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Essay Instructions: "Company profits grew strongly in the June quarter putting another question mark
over the extent of the predicted economic slowdown....."

Later in the article it states:

"However the central bank acknowledged that the weaker data for capital spending
intentions are at this point the only clear evidence of an impending slowdown"


Use an aggregate expenditure model to explain the relationship between capital
spending intensions and economic slowdown.
What would be an example of this type of model.

Essay Instructions: It must be quite a shock to have the founder and namesake of a company die. What bigger change can there be? Well, bankruptcy I guess. But that aside, this is a big deal.

Recently Ely Callaway died. A new CEO has been named in his place.
How will this change the company?
Find out more about the kind of person Ely Callaway was and think about who the new CEO is. Speculate as much as necessary, but be clear about the assumptions you make.

Please write three pages.

Callaway's New CEO Plans to Keep Grip on Old Strategy --- Product Development, Earlier Rollouts Were Hallmarks of Deceased Chief of Golf-Club Firm
Wall Street Journal; New York, N.Y.; Aug 8, 2001; By Sydney Leavens;



Abstract:
Specifically, Mr. [Ron Drapeau] says he hopes to build on an initiative introduced by Mr. [Ely Callaway] last year to roll out new products in October instead of January and to accept orders in the winter rather than the early spring. That move is designed to give Callaway more time to better gauge demand earlier and allow pro shops more time to re-order if a given product rangeis doing well.

Mr. Drapeau, a soft-spoken man from New Hampshire who joined Callaway in 1996 and rose to executive vice president of manufacturing, plans to stay the course in Mr. Callaway's two-year-long battle against the USGA over the company's ERC II driver. The USGA has banned the ERC II from its official competitions and from the handicap calculations of nonprofessionals. Callaway has said that more than 1,200 pro shops around the U.S. currently won't carry the club, damping sales. Mr. Drapeau says that he personally has been and will remain "very vocal" on the issue.

Despite the slowing economy, Callaway's sales in the first six months of the year grew by 6%, to $515 million, over the comparable period a year ago. Net income increased 9% to $61.1 million while earnings per share increased 6% to 83 cents. Still, says Mr. Drapeau, he expects the second half to be rocky for Callaway. "When Lucent Technology lays off 20,000 people, those are our main customers," he points out.


CARLSBAD, Calif. -- In the 19 years he served as chairman of the golf-club company that bears his name, Ely Callaway was the focal point of Callaway Golf Co. He appeared in its ads, tangled with the U.S. Golf Association over the legality of his innovative drivers, and even came out of retirement to run day-to-day operations when Callaway hit a sales slump four years ago.

Mr. Callaway, who died last month, still casts a big shadow on a company that is facing stagnant industry growth, weather across much of the U.S. that discouraged golfers from hitting the links early this year, and an economic slowdown.

Still, new Chief Executive Ron Drapeau says he is sticking with Mr. Callaway's strategy. The company will focus on developing new products that help "the average golfer enjoy the game," says Mr. Drapeau, while avoiding discounting and other steps that might raise sales but reduce the value of the brand.

Specifically, Mr. Drapeau says he hopes to build on an initiative introduced by Mr. Callaway last year to roll out new products in October instead of January and to accept orders in the winter rather than the early spring. That move is designed to give Callaway more time to better gauge demand earlier and allow pro shops more time to re-order if a given product rangeis doing well.

He is also hoping that Mr. Callaway's deal with golf-apparel maker Ashworth Inc., to take effect in January, will power Callaway's golf-wear business. Previously, Nordstrom Inc. held an exclusive license to Callaway apparel, limiting its reach.

"Nordstrom was a good start," he says, "but not all golfers are Nordstrom shoppers."

Mr. Drapeau, a soft-spoken man from New Hampshire who joined Callaway in 1996 and rose to executive vice president of manufacturing, plans to stay the course in Mr. Callaway's two-year-long battle against the USGA over the company's ERC II driver. The USGA has banned the ERC II from its official competitions and from the handicap calculations of nonprofessionals. Callaway has said that more than 1,200 pro shops around the U.S. currently won't carry the club, damping sales. Mr. Drapeau says that he personally has been and will remain "very vocal" on the issue.

