competitiveness. In general, enforcing a high level of standardization with strict rules and guidelines tends to impede creativity and innovation, as illustrated by Figure 1.2. Managers are expected to constantly interact and work closely with other managers to resolve such differences.
For those engineers who elect to become managers, there are skills that can be readily learned to make them more efficient and effective.These include time management, work habits, people-related skills (such as team building, communications, and motivation), and use of decision support tools (e.g., Kepner-Tregoe decision methodology, what-if analysis by modeling, risk analysis, Monte Carlo simulation, forecasting, statistics, regression, linear programming, optimization, and office technologies).
Example 1.2.
The company wants to develop a new product to preemptively enter the marketplace. Current information from marketing is sketchy, and the market size cannot be predicted accurately. Indications are that foreign imports are about to foray the market, causing the company to lose the precious opportunity of a preemptive entry.
Should the company initiate a product development program now or wait for more marketing information? Are there other options available to the company?
Answer 1.2.
Yes, there is a third option:The company can act as a distributor and import the foreign product itself, but with its own brand name.This will allow the company to gauge the market acceptance of a low-quality and low-price product. If the results show that customers like the product and the market size is large, then the company can continue importing or develop a low-cost alternative to compete.
Selling a foreign product under the company name requires that the company enter into a private-label production contract with the foreign producer. Typically, such an arrangement includes some of the following elements:
• The contract is good for a predetermined period (e.g.. two years) and renewable with mutual consent. The company agrees to pay a unit product cost of x dollars for at least y units per year. The foreign producer agrees to hold the product defect rate at or
below z per thousand. The foreign producer remains an exclusive subcontractor to the
company for the product types in question during the contract period.
• The company respects all proprietary design and other know-how of the foreign producer.
The company is obliged not to use any proprietary design of the foreign producer for the development of its own product or for use by its new production partners.
• The company is responsible for marketing, distributing, selling, and serving the product in the target market (e.g., the United States). The foreign producer agrees to upgrade product design, based on the marketing inputs of the company.
• The company strives to invest in the foreign producer for creating the next generation of products. The foreign producer has the first-refusal rights to accept such investment (i.e., funds and technology).
• Each party can cancel the arrangement after an initial period of collaboration.The foreign producer can go to someone else for marketing the product in the target market.The company may develop its own products or engage another foreign producer as a subcontrac tor.Thus, selling the foreign product does not preclude the company from selling a similar product after the contract has expired. Companies change subcontractors all the time