• Le Petit Chef is a French manufacturer of kitchen counter-top appliances
• Brigitte Gagné is a Director of R&D (Microwave Division) at Le Petit Chef
Le Petit Chef's performance had been steadily declining for the past five years
• The marketing and sales staff complained loudly that new products always shipped late, and
that these delays had recently been getting worse.
• Yet her own engineers complained just as loudly that they were overworked.
Put yourself in the position of Brigitte Gagne, Le Petit Chef's new R&D manager (microwaves).
She has a tough deadline to meet - the Executive Board will meet tomorrow in Paris to review her decisions.
• 35% of manufacturing costs for microwave components
such as the magnetron and the high voltage power supply
unit -> standardized components from a few global
suppliers
• 40% of manufacturing costs for sections of the microwave
oven, such as the electrical controls, cavity, and door -
tend to be developed and manufactured in-house by most
manufacturers
• United States, Europe and Japan being the three largest
regional markets > 65% of worldwide shipments
• Considerable variation in the types of cooking tasks for which
microwaves were used in each regional market
• Faster growth in the top end of the market, favored
manufacturers like Le Petit chef
• Heterogeneous market: European countries had widely
differing food preferences and employed diverse cooking
techniques
• Global plavers in Europe: economies of scale and scope
from centralized R&D, sales and marketing, and low-cost
component manufacturing and distribution facilities
worldwide, to lower their manufacturing costs and improve
operating margins
• Le Petit Chef was a privately held, regional manufacturer of
kitchen counter-top appliances such as mixers/blenders,
coffee/expresso machines, griller/toasters and microwave
ovens.
• With 61% of unit sales, and comprising over 85% of Le Petit
Chef's revenues, microwave ovens were still the mainstay of
the company.
•Le Petit Chef products were differentiated through their
emphasis on technical innovation and performance features
• Exclusive recipes for the combi-oven distributed free with
every purchase, had popularized the product, while
extensive advertising had created a strong brand image of
innovative design and high performance - recognizable
brand identity
• Premium price range
• 600+ person strong organization
• Manufacturing facility and administrative departments
geographically separated (see Exhibit 8 for organization
structure
• Producing 500 000 units of microwave ovens and other kitchen-
top appliances annually
• Operating structure: simultaneously deliver high conformance
quality, reliable order deliveries and low costs
strong control over suppliers and outbound logistics with heavy
investment in R&D and continual improvements to its
manufacturing processes
• network of 3,000 Hypermarkets and Electrical retailers that also
sold competing brands -> sales team (50 persons) maintained
direct relationship with retailers
• R&D team of 35 engineers developed new appliance models,
while also providing technical support (10% of their time for
existing models and production support to the manufacturing
facilitv
•Egalité and Liberté line of microwave ovens
• With two major product platforms, the line quickly expanded, as different size cavities and different accessories were added to each
model -> See product line map
Three stage process for project selection:
opportunity development (1): R&D-led meetings with marketing and sales, to sense consumer trends, with lead technical developers,
to identify new technical directions, and with manufacturing, to scrutinize promising process enhancements;
• opportunity refinement (2): R&D screens "ideas" into a number of viable projects, and proceed to document these as formal
development proposals, gathering input from marketing/sales/manufacturing areas as needed (e.g., for cost reduction proposals, no
marketing input was considered necessary). The information was then synthesized into a formal NPV (net present value) worksheet
opportunity selection (3): the director of R&D selected the projects to be funded, taking into consideration the projected returns from
each, as well as the resources available to work on them
• Project execution: Individual projects were organized with clear leadership from the R&D unit and included members of manufacturing,
marketing, sales and service. The project plan included the VP analysis, a project charter, and the detailed sequence of project
activities split into a number of different phases separated by clear decision points for review by the heads of all departments - project
delavs started
• In early years: high margins from its microwave ovens driving financial returns near the highest in the industry
• Company is one of the highest R&D spenders in the industry (4.4% of Sales)
• Over the past few years: increasing competitive pressures, as well as new entrants in the cooking appliances market
• Larger European players moved up-market: players had leveraged their broad expertise in designing and manufacturing large
domestic appliances to successfully develop and introduce high-end microwave ovens at low cost
• Asian consumer electronics manufacutrer had diversified into microwave ovens, often using their global distribution network to
ship ovens to Europe
—> Microwave prices are declining at over 10%
• Risk sth. and invest in innovative projects (fuzzy logic)?
• Introducing low-cost, low-end "Fraternite" line for both the European and the global market?
• Projected return on the project (fuzzy logic), which was far below the others on the list
• Furthermore, where would the resources come from for a completely new original design?
What should Gagné do?
In particular, what projects should she carry out and why? How should she approach the meeting?
You can make the case for any Project really, the following image shows the reasons why to do each Projects.
But we also need to look at the resources we have avaible in the first place
And also at the Projects currently running @ Le Petite Chef
lets go into more detail
ultimatly we don’t really have capacity left to do any Projects
even worse if we look at the roles needed to complete the Projects
We Can’t do anything
What explains the declining success of Le Petit Chef and what should the company change?
There is something wrong in the way how the projects are selected
they projects are not aligned w/ the strategy
the only criteria looked at is the NPV
(also no true up process and only bottom up project idea generation)
—> we need to introduce a new Process to select Projects
We look at the Landscape in Dimension and Categories.
Each Project can be assigned/grouped into them
now by selecting how much we want to do for each category we can ensure that we do enough Projects in each category.
—> Strategic Buckets
(Bonus Exam Question) Fehler im Portfolio von Fr. Gagné (3 Punkte)
(aus dem Gedächnisprotokoll)
—> Zu viele Projekte
—> Zu starker Finanzfokus auf Nettobarwert
—> keine Top-Down Strategieausrichtung
—> keine überfnuktionale Koordination
Möglicher Lösungsansatz:
• Festlegung einer Unternehmensstrategie
• Klassifizierung von Projekttypen
• Entwurf eines aggregierten Projektplans
• Spezifische Projektinstrumente
Zuletzt geändertvor 2 Jahren
