Mini-Case No.

A Firm Production Date

Scott Kelly XYZ's marketing vice president, was shouting on the telephone to Tom

Evers, director of new product development in XYZ's R&D laboratories: "We're going

to kick off a major ad campaign timed to make people want your new model

appliance, just before we start delivering them to dealers, and I want to be sure your

production date is firm and not one of those best estimates you've stuck us with in

the past." Taking a quick breath, he continued: "You people in R&D don't have much

credibility with marketing! You don't tell us what you're up to until it's too late for us

to advise you or interact in any way. I still remember the money you spent on the

water purifier we didn't want. And it didn't help your credibility when you tried to

keep the project alive after we told you to kill it!"

Tom assured Scott that the schedule for starting production was absolutely firm,

"We've run extensive tests, including life tests, and everything definitely indicates 'go'!

We're going to do a small pilot production run and test those pilot units in employee

homes. That's purely routine confirmation, so I can assure you that the production

date is locked in. Go ahead with your ad campaign-we're giving you a sure winner

this time."

But Tom was wrong. A glitch appeared near the end of the pilot test and very close

to the production date. In a hastily called engineering meeting, to which marketing

was not invited, quick-fix design change was approved. Another short pilot

production run would be made and the revised units would again be tested in

employees' homes. A delay of one to two months, perhaps longer, for start of

production was indicated. With this schedule set, Tom arranged a meeting with

marketing to update them of the problem and the new production schedule.
Scott exploded as soon as Tom began his account of the production delay "You gave

me a firm production date! We've got a major ad campaign under way and its timing

is critical. We'll have customers asking for these new models and the dealers won't

have them. We'll look silly to our customers and our dealers will be upset.

"Now wait," Tom interrupted, "I didn't give you the production date as absolutely firm.

I remember cautioning you that a problem could develop in the pilot run and

suggested you allow for it in kicking off the ad campaign. I told you we'd do our best

to make the date but that there is always an element of chance with a new machine.

We're better off having customers asking dealers where the new models are than

being out there with big quality problem."

Questions:

1. Tom was obviously overconfident in the final stages of the testing process, but

was his behavior unethical? Why or why not?

2. Given Scott's concerns over R&D's credibility, should he have taken Tom's

production date as being absolutely firm?

3. In fact, Scott was so skeptical of Tom's production date that he recorded their

original conversation without Tom's knowledge and then produced the

recording when Tom denied giving a firm production date. Tom responded.

"You taped my conversation without telling me! That's unethical." Was it?

4. Has Scott's behavior damaged future relations between marketing and R&D?

In what way? How could this situation have been avoided?