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    Product Development

    Uploaded by

    James Baloi
    Chapter 1

    Copyright:

    © All Rights Reserved
    Download as TXT, PDF, TXT or read online from Scribd

    Product Development

    Uploaded by

    James Baloi
    9 views2 pages
    Chapter 1

    Copyright

    © © All Rights Reserved

    Available Formats

    TXT, PDF, TXT or read online from Scribd

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    Chapter 1

    Copyright:

    © All Rights Reserved
    Download as TXT, PDF, TXT or read online from Scribd
    Download as txt, pdf, or txt
    9 views2 pages

    Product Development

    Uploaded by

    James Baloi
    Chapter 1

    Copyright:

    © All Rights Reserved
    Download as TXT, PDF, TXT or read online from Scribd
    Download as txt, pdf, or txt
    of 2

    The economic success of most firms depends on their ability to identify the needs

    of customers and to quickly create products that meet these needs and can be
    produced at low cost.

    Achieving these goals is a product development problem involving all functions.

    Product Development: a set of activities beginning with the perception of a market


    opportunity and ending in the production, sale, and delivery of a product.

    Characteristics of Successful Product Development


    -Successful product development results in products that can be produced and sold
    profitably, yet profitability is often
    difficult to assess quickly and directly.

    Dimensions that relate to profit


    - Product Quality: reflected in market share and the price that customers are
    willing to pay
    - Product Cost: how much profit accrues to the firm for a participar sales volume
    and price
    - Development Time: how responsive the firm can be to competitive forces and to
    technological developments, as well as
    how quickly the firm receives the economic returns from the team�s efforts.
    - Development Cost: How much did the firm have to spend to develop the product?,
    significant fraction of investment
    - Development Capability: an asset the firm can use to develop products more
    effectively and economically in the future

    Who Designs and Develops Products?


    Functions that are central to a PD project: Marketing, Design and Manufacturing
    Manufacturing often includes: Purchasing, Distribution and Installation
    Project Team: collection of people dveloping a product
    - can be thought of as consisting of a core team and an extended core
    team

    Duration and Cost of Product Development


    - The reality is that very few products can be developed in less than 1 year, many
    require 3 to 5 years, and some take
    as long as 10 years.

    - The cost of PD is roughly proportional to the number of people on the project


    team and to the duration of the project.

    Challenges of Product Development


    - characteristics that make product development challenging are:
    *Trade-Offs, Dynamics, Details, Time Pressure, Economics

    *One of the most difficult aspects of product development is recognizing,


    understanding, and managing such
    trade-offs in a way that maximizes the success of the product.

    *Dynamics: Technologies improve, customer preferences evolve, competitors


    introduce new products, and the
    macroeconomic environment shifts.
    Decision making in an environment of constant change is a formidable task.

    *Details: The choice between using screws or snap-fits on the enclosure of a


    computer can have economic
    implications of millions of dollars.
    *Time Pressure: PD decisions must usually be made quickly and without
    complete information.

    *Economics: the resulting product must be both appealing to customers and


    relatively inexpensive to produce

    -Intrinsic attributes that contribute to PD appeal:


    *Creation, Satisfaction of societal and individual needs, Team Diversity,
    Team Spirit

    Structured Methods: (do not apply blindly, they are a starting point for
    continuous improvement)
    *Vauable bcoz
    1) They make the decision process explicit, allowing everyone on the team
    to understand the decision rationale
    and reducing the possibility of moving forward with unsupported
    decisions.
    2) By acting as �checklists� of the key steps in a development activity,
    they ensure that important issues
    are not forgotten.
    3) Structured methods are largely self-documenting; in the process of
    executing the method, the team creates
    a record of the decision-making process for future reference and for
    educating newcomers.

    Lack of empowerment of the team:


    - managers may engage in continual intervention in the details of a development
    project without a full understanding of the basis for the team�s decisions.

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