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Questions and Answers
A company is deciding between two product development projects. Project A has a shorter development time, while Project B promises higher product quality. Which project should the company prioritize if maintaining current market share is critical?
A company is deciding between two product development projects. Project A has a shorter development time, while Project B promises higher product quality. Which project should the company prioritize if maintaining current market share is critical?
- Project A, because shorter development time allows for quicker market entry and response to competitors. (correct)
- Both projects equally, as development time and product quality are equally important.
- Neither project, the company should focus on reducing development costs instead.
- Project B, because higher product quality leads to greater customer satisfaction and loyalty.
A product development project for a new smartphone has a development cost of $100 million and is expected to generate an annual net profit of $20 per unit on a sales volume of 5 million units per year over a sales lifetime of 3 years. Calculate the percentage return on investment (ROI) for this project, ignoring the opportunity cost/inflation.
A product development project for a new smartphone has a development cost of $100 million and is expected to generate an annual net profit of $20 per unit on a sales volume of 5 million units per year over a sales lifetime of 3 years. Calculate the percentage return on investment (ROI) for this project, ignoring the opportunity cost/inflation.
200%
Which of the following is a benefit of using structured methods in product development?
Which of the following is a benefit of using structured methods in product development?
- They can only be applied to a limited range of product types and markets.
- They ensure that important steps are not missed and increase transparency in the decision-making process. (correct)
- They guarantee the design process will be successful.
- They eliminate the need for transparent decision making.
In product development, the production function is primarily responsible for defining the product's form and function to meet customer needs.
In product development, the production function is primarily responsible for defining the product's form and function to meet customer needs.
Product development methodologies are best learned through abstract theoretical frameworks rather than practical examples from industrial practice.
Product development methodologies are best learned through abstract theoretical frameworks rather than practical examples from industrial practice.
Balancing various project constraints and objectives, such as minimizing development time while maximizing product quality, involves effective ________ management.
Balancing various project constraints and objectives, such as minimizing development time while maximizing product quality, involves effective ________ management.
Which of the following is NOT a typical challenge faced in product development?
Which of the following is NOT a typical challenge faced in product development?
Which function is responsible for mediating the interactions between the firm and its customers?
Which function is responsible for mediating the interactions between the firm and its customers?
Flashcards
Successful product development
Successful product development
Meeting customer needs, low cost, fast development, and building future capabilities.
ROI Formula
ROI Formula
((Net Profit * Sales Lifetime) / (Development Cost + Production Investment))* 100
Value of structured methods
Value of structured methods
Important steps are not missed, increases transparency and creates documentation.
Central functions in product dev
Central functions in product dev
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Textbook Approach
Textbook Approach
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Product Quality
Product Quality
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Development Cost
Development Cost
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Development Time
Development Time
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Study Notes
- Key characteristics of a successful product development effort include product quality, product cost, development time, development cost, and development capability.
Percentage Return on Investment Calculation for Hewlett-Packard DeskJet Printer
- Annual Production Volume (AVP): 4 million units/year
- Net Profit From Sales (NP): $13/unit
- Sales Lifetime (SL): 2 years
- Development Cost (DC): $50 million
- Production Investment (PI): $25 million
Value of Structured Methods in Product Development
- They ensure that important steps are not missed.
- They increase transparency in the decision-making process.
- They create documentation of the design and decision-making process.
- They can be applied uniformly to a wide range of product types & markets.
Interdisciplinary Activity in Product Development
- Product development inherently involves multiple disciplines.
- Central roles include those that mediate interactions with customers.
- Also people that define the product's form and function, and coordinate production/distribution.
Approach of textbook
- The textbook uses examples from industrial practice to illustrate concepts
- The products are simple to properly illustrate the methods being covered.
Challenges of Product Development: Economics
- Firms must consider the expense of developing and manufacturing a product.
- Every step, from engineering to materials, requires investment.
- To ensure the investment is worthwhile, the firm needs to profit from the product.
- Companies aim for success by making the product appealing and affordable for customers.
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Description
Key factors in successful product development are cost, time and quality. ROI is calculated based on production volume, profit, sales lifetime, development and production costs. Structured methods ensure no steps are missed.
