Flight of the Kittyhawk
In an attempt to increase the market share with in the digital memory division (DMD) of Hewlett-Packard, management decided to analyze the potential profitability of developing a 1.3” drive that would surpass the current technology within this continually growing market. Teams comprised of the best and brightest employees, within the organization, were tasked with developing this new product from the ground up. After successfully delivering on their goals, the new drive was ready for the customer. Initial sales were one tenth of the prescribed figures and the 1.3” drive was scraped, even though it was a far superior product to the current technology available at the time of introduction. Throughout this case study I will outline the reasons this project ultimately failed and discuss how some of the mistakes that lead to the drives demise were actually rational decisions.
Most of the decisions that HP made regarding the Kittyhawk project were fundamentally sound. For instance, the senior management was in full support of this project, including the executive vice president of the computer products organization. This ultimately increased the success within the development stages of the drive and allowed the team to seamlessly achieve milestones within the projects timeline. Secondly, the team was comprised of talent that did not possess the traditional development process that a large firm like HP is accustom to. The group was also physically segregated from the company and was given the financial backing to achieve the projects critical objectives. All of these decisions by HP gave the project autonomy from the traditional HP development procedures. This approach help the development teams operate as a sma...
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...nths they would need to produce a high volume with low margins and this was not possible at the time of release and the project was scrapped.
From initial assessment the project had all of the indicators of a sustaining product line. Which would justify all of the decisions management made as rational. Making a product with increased critical performance features with our current processes and enhance the value system of HP sounded great! Unfortunately, this was a disruptive technology that should have been developed for less than $50 and marketed to gaming community. This case is a classic lesson on the importance of knowing what direction you development team is going, sustaining or disruptive, and accurate categorization. If the project is incorrectly categorized it effects all facets of business including finance, development, marketing, and, management.
Once the new products are identified for your business (Milestone One), how has the use of technology helped or hindered this organization in determining which new products to
Summary of Clock Speed: Winning Industry Control in the Age of Temporary Advantage by Charles H. Fine
Capital requirements to set up an assembly line to produce PC's are also relatively low, estimated at roughly a million dollars (Rivkin & Porter,1999 pg. 5) which means that virtually any firm can enter the market easily. Despite sky rocketing demands for PC's, PC producers are unable to capitalize due to increasing number of competitors. The PC industry is also affected by environmental turbulence due to price fluctuations of its components. Constant innovation in PC technology causes older components to be rendered obsolete and prices of older versions to plummet. PC producers who are stuck with inventory of obsolete products incur high costs of dumping these components.
If Lars decides to invest around $6 million more in research and development, it is highly risky as the company’s survival depends largely on the success of the launch of Ray’s new product into the market.
1. How and why did the personal computer industry come to have such low average profitability?
Unfortunately for Byte the demand for these computer components have increased and Byte simply can not meet the demands. This dramatic increase in demand has allowed many new firms to enter into the industry and have cause an increased number of competing firms. Although Byte management and shareholders are pleased with the profits and growth of the market, it still faces a major issue of the increase in demand. Byte currently operates three manufacturing facilities that operate 24 hours a day, with three shifts, and 7 days a week. This constitutes the maximum production capacity that Byte can do and can not increase its output.
For many years, IBM succeeded in holding a very good market position. In fact, the company achieved a very high market share and huge profits. However, this situation did not last forever. In 1990, IBM experienced its first quarterly loss of $2billion due to some unexpected accounting charges. However, revenues increased from $62.7 billion in the previous year to $96 billion. In 1991, the c...
Although the initial results were appealing, the move had a massive negative impact on the company’s future.
emerging or new market. It can originate from new technology or new market opportunities (Eliashberg, J., Lilien, G. L., & Rao, V. R. 1997). Literature defines product development as exploiting an untapped market opportunity and turning it into a value product for customer satisfaction. Development and introduction of a new product requires extensive research on understanding customer needs, market structure, emerging trends and analysing the internal & external competitive market environments. To evaluate customer satisfaction previous researches provide strong relationship between customer satisfaction and product quality, product features and value for money. ***
With the performance fell beyond expectation, Best Buy announced The Renew Blue strategy in 2013 th...
With all of the designing that was happening in the company, it helped to shrink its profits. Lego City was a popular toy for children but the redesigning shrank the sales and attention the product was once getting. A worker of Lego said it well when he said, “Management was to blame, the same people who were doing crappy products then are making world-class products today” (Greene). Essentially the managers and higher up executives didn’t communication what direction the company should be going. They didn’t have a strategy to follow and tell their employees. With no clear strategy and communication in place, things were a free for all. This lead to the declining profits and stability of the company. Lego assumed that if the designers were able to create whatever they saw fit, that somehow it would lead to a breakthrough in the toy maker’s product line. However, this ideology backfired with high production costs and low profit margins.
With a near total saturation of the consumer electronics market, companies need to look beyond their boundaries and add value to their offerings, and sometimes it means total reinvention of the company.
DataClear had also recorded very impressive sales growth in its first two years and, given the projections, were looking at 300 percent average revenue growth thru '02. The case analysis available shows that DataClear has a $600 million annual domestic market for its current product and $1.2 billion when you add in the global market in telecommunications and financial services. With product expansion, there was a potential annual $2.7 billion market ($1.5billion domestic/$1.26 billion abroad) to target in the telecommunications, financial services, chemical, petrochemical, and pharmaceutical industries combined.
In terms of the whole project the main issues faced were around no changes to project schedule as it is not flexible and project must be completed within 1 year and the scope must be supported and not changed, and it was challenging to find a vendor who could meet these criteria.
...shed these devices with added features and improvements. However, they are still the same basic devices. These products, built upon incredible foresight and attention to detail, carried tremendous customer loyalty and high margins.