Senior Project
pauola
busn460_-_marapr_2014_gov-tec_case_1.docxBUSN 460 Senior Project
Gov-Tec Case Study
Background
Gov-Tec is a well established U.S.-based electronics manufacturing company that supplies the US government and military with personal computing and communication devices built to military specifications. Senior management of Gov-Tec has been under pressure from stockholders to develop and market products to the consumer/business markets that can draw on their vast experience and highly automated production facilities. Stockholders have sent a directive to Gov-Tec senior management to leverage their manufacturing resources and market a cutting-edge tablet computing devices as an opportunity to shift business to consumer/business markets.
Research and Development has designed three prototype tablets. You must define the product features that should be added to the R&D designs to best meet the needs of your market segments.
Parent Company Structure
While the parent company has been very successful in the government and military markets, it is felt that a new division would be needed to support consumer tablets. The tablets would be manufactured by the Gov-Tec manufacturing facility and marketed through the new division. Since Gov-Tec has a strong reputation for customer service, outsourcing the customer service function is not an option to be considered at this time.
Project Teams
Gov-Tec has organized a number of project teams from various departments in their organization to develop recommendations, estimates and a detailed project plan for the launch of the new tablet line. The project teams are scheduled to report their findings and recommendations to Gov-Tec senior management in 7 weeks.
(Below are some team requirements, but the lists are not exhaustive.)
Marketing/Sales: Determine the target market(s), product features, application software, add-on products, MSRP and OEM pricing. Develop a detailed marketing strategy. Recommend product sales and distribution approach(s) in coordination with the Distribution team. Determine market size and propose market share/sales projections. Estimate product life cycle and a recommend product up-grade and new product timing for a 5 year period. Recommend staff addition and training requirements. (Note: The “general consumer” is NOT to be the primary target market)
Customer Support: Determine the staff and equipment requirements for telephone and web based support. Recommend phone and computer equipment for the new division. Determine staff training requirements.
Human Resources: Determine the organizational structure and staff additions for the new division of Gov-Tec to support the proposed new product. Determine salary and benefit expenses. Determine staff training requirements.
Finance: Develop all projected financial statements. Determine the sales volume required to breakeven in 18-24 months. Estimate start-up capital expenses and on-going operating expenses. Develop a 5 year financial projection based on estimated sales volumes and estimated expenses. Assume appropriate corporate allocation expenses and the percentage of sales to allocate for R&D. Assume the facilities are located in Illinois for tax purposes.
Project Management: Integrate the work of the individual project teams and develop the detailed project plan for the new division start-up and product launch. Develop a detailed risk analysis and a contingency plan.
The Gov-Tec senior management team brainstormed the following list of assumptions as a starting point for the development of new tablet products and new division. These assumptions are not “set in stone” and can be negotiated with the Gov-Tec senior management representative (Prof. D.)
1. Assuming that the highly automated corporate manufacturing facility can produce tablet computers in sufficient quantities for $75.00 to $95.00 per unit depending upon features and configuration.
2. Using estimated startup and operational expenses for the new division, how many units need to be sold breakeven in 18-24 months?
3. For the purposes of this analysis, assume that the capital expense to build-out and configure the manufacturing facility is $33,000,000.
4. How should the tablets be sold? Any sales through a retailer would require OEM pricing.
5. What are the marketing advantages provided by a retailer? What value does the retailer add by being in the distribution channel?
6. Online sales would require the development of an E-Commerce solution and appropriate distribution resources. (Perhaps a website should be developed)
7. What is the marketing strategy for entry into the consumer/business market?
8. What are the target markets?
9. What is the market size for tablets? Variations of the product (product lines)?
10. What is the expected/projected market share for the new tablet?
11. What are the product features that would differentiate the new product from the competition for the target market(s)?
12. How should the tablets be branded?
13. What is the expected product lifecycle? When should new versions be introduced?
14. How long would it take to set-up the new division? A detailed project/implementation plan is required.
15. What is the configuration and staffing for the customer service department?
16. Assume that sufficient warehouse space is available at the corporate facility to handle the tablets.
17. Assume that sufficient office space is available for the new division at the corporate headquarters due to forecasted reductions in the size of the military and government operations. Recommendations for networks, computer workstations and a telephone system need to be included in the plan. Also, recommendations are required for systems related to sales and distribution.
2
Gov-Tec MarApr 2014