All of this is just fine with Joseph Yurman, a Bear Stearns & Co. analyst. "It's almost as if, don't fix it if it ain't broke," he says. "Callaway is an incredibly successful company . . . and they'd be remiss to change things dramatically."

Despite the slowing economy, Callaway's sales in the first six months of the year grew by 6%, to $515 million, over the comparable period a year ago. Net income increased 9% to $61.1 million while earnings per share increased 6% to 83 cents. Still, says Mr. Drapeau, he expects the second half to be rocky for Callaway. "When Lucent Technology lays off 20,000 people, those are our main customers," he points out.

The company is now predicting sales will slow from the record-setting pace in the first two quarters, settling in at $830 million to $840 million in 2001. Last year's sales were $838 million. Earnings per share are expected to fall, from $1.13 last year to $1.00 to $1.05, a few pennies short of consensus analyst estimates by Thomson Financial/First Call. Things could easily get worse, too, says Tim Conder, an analyst at A.G. Edwards & Sons in St. Louis. The firm downgraded Callaway stock on June 8 from its previous "buy" rating. "We're standing back to see how the balance of the season transpires," Mr. Conder says.

Still, Callaway is in robust shape to play through the economic slowdown, which first surfaced for the company in its second-quarter results. It has about $100 million in cash and no debt. Mr. Drapeau says it is open to considering complementary acquisitions that "make sense in terms of the leverage of the brand."

Some shareholders and analysts are hoping the cash hoard, which Mr. Yurman believes will rise to $200 million by the end of the year, will be used for stock buybacks. Callaway said last month that it had exhausted the $100 million the board authorized for share repurchases in May 2000 and, according to Mr. Drapeau, may consider further buybacks at its Aug. 17 board meeting.

Mr. Drapeau won't comment on what he is recommending, although he says he believes Callaway shares are undervalued. The stock is "worth a heck of a lot more than it's being traded for today," he says.

That is what Ned Shadock Jr., a managing director at Putnam Investment Management Inc., is counting on. His firm is one of Callaway's largest investors, with more than one million shares, and since he started buying into the company about a year ago, he has seen its stock price swing from about $15 to $27 and back down to $15.

"This one's going to take some time, but you've got to believe that a couple of years from now, the stock will be higher than $15 one way or another," Mr. Shadock says. With its innovative products, good brand recognition and strong balance sheet, Callaway still has "got a lot of cards to play."

At 4 p.m. in New York Stock Exchange composite trading, Callaway was down 13 cents at $15.90.

Credit: Staff Reporter of The Wall Street Journal

Essay Instructions: Assignment Overview
Prepare a report for the CEO about this situation in two parts.
Part One:Respond to the following specific questions of Part One. For Part Two:Write an executive summary for the CEO.

PART ONE:
Use the case materials to complete this assignment.

ANALYSIS
1.Describe all assumptions seen in any documents provided.
Try to provide: four to six assumptions held by Kelly; six to nine assumptions held by Pat; two to three assumptions held by Cliff; two to three assumptions held by Chris.
a.Kelly
b.Pat
c.Cliff
d.Chris
2.Explain the arguments made by each of these people.
Explanations should be comprised of two to six sentences for each of the following.
a.Cliff O?Connor
b.Pat Lambert
c.Kelly Thomas
d.Chris Martinas
3.Evaluate each argument listed above as sound or unsound and why. Indicate whether they are emotional or logical in nature. Evaluations should be comprised of two to six sentences for each of the following:
a.Cliff O?Connor
b.Pat Lambert
c.Kelly Thomas
d.Chris Martinas
4.Describe specific fallacious arguments, and identify the people who hold them.
Try to provide four to six fallacious arguments.

CONCLUSIONS
1.Describe all problems in this situation.
Describe a minimum of two to three problems that characterize the situation. Single sentence format is acceptable.
2.For each problem listed above, describe the data, arguments, and reasoning that contribute to the problem.
Describe issues of data, arguments, and reasoning-related to each problem within two to six sentences.
3.What is the underlying problem that is the base cause of the conflict within the company?
Present the underlying problem in one to four sentences.
4.What alternative solutions would you propose for this situation?
Present a MIMINUM of two potential solutions in the format of two to four sentences each.
5.State the relative strengths and weaknesses of each alternative solution.
Describe at least one strength and one weakness for each alternative solution.
6.Which solution will you recommend to the CEO and why?
In two to six sentences, fully articulate the exact solution you would propose and the reason(s) for that choice.

