Assignment 1: Technetronic INC

A report submitted to
Prof. Girija Shankar Semuwal

In partial fulfilment of the requirements of the course

By
Allam Rohit Chandra (1911019)
Subhajit Roy ( 1911264)
Section D

On
20-10-2019
Mr. Ilene Carter
Manager, Audio products section
Technotronics,Inc
Date: September 10, 1987

Subject: Recommendation regarding the choice of actions on the exploitation on X-27

Dear Sir,
After the successful research done by the Audio Products Section on the concept of a new
kind of magnetic material, which was envisioned by the Advance Development Laboratory,
Technotronics has to decide on the future of exploitation of X-27 . It has to make the decision
based on the overall profitability of the company , Upholding the decentralization culture of
company and Protection against the competition.

Sincerely
Allam Rohit Chandra
Subhajit Roy
 One Page Summary
Situation analysis:
After the successful research done by the Audio Products Section on the concept of a new
kind of magnetic material, which was envisioned by the Advance Development Laboratory,
Ilene Carter was facing multiple problems on the way forward. After a series of discussions
between Carter and Grant followed on how to exploit X-27 best, keeping in mind what was
best for the two sections within the framework of what was best for Technotronics
.Technotronics has to decide on the future course of action Regarding the exploitation of X-
27 Magnetic Material.

Problem Statement:
At present Technotronics is the market leader in its industry to enhance its position as market
leader It has to decide which section produces the X-27 magnetic material

Options:
1) Go with Audio Products section
2) Go with Magnetic Materials section
3) Combination of audio products and Magnetic Sections

Criteria :
1) Upholding the decentralization culture of the company
2) Overall profit to the company
3) Protection against competitors
4) efficient and economical production in the Long run
Evaluation of Options:
1) Go with Audio Products section : If we go with is option we will be able to maintain
the Decentralization Culture of company but we will not be able to Maximize the
profit to the company
2) Go with Magnetic Materials section: We will be able to Maximize the profit for the
company
3) Combination of audio products and Magnetic Sections: We will be able to Maximize
the profit for the company and maintain the Decentralization Culture of company
Recommendation: We should go with Combination of audio products and Magnetic Section
option since it will maximize the overall profit of the company and also maintains the
decentralization culture of company.

SITUATIONAL ANALYSIS

After the successful research done by the Audio Products Section on the concept of a new
kind of magnetic material, which was envisioned by the Advance Development Laboratory,
Ilene Carter was facing multiple problems on the way forward. The unique magnetic
material, which was named X-27, she fears that competitors outside the company could
exploit it if they come to know about the product. At the same time she had to ensure that all
the operating sections of Technotronics that use magnets should have complete access to X-
27. Also, the development costs of $1.2 million, which was bored by her section have to be
recovered. It is during this period that she was approached by Sam Grant, who wanted to take
over the benefits of X-27 as he thought the Magnetic Materials Section was the best and most
logical operating section of the company to exploit the benefits.
A series of discussions between Carter and Grant followed on how to exploit X-27 best,
keeping in mind what was best for the two sections within the framework of what was best
for Technotronics. If we look into Carter’s argument, she was right as it was her department
who took the risk of taking up the research project, which could have proven wrong. Also,
since the employees in her section were involved in this research so they were better
equipped to manufacture it with less expense, which magnetic material will not be able to as
they were still following the process of manufacturing traditional magnets. Also, the
development costs were bored by them which have to be recovered. Also Carter is right as
the respective operating sections should take new initiative and responsibility for new
developments.
On the other hand, Grant argued that the development costs, which were bored by the Audio
Products Section, was the shareholder’s money. So Carter should look into it as a total
company effort rather than her section’s effort. On the same ground, he argued that anything
developed at shareholder’s expense should be exploited so that it maximizes the profits for
the company, and he thought that his section would reap the maximum benefit from this new
product named X-27. He also gave several quantitative data to support his side of the story.
He asserted that Magnetic Materials’ sales of magnets and magnetic components were far
greater than Audio Products’ sales both within as well as outside the company. So he argued
that his section would maximize the prof
it much more than what the Audio Products could accrue. He also pointed out that in the long
run, Magnetic Materials rather than Audio Products was the best section to manufacture X-27
as their major business was magnets, which would enable them to achieve more efficient and
economical production in the long run.
Carter was trying to have a protected right of 5 years on the new product so that
Technotronics can fully utilize the superior benefits of X-27 and enhance its position of
leadership in the industry by using this new magnet. On the other hand, Grant argued that 5
years is too long a time and also pointed out that Technotronics can immediately start
realizing profits if the company starts selling X-27 to the customers outside the company
whose product lines did not compete with Technotronics’ products. Carter was not sure if this
idea of Grant of selling X-27 to a particular section will work out, as she thought it might be
seen as a restraint of trade, and also, there is no guarantee that the product will not reach in
the hands of the competitors. Grant then raised the possibility of licensing the product to
counter this problem. Although we can see that both of them have raised most of the
important considerations bearing in mind the company’s policy, they were not able to reach a
fruitful conclusion. Also X-27 is at a nascent stage and its full impact on the market cannot be
accurately forecasted. Also, there was some biasedness in the arguments given by both, as
both were trying to maximize what was best for their respective sections instead of the
company’s as a whole and which they both agreed.

Problem Statement:
At present Technotronics is the market leader in its industry to enhance its position as market
leader It has to decide which section produces the X-27 magnetic material

Options:
4) Go with Audio Products section
5) Go with Magnetic Materials section
6) Combination of audio products and Magnetic Sections

Criteria :
1) Upholding the decentralization culture of the company
2) Overall profit to the company
3) Protection against competitors
4) efficient and economical production in the Long run
Evaluation of Options:
Go with Audio Products section :
Pros:
If we go with this option there will be upholding of the decentralization culture of the
company which will encourage other section to take similar type of risks and succeed and
there will be enough time for technotronics to protect against competitors
Cons:
We will be able to maximize the profits for overall company as audio section doesn’t have
rights to sell the product outside of the company and we will not be able to make low cost
and efficient production in the long run.
Go with Magnetic Materials section:
Pros:
If we go with this option we will be able to Maximize the profits for overall company since
Magnetic materials has good sales outside the company as well as inside the company and we
can achieve low cost and efficient production in the long run .
Cons:
we will be putting the decentralization culture of the company at risk and we might not have
enough time for technotronics to protect against competitors
Combination of audio products and Magnetic Sections:
Pros:
If we go with this option we will be able to Maximize the profits for overall company since
this a profit sharing agreement where Magnetic materials will lend its low cost and efficient
production techniques to audio products section and Make changes in section charters to
allow Audio products to sell the products to outside the company.
Cons:
Bringing both parties to agree with this might be a problem

Recommendation:
We should go with Combination of audio products and Magnetic Section option since it will
maximize the overall profit of the company and also maintains the decentralization culture of
company.
Action Plan:
Technotronics should go for the combination of audio products and Magnetic Material
section option and Draft a profit sharing agreement between audio products and Magnetic
Material sections and go ahead with production of X-27

Word Count :1096