CASE STUDY

SUNCELL ENTERPRISE - 1

The Suncell Enterprise is a medium sized high-tech company with 40 employees and a functional organizational structure, producing solar batteries for home appliances. The company mainly deals with production and R&D, and contracts marketing activities out. We are the one of the innovative companies producing solar batteries in the region, but the market demand is less than we have expected, said the owner of Suncell. The vision statement of Suncell is recently defined as keeping our region clean and illuminated with at least one solar battery in every house.

The owner received two project proposals recently

Human resources development project: The project is composed of a formal and a set of on-the-job training (OJT) activities to improve the technical skills of the employees. The project will be implemented for a period of 5 years. The training program will be iterated each year. The first years budget is predetermined as US$ 100.000, and 60% of this budget will be allocated to on OJT activities. The budget for the coming years will be defined during each budgetary period in accordance with the results of first years implementation. However, the expected return is US$ 650.000. The human resources (HR) department will be responsible for this activity, and the production and design departments will support the project. The HR department claims this is a very important project which will help the company navigate itself into the future with an adequate personnel structure equipped with the necessary knowledge and experience. This project is also expected to double the production capacity and halve the quality control expenses. The expected payback period is given as 2 years for each annual implementation.

New assembly line development project: The project is composed of developing a new assembly line for solar battery production. The new line will cost US$ 750.000 and is expected to be completed in 18 months. The new line will be operational after a testing period of 3 months which is not included in the scope of the project. The project will be implemented by the production department. The head of department considers this project as an important move to increase their market share. This project is expected to triple the production capacity, and the expected payback period is calculated as 3 years.

Answer the following questions:

1. Before examining the proposals, the owner revisited the strategic objectives of Suncell. What may be the SMART objectives that the project proposals are related with?

2. Which of the proposals would you choose? Why? Do you need additional information on both projects for a thorough comparison and evaluation?

3. If the new assembly line development project is selected, what kind of a project management structure would be suitable for it? Why