competing models have this
Improve external finish, Colors & contours to make them more aesthetically differentiated Change grill element material in liberte to extend life. Redesign the Egalite user interface for faster user input (one touch cooking ) and expanded recipe offerings)
3 7
3 6
7,000,000 13,700,000
306
12(18)
26(9) 84,00,000.00
Modified Egalite
72
6(12)
Liberte Express
24
6(6)
Thank You