I believe she should take on the projects that have visible differentiation and also take on the high-end microwave oven with the fuzzy intelligence. It is apparent the competing companies are utilizing technologies that are cheaper and are still maintaining their success. Le Petit Chef products are perceived as quality products, which is something that the executives know and something their current customers know.
Despite the company’s low returns, I still believe Gagne should go forward with the new high-end microwave oven because it will enhance the ease of use with minimal incremental costs. This microwave oven can also solve the problem with the variation in food quality, which should entice Gagne to go forward with the project. As far as other projects, they need to develop other projects that are all different from each other, which are visible to the retailer and potential customer.
As far as handling the executive meeting, Gagne needs to tell them that she is scrapping those several projects in order to free up more funds, allowing more money to be used in other projects and enabling them to differentiate their line. Le Petit Chef’s poor performance can be attributed to a few things. The competition of the other companies developing products that directly competes with them such as Electrolux and Bosch-Siemens.
Both companies have developed low-end microwave ovens that are seemingly very attractive to potential customer because of their brand recognition and the price of the products. Another explanation for their poor performance is the company’s lack to differentiate their lines. It is important to have visible differentiation for products so the retailer sees the difference of their products.
The Global Product Company concept means ”to concentrate manufacturing – and ultimately other activities – wherever in the world it could be carried out to GE’s exacting standards most cost-effectively”. That means that the production is moving to countries where people are mostly underutilized (the example given in the case study tells about engineers from Eastern Europe, who cost only $1,5/h). ...
If a product has a lack of visible differentiation, the retailer and potential client will question what is different with the product and why it is more expensive than the previous model. In order for the company to remedy the situation I feel they need to implement the 18-month project for their high-end microwave oven with fuzzy intelligence technology and further advertise and market the glitches that have been fixed. Further, they need to develop differentiated products in order to promote to their retailers and potential clients of their differences.