Problem:
General Electric had 3 goals: achieve world wide product quality and profitability, world class leadership and productivity and increase "job security through high quality" (Ellet, 2007).
With $28 million invested in Project C the board of directors outlined objectives to be met with this project; maintaining the top quality by using Perma Tuf throughout al product lines, and achieve significant cost reductions in product costs, transportation costs and service calls costs.
It was critical for Corcoran to decide which modification was best suited to implement Project C that meet all of the goals and objectives, with the added pressure that if any modification suggested required more than 10% net additional investment he would have to go back to management for formal approval.
Diagnosis:
When Major Appliances Business Group (MABG) discovered their diamond in the ruff; Perma Tuf, a top product that saved costs and out performed its competitors. They did not want to cheapen their brand and launched Perma Tuf in model A as a high-quality product rather than a contractor low end model. In order to meet strict timelines for project A they did not follow normal testing protocols which proved detrimental. They tried again with model B by changing prices and features hoping to generate sales and customer interest but, to no avail. Models A and B sales proved to be 30-40% below sales targets. They had to in a sense revert to their original plan of launching Perma Tuf as a one piece tub in the low-end product line.
Proof of causes:
They were so focused on brand image they forsook quality and customer satisfaction two of their top goals by not following proper testing protocols. Another asset they overlooked were sales people who did not want to sell an inferior product.
They also had to consider the manufacturing plants capability and therefore, tried to reduced costs and improve quality by redoing major sections of the plant to accommodate the vision of what the project wanted to achieve.
References:
Ellet, W. (2007). The case study handbook; How to read, discuss, and write persuasively about cases. Brighton, Massachusetts: Harvard Business Review Press.