Case Analysis: The Dim Lighting Company Macro Dim Lighting Company needs to review all of the pros and cons of moving forward with this project. The changes of the industry are determining that they cannot sit back and wait for a better time within their company to develop new products that will compete with the competition and possibly lead them above the competition. They have to decide whether they will be proactive and continue forward with the development of new products or if they will be reactive and get the equipment necessary to continue doing what they are doing.
Ultimately, they need to look at the future to decide what the best decision for now is. Raising current profits is necessary but without the development of the new products getting through another year or two really does not help with the long-term longevity of the company. Micro Mr. West is faced with many factors that are going to influence his decision. The biggest issue he is facing is financing. The company is not in the position to spend the capital necessary for the development of the new product. Current production equipment needs to be updated and repaired which would give them an immediate return.
The project also is facing a two year development before they start production. The first two years of production only break even. In addition, Robert Spinks may not want to continue with his employment with Dim Lighting if his research and development do not lead to new products being developed, produced and marketed. Causes One of the biggest concerns that are seen here is that Mr. Spinks has left prior companies for the exact reason that they are currently facing, without the consideration of the budget. The lack of “creativity and innovation” led to his current position, as he left his prior company.
The other concern is that the prior year was not profitable and without new product development they will continue to face less profitable years in the future. Systems Affected The structural system will be affected because of the change. The company seems to currently be a traditional structure. With traditional structures the innovation and change may not be as open to change as other structural systems. The psychosocial structure is already being affected. Mr. Spinks is a demanding man who voices his opinion loudly. Mr.
West is already under pressure to have a better year in regards to profit. The accountant is stressed about the fact that they are barely hanging on. Even the production manager is concerned about the need for new equipment to be used in production now. The technical systems are fighting for the money for the same reason that the psychosocial structure is being affected. The production manager and Mr. Spinks both want the money to upgrade and develop the technical needs of the company. The managerial structure is affected as Mr. West is facing making a huge decision.
He has to decide whether or not he would rather pursue the innovation side of the company or try to raise the bottom line as quickly as he can. The goals of the company are two-fold. Mr. West needs to raise the bottom line and also needs to develop new products so that they can continue to move forward as technology changes. Alternatives Mr. West needs to discuss with headquarters what they think in regards to research and development. Until speaking with them he is going to have a hard time deciding what he should do. Spinks research leads the company to question the future of the industry.
Mr. West should be able to convince the parent company to help fund the project, since they would be leading the industry with a new product. Mr. West should work with the accountant to develop projected profit analysis based on what could happen. They should look at all aspects of the development, both good and bad. Working with Mr. Spinks they should look to try and save as much money as they can in the development of the product. Mr. Spinks should be an integral part of this project since it is his ideas that are going to influence the issue.
When submitting a proposal for funding, he should include the money necessary for current equipment upgrades. Without those upgrades they may not last long enough for the project to even reach production. Recommendations Mr. West should reach out to the parent company for funding. With all of the work done with Mr. Spinks and the accountant he should be able to present them with the necessary information to back up his decision to both move forward with the project development and upgrade the equipment. If, in the nd, they cannot come up with the funding necessary then the budget committee needs to start over and manage to work the budget out so that the equipment that most direly needs to be replaced can be and the project can move forward even if it takes longer than originally planned. He has to move forward with both the equipment upgrades needs now and the development of the new product. Only with both can he guarantee that they can last throughout the next few years until the product development in complete.