CASE SUBMISSION – LE PETIT CHEF

Submission by Neha Mota – 1911356

Le Petit Chef’s highest revenue segment is microwave oven (85% contribution), even when
prices and overall revenue are declining YOY (Case Exhibit 6). Market saturation of
Microwave ovens in US and Japan has reached to >90% already (Case Exhibit 4). And those
markets also have specific standardized kind of oven requirement (low price influencing US
markets and rice-based accessories influencing Japan market). Asian markets can’t be
penetrated at such small scale of Le Petit Chef, since those are heavily dominated by global
players proposing low price oven models with advanced electronic interfaces. So, focussing
on European markets only, we can see growth opportunity in countries like Italy, Portugal, etc
– acquiring new customers should be the target, whereas in countries like France, Germany,
etc – preserving customer share should be the main target.
The Business Maturity is high, so prioritisation is the main contributor to business success at
this point than resources or processes. Processes are prioritized but resources seem to be used
in random allocation manner. An expert person has become bottleneck in the process which

m
er as
should be improved upon. Instead of working on all existing projects and choosing among the
new projects, Gagne should also think of scrapping some low-yielding projects – strategy of

co
eH w
which is given below:

o.
1.
rs e
What should Gagne do? Specifically, which projects should she fund and
ou urc
why? How should she handle the executive meeting?

Currently, out of 5 proposed R&D projects, Project A can be the radical innovation in
o

European market that can build new customer base and also help upgrade (retain customers).
Although implemented in Asian markets, if launched within time, Le Petit Chef can be the
aC s
v i y re

first one to introduce fuzzy logic equipped controls. It will create competitive advantage in
the saturating market which will help gain new share and maintain it for few years until
competition catches up.
ed d

Projects B to E may help preserve the same market share but would be incremental
ar stu

innovations which would hardly give a year’s time for others to copy. But at current rate of
declining revenues, incremental innovation may be helpful.
For selecting that, the criteria used is Highest of (NPV of Project/Resources required in
sh is

person-months). From Exhibit 3, we can see it is highest for Project D. This project also
focusses on combination of incremental + radical innovation.
Th

Therefore, among new projects, A and D should be chosen.

Among ongoing projects, currently 35 engineers are doing work of 36 engineers until March
’00, after which 4 of them are getting free.
 Project 5 which again focusses on volume-based changes can be scrapped if there’s not
much sunk cost losses. As shown in Exhibit 4, this project has low NPV for number of
resources required and requires manufacturing changes with it.
 Similarly, project 4 should also be re-evaluated since it is specific for a few countries and
has lowest NPV/RR. This project may help in preserving current customers but will not
help in upgrading from them or acquiring new customers.

1
This study source was downloaded by 100000819785306 from CourseHero.com on 08-15-2021 05:55:45 GMT -05:00

https://www.coursehero.com/file/99537074/Le-Petit-Chef-Neha-Mota-1911356docx/
 2. What factors explain Le Petit Chef’s poor performance? What actions would you
recommend to remedy the situation?

1. 12 different versions of the basic platform are being managed by Le Petit Chef. This
leads to higher variety required in manufacturing processes for each product while
providing lower unit volumes for each offering.

Recommendation:

- Use of standard cavity size in two-formats – small (20L) and large (35L) – and doing
away with 25L products gradually would lead to standardized manufacturing
processes for cavity and related components. Standardization would lead to low-cost
processes and less number of manufacturing changes for each volume-differentiated
product.
- Older models should be shelved immediately once they are not in use or have been
replaced by new versions.

m
2. Experienced R&D engineers who became experts have become bottleneck in

er as
executing manufacturing design change requests for products already in production.

co
eH w
Recommendation:

o.
-
rs e
Manufacturing design change requests should not be allocated to experienced
ou urc
engineers (unless they have free bandwidth), instead they should be solely focussed
on new product development or radical changes to existing products.
- Hierarchy should be changed so that experts have higher approval flow and cannot be
o

bypassed while approving technical changes.

aC s
v i y re

3. All R&D resources have been over-working as and when design changes are selected –
currently 35 total engineers (30 dedicated to microwave ovens) are supposed to be doing
work of 36 engineers until March ’00 (Exhibit 5)
ed d
ar stu

Recommendation:

- New projects should be decided not only on the basis of profitability but also on the
basis of resource availability. Although opportunity selection stage is supposed to take
sh is

care of this, allocation doesn’t seem to happen in that manner.

Th

- Project should not be decided assuming full capacity utilization (as it is currently).
There should be room for leaves and emergencies in timelines while selecting
projects.

4. No visible differentiation in the newer introductions, which is necessary to sustain

premium pricing for the models.

Recommendation:

- Either visible or experiential differentiation should be made in new product

introduction

2
This study source was downloaded by 100000819785306 from CourseHero.com on 08-15-2021 05:55:45 GMT -05:00

https://www.coursehero.com/file/99537074/Le-Petit-Chef-Neha-Mota-1911356docx/
 - Keeping base architecture and underlying platform features same, superficial changes
in colours, contours, interface design can be made once main unit is manufactured. It
will show add to the differentiation required for premium pricing.

5. Company’s product mix shows largest contribution from microwave ovens. R&D on next
best contributing products – breakfast appliances – seems weak as all the R&D
engineers are overworked with oven projects only.

