INTRODUCTION

This

report deals with the problems in organizational communication and group conflict

management at TerraCog, a high tech company that develops GPS products for the consumer market.
CASE DETAILS
Terracog was a successful privately held firm specializing in high quality Global Positioning
system and similar products. Even though TerraCog was always not the first to market new products, the
company did not have any problem in capturing the market as the products were of high quality and
effectively addressed customer needs. When a competitor Posthaste introduced a GPS prototype called
Birds that displays satellite imagery, TerraCog did not see any threat, which proved to be wrong. By the
time TerraCog realized their mistake in judging Birds, the product was a huge success. In order not to
lose the market, TerraCog also plans to launch a GPS with satellite imagery dubbed Project Aerial. As
the product was to be launched without any delay, a redesign within existing GPS platform was proposed.
However, the projected costs threaten to scuttle the project.
Sales team headed by Ed Pryor feels the new product Aerial should be priced below $425 to
capture the lost market share to the competitors. As per the estimate of pricing team, price for sale
would, at the minimum, be $475. The price is quite too high for the sales team to consider. The key unit
managers gather in a pair of contentious meetings that feature anger, finger pointing, blame and
bewilderment, but produce no effective conclusion. The responsibility of pushing the group towards a
decision lies with Emma Richardson, a newly promoted Executive Vice President of the Company. Emma
Richardson is in a dilemma whether to go ahead with the Project Aerial or not.
CASE ANALYSIS
From the outset, it appears that determination of launch price of the product is the only
problem in the case. But this is only a symptom of the bigger problem within the company.
PROBLEMS AND INDICATORS
1. Lack of leadership : As a leader, Richard Fiero, President of the company needs to give
proper directions to other team members, which he fails to do. This is evident from three
instances - initially, when the company did not react to launching of Birds in time,

secondly, when the launch decision was made by Richard Fiero without consulting all team
members and finally when Richard Fiero did not consult Harold Whistler on the project.
a. Had the management of TerraCog not ignored the idea of shifting to satellite imagery as
soon as Posthaste did it, the damage would have been much less. The decisions were not
made in the right manner..
b. Richard Fiero was persuaded into making the decision to launch Aerial by the sales
Vice President Ed Pryor. Richard Fiero went ahead and took the decision based on only
one source of information Sales. He did not consult the other team members
Production, Design and Development.
c. In the past, Fiero and Whistler had been very involved in new products and tended to
make quick decisions. But now, with the impending retirement of Whistler, Fiero is not
consulting Whistler on the project.
2. Inter group conflicts : The team is not united on the common goal. Everybody wants to
protect their own turf.
a. Ed Pryor (Sales) is interested in taking up the product as he is concerned with
compensation packages and does not want to disappoint his sales team.
b. Allen Roth (Design & Development) and his team are not happy with the decision
made because they feel that there are several other exciting projects that are being
compromised upon. Further Roth has his eyes set on the post of Vice President (Design
& Development), for which he wants to launch some other item of his won, to which
Project Aerial is an impediment.
c. Tony Barren (Production) wants to prove his mettle. While in an earlier production
fiasco, he was held responsible, this time he wants success. However, he is very
conservative on the pricing aspect.
3. Lack of communication : None of the meetings had any fixed agendas. Team was not clear
what the meetings are about - whether it is about setting a price point or positioning of the
product in the market.

SOLUTION FOR THE ORGANISATIONAL PROBLEM :

1. Individuals & Departmental goals to align with Organisational goals. Emma can talk to
individuals and sensitize them about the common goals and benefits that every individual will
gain out of it.
2. For launch of every new product, an Inter departmental team can be made as the core
functioning group.
3. Last but not the least, Richard Fiero should lead the different departments towards a united
goal.
POSSIBLE SOLUTIONS FOR LAUNCH OF AERIAL :
Various options are available for launch of Aerial.
1. Launch Aerial at $475 and then redesign, so as to reduce cost.
2. Launch Aerial at zero margin, i.e, at $425 and then redesign so as to reduce cost
3. Differ launch of Aerial by 3 to 6 months. During intervening period, redesign, reduce the cost
and then launch
4. Abandon the project.
SUITABLE SOLUTION
If option 4 is selected and the project is abandoned, TerraCog will continue to lose market share.
Hence this is not considered. If option 3 is selected, TerraCog will miss out the holiday season
and the market share will continue to fall down. So this option is also not considered. In case
option 1 is selected, it is likely that market may not pick up due to higher cost than the competitor
and accordingly, this option is less preferable. The most suitable solution would be option no 2,
i.e, Launch Aerial at zero margin, i.e, at $425 and then redesign so as to reduce cost . In this
scenario, even if there is no profit initially, market share will pick up. Meanwhile,
redesigning of the product can be taken up. For redesigning of the product, Harold Whistler
may also to be consulted.