By 2005, Clark and Company had grown into the third largest supplier ofbathroom fittings for both commercial and home use. Competition was fierce. Consumerswould evaluate bathroom fittings on artistic design and quality. Each fitting had to be availablein at least twenty-five different colours. Commercial buyers seemed moreinterested in the cost than the average consumer, who viewed the fitting as anobject of art, irrespective of price.
Clark and Company did not spend a great deal of money advertising onthe radio or on television. Some money was allocated for ads in professional journals.Most of Clark’s advertising and marketing funds were allocated to the twoSemiannual home and garden trade shows and the annual builder’s trade show.One large builder could purchase more than 5,000 components for the furnishingof one newly constructed hotel or one apartment complex. Missing an opportunityto display the new products at these trade shows could easily result in a sixtotwelve-month window of lost revenue.
Clark Fitting had a noncooperative culture. Marketing and engineering wouldnever talk to one another. Engineering wanted the freedom to design new products,whereas marketing wanted final approval to make sure that what was designedcould be sold.
The conflict between marketing and engineering became so fierce that earlyattempts to implement project management failed. Nobody wanted to be theproject manager. Functional team members refused to attend team meetings andspent most of their time working on their own “pet” projects rather than therequired work. Their line managers also showed little interest in supporting projectmanagement.
Project management became so disliked that the procurement managerrefused to assign any of his employees to project teams. Instead, he mandated thatall project work come through him. He eventually built up a large brick wallaround his employees. He claimed that this would protect them from the continuousconflicts between engineering and marketing.
THE EXECUTIVE DECISION
The executive council mandated that another attempt to implement good projectmanagement practices must occur quickly. Project management would be needednot only for new product development but also for specialty productsandenhancements. The vice presidents for marketing and engineering reluctantlyagreed to try and patch up their differences, but did not appear confident that anychanges would take place.Strange as it may seem, nobody could identify the initial cause of the conflictsor how the trouble actually began. Senior management hired an external consultantto identify the problems, provide recommendations and alternatives, and actas a mediator. The consultant’s process would have to begin with interviews.
The following comments were made during engineering interviews:
● “We are loaded down with work. If marketing would stay out of engineering,
we could get our job done.”
● “Marketing doesn’t understand that there’s more work for us to do other
than just new product development.”
● “Marketing personnel should spend their time at the country club and in
bar rooms. This will allow us in engineering to finish our work uninterrupted!”
● “Marketing expects everyone in engineering to stop what they are doing
in order to put out marketing fires. I believe that most of the time the problem
is that marketing doesn’t know what they want up front. This leads to
change after change. Why can’t we get a good definition at the beginning
of each project?”
● “Our livelihood rests on income generated from trade shows. Since newproduct development is four to six months in duration, we have to beat upon engineering to make sure that our marketing schedules are met. Whycan’t engineering understand the importance of these trade shows?”
● “Because of the time required to develop new products [4–6 months], wesometimes have to rush into projects without having a good definition ofwhat is required. When a customer at a trade show gives us an idea for anew product, we rush to get the project underway for introduction at thenext trade show. We then go back to the customer and ask for more clarificationand/or specifications. Sometimes we must work with the customerfor months to get the information we need. I know that this is aproblem for engineering, but it cannot be helped.”
The consultant wrestled with the comments but was still somewhat perplexed.
“Why doesn’t engineering understand marketing’s problems?” ponderedthe consultant. In a follow-up interview with an engineering manager, the followingcomment was made:
“We are currently working on 375 different projects in engineering, and that
includes those which marketing requested. Why can’t marketing understand our
Part A 60%
1. What are the critical issues? (40 marks)600 Words
2. What obstacles exist in getting marketing and engineering to agree to a singularmethodology for project management?
450 Words (30 marks)
3. How would good Project Management improve Clarks operational methods and what steps would you recommend?450 Words
Part B 40%
As part of their deliberations Clarks have concluded that their packaging system is out of date and costly to run and maintain. They have identified a machine which will pack and palletize their products. The machine will cost £230,000 including installation and setting to work. This will result in saving of two operators, whose employee costs are £27,000 each. Annual maintenance is estimated at £7500, rising by 5% per year. The machine is expected to have 10 years useful life, after which it would have a residual value of £35000. The company’s cost of capital is 8%.
i) Calculate the NPV and payback period of the proposed investment and decide if the firm should proceed with the purchase of the machine. 1000 Words
ii) The Company has always relied on the Payback method when deciding upon investments you must therefore explain what the differences are between the methods and why NPV is a more reliable method for a project such as this 500 Words
Place an order of a custom essay for this assignment with us now. You are guaranteed; a custom premium paper being delivered within its deadline, personalized customer support and communication with your writer through out the order preparation period.