Recommendation:

- Microwave ovens are products already in a fiercely competitive market with players,
making companies lose revenues. Le Petit Chef being in premium segment can’t do
much for low-end products and may soon be losing market share as well.
- If R&D efforts on innovative breakfast appliances can be secured, it may help grow
revenue and market position through other product segment. Meanwhile the older
oven segment product line should be truncated.

m
Exhibit 1: Le Petit Chef’s Position on Business Maturity Stage

er as
co
eH w
o.
rs e
ou urc
o
aC s
v i y re
ed d
ar stu
sh is
Th

Exhibit 2: Innovation Type of Proposed Projects

Product A trajectory is shown since it is not right away expected to render existing products
obsolete. In early adoption stage, it is supposed to be considered as incremental innovation
but only until mass market adopts the changes.

3
This study source was downloaded by 100000819785306 from CourseHero.com on 08-15-2021 05:55:45 GMT -05:00

https://www.coursehero.com/file/99537074/Le-Petit-Chef-Neha-Mota-1911356docx/
 Exhibit 3: Benefit Comparison between Proposed Projects
Project Description NPV/Resources Pros and Cons
required
(Person-
months)
(NPV/RR)

m
A New intelligent line of 22,876 + Radical Innovation – can help

er as
microwave cooking in acquiring new customer base

co
appliances with + Visible and experiential

eH w
multiple sensors, and differentiating feature

o.
controls with fuzzy
rs e - Low NPV, longer duration to
logic intelligence complete
ou urc
- Definite reduction in benefits if
competitor launches it earlier
B Cost reduction of the 277,778 + Good NPV/RR
o

Egalité to develop a - Many competitors in low cost

aC s

low-cost, low-end segment, within 1-year more

v i y re

Fraternité line work may have to be done

C New, original design 55,556 + Original product, difficult to
of a low-cost, low-end imitate
Fraternité line - Low NPV/RR
ed d

- Many competitors in low cost

ar stu

segment, within 1-year more

work may have to be done
D Develop a "Liberté- 645,833 + Highest NPV/RR. Short
express" quick- development duration
sh is

heating model by + Use of supplier capabilities

Th

upgrading to a new, + Experiential differentiation

more powerful - Dependency on supplier
magnetron increased for this product line
E Add a larger cavity 480,000 + High NPV/RR
model to the Liberté - Addition of another product
line differentiating on volume,
manufacturing change
- Doesn’t help with the problem
of visible differentiating feature

Exhibit 4: Benefit Comparison between Ongoing Projects

4
This study source was downloaded by 100000819785306 from CourseHero.com on 08-15-2021 05:55:45 GMT -05:00

https://www.coursehero.com/file/99537074/Le-Petit-Chef-Neha-Mota-1911356docx/
 Project Description NPV/Resources Pros and Cons (vs
required development duration)
(Person-months)
(NPV/RR)
1 Improve external finish, 640,000 + Visible differentiation
colors and contours of both offered
lines, to make them more + High NPV/RR
aesthetically differentiated
2 Redesign wave-guide to 250,000 + Short duration of
improve wave diffusion in completion
cavity in Liberté line + Quality improvement
3 Change grill element 583,333 + Increased reliability
material in Liberté to make + High NPV/RR
it longer-lasting
4 Modify HV power supply 138,889 + Increased value for few
design in both Egalité and specific countries
Liberté to be tolerant of - Not so beneficial in
fluctuating or under-voltage gaining new customers

m
conditions in some countries or getting upgrades from

er as
retained customers

co
5 Reconfigure component 166,667 + Addition of volume-

eH w
layout in Egalité line to based differentiation

o.
reduce overall
rs e volume - Another volume-change
occupied and develop an requiring manufacturing
ou urc
Egalité-compacte model change
6 Add halogen lamp grilling 208,333 + Added experiential and
capability to Egalité line visible differentiation in
o

accessory
7 Redesign the Egalité user 761,111 + Added experiential and
aC s
v i y re

interface for faster user visible differentiation in

input (one-touch cooking) accessory
and expanded recipe
offerings
ed d
ar stu

Exhibit 5: Calculation for number of resources required per month

Projec Current Original NPV Resources reqd. Resources
sh is

t Estimated Ship of Project for Completion* required

Date* (FF) (Person-months) per month
Th

1 May'00 1,60,00,000 25 5

2 Jun'00 1,20,00,000 48 8

3 Mar'00 70,00,000 12 4

4 Sep'00 50,00,000 36 4

5
This study source was downloaded by 100000819785306 from CourseHero.com on 08-15-2021 05:55:45 GMT -05:00

https://www.coursehero.com/file/99537074/Le-Petit-Chef-Neha-Mota-1911356docx/
 5 Dec'00 1,20,00,000 72 6

6 Jun'01 2,25,00,000 108 6

7 Jun'00 1,37,00,000 18 3

36
Total resources required per month

m
er as
co
eH w
o.
rs e
ou urc
o
aC s
v i y re
ed d
ar stu
sh is
Th

6
This study source was downloaded by 100000819785306 from CourseHero.com on 08-15-2021 05:55:45 GMT -05:00

https://www.coursehero.com/file/99537074/Le-Petit-Chef-Neha-Mota-1911356docx/
Powered by TCPDF (www.tcpdf.org)