MegaTech, Inc. designs and manufactures automotive components. For years, the company enjoyed a stable marketplace, a small but loyal group of customers, and a relatively predictable environment. Though slow, annual sales continued to grow until recently hitting $300 million. MegaTech products were popular because they required little major updating or yearly redesign. The stability of its market, coupled with the consistency of its product, allowed MegaTech to forecast annual demand accurately, to rely on production runs with long lead times, and to concentrate on internal efficiency.
However, with the advent of the North American Free Trade Agreement (NAFTA) and other international trade agreements, MegaTech found itself competing with auto parts suppliers headquartered in countries around the world. The company was thrust into an unfamiliar position: it had to become customer-focused and quicker to market with innovative products. Facing these tremendous commercial challenges, top management at MegaTech decided to recreate the company as
a project-based organization. The transition, though not smooth, has nonetheless paid big dividends. Top managers determined, for instance, that product updates had to be much more frequent. Achieving this goal meant yearly redesigns and new technologies, which in turn meant making innovative changes in the firm’s operations. In order to make these adjustments, special project teams were formed around each of the company’s product lines and given a mandate to maintain market competitiveness. At the same time, however, MegaTech wanted to maintain its internal operating efficiencies. Thus, all project teams were given strict cost and schedule guidelines for new product introductions. Finally, the company created a sophisticated research and development team, which is responsible for locating likely new avenues for technological change 5 to 10 years down the
road. Today, MegaTech operates project teams not only for managing current product lines but also for seeking longer-term payoffs through applied research. MegaTech has found the move to project management challenging. For one thing, employees are still rethinking the ways in which they allocate their time and resources. In addition, the firm’s success rate with new projects is still less than management had hoped. Nevertheless, top managers feel that, on balance, the shift to project management has given the company the operating advantage that it needed to maintain its lead
over rivals in its globally competitive industry. “Project management,” admits one MegaTech executive, “is certainly not a magic pill for success, but it has started us thinking about how we operate. As a result, we are doing smarter things in a faster way around here.”
1. What is it about project management that offers MegaTech a competitive advantage in its industry?
2. What elements of the marketplace in which MegaTech operates led the firm to believe that project
management would improve its operations?