Posted: May 1st, 2022

PROJECT MANAGEMENT
MARKS : 10 CASE STUDY ASSIGNMENT LAST DATE OF SUBMISSION: 30 APRIL 2022
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CASE STUDY: LUXOR TECHNOLOGIES
Between 1992 and 1996, Luxor Applied sciences had seen their enterprise virtually quadruple within the wi-fi communications space. Luxor’s success was attributed largely to the power of its technical group, which was thought to be second to none. The technical group was paid very nicely and given the liberty to innovate. Though Luxor’s income got here from manufacturing, Luxor was regarded by Wall Road as being a technology-driven firm.
Nearly all of Luxor’s merchandise had been primarily based upon low price, top quality appli cations of the state-of-the-art expertise, quite than superior state-of-the-art technological breakthroughs. Purposes engineering and course of enchancment had been main strengths at Luxor. Luxor possessed patents in expertise breakthrough, ap- plications engineering, and even course of enchancment. Luxor refused to license their expertise to different companies, even when the applicant was not a significant competitor.
Patent safety and design secrecy had been of paramount significance to Luxor. On this regard, Luxor grew to become vertically built-in, manufacturing and assembling all elements of their merchandise internally. Solely off-the-shelf elements had been bought. Luxor believed that in the event that they had been to make use of exterior distributors for delicate part procurement, they must launch vital and proprietary information to the distributors. Since these distributors probably additionally serviced Luxor’s rivals, Luxor maintained the method of vertical integration to keep up secrecy.
Being the market chief technically afforded Luxor sure luxuries. Luxor noticed no want for experience in technical threat administration. In instances the place the technical
Exhibit I. Probability of a technical threat
Occasion Probability Score
• State-of-the-art advance wanted zero.95
• Scientific analysis required zero.80
(with out developments)
• Idea formulation zero.40
• Prototype improvement zero.20
• Prototype testing zero.15
• Essential efficiency demonstrated zero.10
group was solely in a position to obtain 75–80 p.c of the specified specification restrict, the product was launched because it stood, accompanied by an announcement that there could be an improve the next 12 months to realize the remaining 20–25 per- cent of the specification restrict, along with different options. Enhancements and upgrades had been made on a yearly foundation.
By the autumn of 1996, nonetheless, Luxor’s fortunes had been diminishing. The com- petition was catching up rapidly, because of main technological breakthroughs. Advertising and marketing estimated that by 1998, Luxor could be a “follower” quite than a market chief. Luxor realized that one thing should be executed, and rapidly.
In January 1999, Luxor employed an skilled in threat Assessment and threat administration to Help Luxor assess the potential injury to the agency and to help in improvement of a mitigation plan. The guide reviewed mission histories and classes realized on all tasks undertaken from 1992 by means of 1998. The guide concluded that the main threat to Luxor could be the technical threat and ready Displays I and II. Exhibit I reveals the chance of a technical threat occasion occurring. The guide recognized the six most typical technical threat occasions that might happen at
Exhibit II. Impression of a technical threat occasion
Impression Score
Occasion With State-of- the-Artwork Modifications With out State-of- the-Artwork Modifications
• Product efficiency not at zero.95 zero.80
100 p.c of specification
• Product efficiency not at zero.75 zero.30
75–80 p.c of specification
• Abandonment of mission
zero.70
zero.10
• Want for additional enhancements zero.60 zero.25
• Decreased revenue margins zero.45 zero.10
• Potential techniques zero.20 zero.05
efficiency degradation
Luxor over the subsequent a number of years, primarily based upon the extrapolation of previous and current information into the long run. Exhibit II reveals the affect that a technical threat occasion might have on every mission. Due to the excessive likelihood of state-of-the-art developments wanted sooner or later (i.e., 95 p.c from Exhibit I), the guide recognized the affect possibilities in Exhibit II for each with and with out state- of-the-art development wanted.
Displays I and II confirmed administration’s worry that Luxor was in hassle. A strategic determination needed to be made regarding the technical dangers recognized in Exhibit I, particularly the primary two dangers. The competitors had caught as much as Luxor in functions engineering and was now surpassing Luxor in patents involving state-of-the-art developments. From 1992 to 1998, time was thought of as a lux- ury for the technical group at Luxor. Now time was a critical constraint.
The strategic determination going through administration was whether or not Luxor ought to strug- gle to stay a technical chief in wi-fi communications expertise or sim- ply console itself with a future as a “follower.” Advertising and marketing was given the duty of figuring out the potential affect of a change in technique from a market chief to a market follower. The next checklist was ready and introduced to administration by advertising:
1. The corporate’s future development fee shall be restricted.
2. Luxor will nonetheless stay sturdy in functions engineering however might want to outsource state-of-the-art improvement work.
three. Luxor shall be required to offer exterior distributors with proprietary infor- mation.
four. Luxor could now not be vertically built-in (i.e., have backward integration).
5. Ultimate product prices could also be closely influenced by the prices of subcontractors.
6. Luxor could not have the ability to stay a low price provider.
7. Layoffs shall be inevitable, however maybe not within the close to time period.
eight. The advertising and promoting of merchandise may have to vary. Can Luxor nonetheless market merchandise as a low-cost, top quality, state-of-the-art producer?
9. Worth-cutting by Luxor’s rivals might have a critical affect on Luxor’s future capability to outlive.
The checklist introduced by advertising demonstrated that there was a critical risk to Luxor’s development and even survival. Engineering then ready a listing of different programs of motion that might allow Luxor to keep up its technical management place:
1. Luxor might rent (away from the competitors) extra workers personnel with pure and utilized R&D abilities. This could be a expensive effort.
2. Luxor might slowly retrain a part of its current labor power utilizing current, skilled R&D personnel to conduct the coaching.
three. Luxor might fund seminars and college programs on basic R&D strategies, in addition to R&D strategies for telecommunications tasks. These applications had been out there regionally.
four. Luxor might use tuition reimbursement funds to pay for distance studying programs (carried out over the Web). These had been full semester applications.
5. Luxor might outsource technical improvement.
6. Luxor might buy or license expertise from different companies, together with rivals. This assumed that rivals would conform to this at a rea- sonable worth.
7. Luxor might develop joint ventures/mergers with different corporations which, in flip, would in all probability require Luxor to reveal a lot of its proprietary data.
With advertising’s and engineering’s lists earlier than them, Luxor’s administration needed to determine which path could be greatest for the long run.
QUESTIONS
1. Can the affect of 1 particular threat occasion, similar to a technical threat occasion, create further dangers, which can or might not be technical dangers? Can threat occasions be interrelated?
2. Does the checklist offered by advertising exhibit the chance of a threat occasion or the affect of a threat occasion?
three. How does one assign possibilities to the advertising checklist?
four. The seven gadgets within the checklist offered by engineering are all methods of mitigating sure threat occasions. If the corporate follows these ideas, is it adopting a threat response mode of avoidance, assumption, discount, or deflection?
5. Would you facet with advertising or engineering? What ought to Luxor do at this level?

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