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TerraCog Global Positioning Systems:

Conflict and Communication on Project Aerial

Submitted By-Mahek Shah (2010112)

Mudit Srivastav (2010123)

Mohit Agarwal (2010120)

Nikhil Beriwal (2010133)

Palak Narang (2010141)

Lokesh Sharma (2010262)

Syed Shakeeb (2010278)

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Introduction

The case is about TerraCog which was a privately held company specializing in

high-quality Global positioning System and fishing sonar equipment. Industry

reports indicated that the TerraCog GPS outperformed competing products on

navigation. TerraCog had found it was free to lag in technological innovation with

little risk because, when the company finally introduced new products, they

surpassed those of competitors in addressing customer needs but in 2006 a

competitor, Posthaste, had unveiled a GPS prototype called BirdsI that displayed

satellite imagery. This was the marked improvement on the simple, vector based

graphics used by the rest of the industry. TerraCog team was not impressed by

BirdsI but a number of key buyers and product reviewers found it an exciting

innovation. In fact, it had an exclusive launch at two major national outdoor

retailers, both of which were key accounts forTerraCog. By 2007 TerraCogs sales

reps were noticing increasing customer demand for a GPS with satellite imagery

like BirdsI. TerraCogs executives debated whether to upgrade to satellite imagery.

However, they realized that adding the feature to the existing GPS platform

required upgrades to processor speed and memory, as well as new firmware.

Richard Fiero, president of company, changed his mind on satellite imagery, if

only to satisfy the gadget appeal of such an innovation. The initiative was

dubbed project Aerial. In order to speed development and avoid the costs of new

moldings and major reconfiguration, the team decided to redesign within the

existing platform. After making the decision, Allen Roth, director of design and

development, brought his key managers to the meetings. As the meeting ended,

Roth indicated that key would have to do some careful planning to keep the cost as

low as possible. The product development team did not greet the aerial decision

with enthusiasm because they felt that a redesign of the total platform was feasibleif management could extend time to market by six or more months. In pre-launch

meeting, there were some conflicts between members regarding cost cutting which

was continued in the second meeting also. Emma Richardson, executive vice

president, wondered fleetingly what the consequences might be if the company

abandoned Aerial altogether. As things stood, the arguments and finger pointing

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were bound to continue and the group would never come to a decision on its own.

Richardson would have to push them to one. By solving the conflicts and making a

decision that would be fruitful for the company TerraCog can launch its product

and gain success in market.

Analysis

In the case there is functional conflict between members whether to launch the

product at a competitive price in the hope that costs might be cut in the future or

they can launch the product at high price. The reason for calling it functional

conflict is that the goal of conflict is to come with a better product to sustain its

position in the market.

There are situations in which conflicts could be avoided-

After taking the decision of redesign the product, Roth indicated to keep the costs

as low as possible but they were not aware of the production, whether the costs

could be low or not. As a structural factor, specialization could be considered a

reason for conflict between members. Product development team demanded six

more months to produce a superior and better product but company co-founder

Harold Whistler was preparing to retire, Roth was eager to prove his readiness to

be the next VP of design and development. It shows the deviation of Roths goal

fromT

erraCogs goal.T

his difference of goals can also be considered as a reasonfor conflict.

In TerraCog the work was interdependent as different departments depended on

one another to accomplish the goals. The task is easier to accomplish when the

process works smoothly but in this case there were many interdepartmental

conflicts regarding the pricing of the product. The pricing was dependent on the

cost analysis by other departments which was making it tough for the sales

department to decide on whether to launch the product or not.

There were instances in the case that reflected the employees had started adopting

the defense mechanisms when in conflict.

Flight or Withdrawal Mechanisms: Ed Pryor (VP, Sales) If we cant lower

these costs and fix the finances on Aerial, I cant sell it. I wont try.

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Aggressive Mechanism (Fixation): Tony Barren (Director, Production) You

cant wish away the costs. Weve cut what we can. Last time we got pressured into

being too aggressive on cost estimates and then we got burned when the price of

plastic went through the roof. Im not making that mistake again.

Problems in the Organization:

There was problem in communication between the departments. As there was

communication gap between Design & Development and Sales department.

Unclear priority or desired objective of the firm

The entire department aimed at profit maximization but failed to specify howthey aim to achieve that target. Profit maximization being a vague goal needs to

be specified how it could be achieved. For instance sales department of the

organization wanted the production department to produce a product which

included all the features at an optimum price, but they failed to understand that a

premium product would result in cost of the product to increase beyond the

expectation of sales department.

Lack of Communication

Sales department made it clear to the production department to produce a

product with all the features, i.e. making Ariel a premium product. But they failed

to communicate to the production department that they also need the price to be

lowered, which according to them was an important criteria which need to be

fulfilled. Also the sales department should communicate their lower confidence

level in selling a premium product, which could there of result in product made to

be above average product with relatively lower cost, as the features included

would reduce.

Lack of leadership skills

Richard Fiero, President lacked leadership skills. This is evident from the fact that

he did not take any quick decision when the competitive product BirdsI was

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launched in the market. The company was extremely confident that their product

Aerial is much superior to that of Posthaste. He was later persuaded to take a

decision on the product by the sales department when the sales started dipping.

Even then Fiero did not consult the Design and Development as well as the

Production department.

Further the president did not pay heed to Harold Whislers opinions. Harold was a

co-founder of Terracog and had a lot of experience. Also in the last meeting

Harolds opinions were not considered and Richard Fiero was not present to listen

to his important views.

Also the entire projects responsibility was on Emma Richardson who had just two

months of experience in this role. She could not direct the group discussions

effectively which could not lead to any productive result.

Solution :

For organization :

Collaboration between departments win win situation

OPTIONS

1. Launch the product at a higher price for now till the time the company canwork on reducing the cost.

2. The sales and design team had a scope for engaging in functional conflictbut that seems to have degenerated into a dysfunctional conflict. They

have lost sight of the main target of earning profits and maintaining their

position as market leader.

3. Superordinate Goals: The parties should keep the long term goal ofretaining the market share. With this larger goal in mind, both parties

would be better able to coordinate to achieve a common ground. They also

should be able to envision the situation from the viewpoint of the opposing

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group.

4. Confronting and Negotiating: Instead of focusing on the negativity theyshould try having an open discussion of the problem to find creative or

innovative solutions.

Managerial Learning:

y How to manage conflicts within organizational groups.y Understand how organizational decision-making can be affected by group

processes.

y How to analyze a managerial situation that requires quick decisiveleadership response.