Professional Documents
Culture Documents
Terracog Case Analysis: Busa 305-02 Behavior in Organizations
Terracog Case Analysis: Busa 305-02 Behavior in Organizations
TerraCog is a privately held company that produces Global Positioning Systems (GPS)
and fishing sonar equipment. TerraCog has been around since 1977 and over the years has built
themselves a reputation for high-quality products, which they specifically market to campers,
hunters, hikers, and fishers. In the past, the company has had no trouble not being the first to
market. They have been free to lag a bit behind the competition because of the quality of their
The problem began in 2006 when Posthaste, a competitor, introduced a new GPS
prototype dubbed “BirdsI”. BirdsI displayed satellite imagery by using static satellite
photographs and stitching them together to create one image, much like Google Earth.
At first, TerraCog dismissed this new product because they believed it did not offer that
much of an improvement to the existing GPS technology. While they knew it had a visual
appeal, TerraCog did not believe that BirdsI had a substantial performance improvement over
nationwide. TerraCog was still confident that the popularity of BirdsI would not last. Fast
forward to the spring of 2007 and TerraCog starts noticing customers increase in demand for a
GPS with satellite imagery like BirdsI. TerraCog realizes their mistake now and starts plans for
their own satellite imagery GPS, which they name “Project Ariel”. In order to cut down on
development time and costs, they decide to redesign their existing GPS product.
After a couple of meetings with the higher-ups of the company, they find that the
redesign is going to cost them a lot more than originally anticipated. The pricing team states
2
TERRACOG CASE ANALYSIS
that $475 is the lowest they can sell Aerial for and still meet the margin. The sales team thinks
that price is way too high and suggests a price of $425 to capture the market share that
Basically, the decision has come down to Emma Richardson, the recently promoted
Executive Vice President. TerraCog needs a go or no-go decision, and Richardson needs to push
There are a few definite problems within TerraCog that are making things more difficult
than they need to be. After reading the case, it is clear that during their meetings there is no
clear cut leader. Conversations are free flowing and you also have people calling others out,
such as when Ed Pryor, the vice president of sales, calls out Becky Timmons, the CFO, for not
understanding how competitive the market is. At times, the conversations have even split off
into smaller groups, even though they were all at the same meeting sitting at the same table.
Another problem was how quickly they wrote off BirdsI. They could have done more
research after BirdsI was announced showing that people wanted satellite imagery in their GPS.
They ignored the buzz the product was getting and waited almost an entire year to respond
Another mistake was not being as innovative as they probably could be. They decided to
just redesign their existing GPS system to save time and money. The problem is that TerraCog is
known for their high-quality products. It wouldn’t be surprising if their customers did not care
for Aerial, since it was the same product, just upgraded a bit. With their resources, TerraCog
could have designed the next big thing in the GPS market.
3
TERRACOG CASE ANALYSIS
Ed Pryor also seems to cause a minor problem because he end of the first meeting, he
says he won’t even try to sell the product if the price is not lowered. It makes it seem like he
The main problems going forward with Aerial is that there is a rush to market before the
holiday season and also because they have been lagging behind their competition for almost a
year now. They need to decide on a price soon or they are just going to hurt themselves
further.
One organizational behavior theory you can apply to this case is the negotiation process.
The negotiation process is a five-step theory t negotiation tactics. First, you want to start with
preparation and planning. To do this effectively, it helps to goal set. TerraCog could have
executed this step better by laying out a plan detailing how to respond to BirdsI. When they
first heard of it, they mistakenly wrote it off as a fad and did not bother to come up with any
ideas of how to compete with it. They were determined that it would just go away, and that is
The next step of the negotiation process is to define the ground rules. TerraCog partly
did this in their first meeting, stating that they want to get Aerial on the market quickly, making
clear that the processing speed of Aerial was not an issue and also saying that Aerial would
have all the same features of their current GPS products. Once Aerial was designed, though,
they were surprised by the cost that was required to build it. They could have laid down ground
After the ground rules are laid it is important to take the next step and make sure
everyone is on the same page. Clarification and justification are necessary, but TerraCog did not
do a great job of it in their meetings. At times, things got a little confrontational even. People
kept bringing up the same things that had already been talked about, such as the processing
speed of Aerial and telling the designers to cut back on costs again when they had already done
Bargaining and problem solving is the next step in the negotiation process. In the
meetings when TerraCog is trying to decide on a price for Aerial, no one seems to have a
solution to the problem. $475 is much too high for the sales team to even consider, but it’s
hard to push the price down because of the margin requirements. The negotiation is at a
Lastly, the final step in the negotiation process is closure and implementation. TerraCog
needs to come up with a solution, and it seems like that has landed on Emma Richardson’s
shoulders. She needs to push one way or the other so that the company can come to a decision.
The way I see it, there are a few options Richardson can pursue. The first option is to go
ahead and market Aerial as planned with a $425 starting price. This would put them in the
market again before the holiday season and stop them from continuing to lag behind their
competition. They could continue to look for new ways to improve the design in order to cut
more costs since they would be very close to their margin requirements if they sell Aerial for
$425. The main problems with this are the decreased profit from the reduced price and it
would also put more pressure on the design team to reduce costs even further.
5
TERRACOG CASE ANALYSIS
Another option Richardson could look into is to scrap Aerial all together and look into
underserved markets. The case mentions that in early 2007 TerraCog started looking into sub-
markets such as fitness and cycling. They could scrap Aerial altogether since they are lagging
behind their competitors already and focus on a new market. They wouldn’t have to decide on
a price point anymore, which is putting a lot of pressure on all the team leaders. This option
could take a lot of stress of everybody in the business and potentially make them a lot of
money tapping into an underserved market. TerraCog would have an early mover advantage if
they went with this option. Yet, this would also hurt their brand image by not focusing on the
One last option is to scrap the Aerial launch for now and go back to the drawing board.
This would disappoint the design team but would be ideal for the rest of the company. The
design team would have to put other projects on hold but if given more time, they could
potentially design the next big thing in the world of GPS. The problem with this option is that it
would cause them to lag behind their competitors even further, along with missing the holiday
season. It’s a high risk/high reward kind of move. Either they successfully design the next big
thing in GPS or they try to and they fail, which would cause massive problems for TerraCog.
Taking all things into account, my recommendation would be to go with the last option,
to push the launch date back in hopes of launching the next big industry-changing product, just
as the BirdsI was. As I said before this is high risk, but in the end it seems like a good idea.
TerraCog is known for their high-quality products and has built a name for themselves in the
GPS industry. Companies known for premium products can usually lag behind the competition
for a bit as TerraCog has in the past. They would lose some money waiting for the new launch
6
TERRACOG CASE ANALYSIS
but if they do design something amazing, they would surely gain back their market share. Their
design team is one of the best in the business, and they also have a very motivated leader in
Allen Roth. TerraCog’s reputation is too much to risk if they chose another option. With this
References
Robbins, S. P., & Judge, T. A. (2015). Organizational Behavior (16th ed.). N.p.: Pearson.
Beer, M., & Yong, S. (2008, April 11). TerraCog Global Positioning Systems: Conflict and
Communication on Project Aerial. In harvard.edu.