PART TWO:
EXECUTIVE SUMMARY
Write an executive summary of the case for the CEO of the company. The executive summary should give readers the essential contents of the master document(s) in approximately two pages. It should preview the main points of your document, enabling readers to build a mental framework for organizing and understanding the detailed information you are presenting, and helping them determine the key results and recommendations reported in your document.
Try to include the following:
1.Purpose and scope of document
2.Summary of the situation
3.Key points relating to the situation
4.Conclusions
5.Recommendations and actions to be taken, and why
6.Other supportive information

CASE STUDY: Critical Thinking GEN 480: Assessment Case Version 2.1: September 2, 2003 Introduction The Critical Thinking 480 Assessment Case tests your critical thinking skills by presenting you with realistic information about a typical company problem. In this assessment, you are being evaluated on the following skills: ? Evaluate the unspoken assumptions that influence behavior. ? Differentiate between logical and emotional thought processes/responses. ? Evaluate the soundness of arguments. ? Recognize fallacious reasoning. ? Identify problem(s) in a given situation. ? Construct alternative solutions to a problem(s). ? Select the appropriate solution to a given problem. ? Hypothesize the outcome of a selected solution to a problem. Assessment assignment YOUR NEW JOB BEGINS You are a newly hired executive within AcuScan, Inc., maker of the iScanner, a retinal scanner security product. You are the company?s new VP of Organizational Development, and will be responsible for creating the Organizational Development department over the coming year. Cliff O?Connor, the CEO of the company hired you to help AcuScan make the transition into retail markets with a new product while maintaining its traditional product quality and excellent employment environment. When you were hired in early February, you received the Scanner?s Weekly and a Memo from Cliff O?Connor as part of your orientation to the company.
Critical Thinking GEN 480
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SCANNERS? WEEKLY February 5, 2003 Vol. 10, No. 5The employee newsletter of AcuScan, Inc. Copyright ? 2003 by AcuScan, Inc. All Rights Reserved. SCANNERS LOOK BACK A Decade of Security from AcuScan The iScanner in action Ten years ago today, AcuScan, Inc. launched its cutting-edge retinal security product iScanner at a security conference in Houston, TX. Based on software created by our own Chief Engineer of Product Software Kelly Thomas, the iScanner quickly became the leader in the emerging retinal scanning security business. ?The iScanner is the security scanner of choice for airports throughout the nation,? says AcuScan CEO Cliff O?Connor, one of the visionaries for the potential of the iScanner. ?We?re confident that, with our superior experience and terrific service, AcuScan will continue to take the market by storm in the coming year.? Today, the iScanner claims nearly 40% of the market. In just a decade, the company has grown to 1,500 employees based across the United States. Regional centers in Los Angeles, Houston, and Maryland provide service to customers, while the company?s Chicago?based HQ drives technology forward into the next century. Last year, AcuScan revenues hit $100 million, a new record for the company despite the recent economic slowdown. After last year?s traumatic labor reductions, the company is bouncing back stronger than ever, with four sales and service centers in each of the country?s four regions: West, South, North, and East. - Staff writer Critical Thinking GEN 480
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ACUSCAN, INC. Memo TO: All Department Heads FROM: Cliff O?Connor, CEO RE: Strategic budget cuts for remaining fiscal year Date: January 31, 2003 Mid-year numbers continue to pressure us from all sides in spite of last year?s tremendous cost-cutting sacrifice of nearly 500 employees and a revamping of our supply chain management system, which cut costs by almost 15%. Project revenues continue to fall in this economy, with both sales and service revenues sinking. Based on recent numbers, the present sales/services ratio of 50/50 will slide about 30%, with services expected to provide about 70% of our revenues during the rest of this fiscal year. Based on this extreme situation, we are taking extreme action. As you know, Pat Lambert recently joined AcuScan as the company?s new Director of Marketing. Pat?s history as a talented and creative marketing force within the cereal industry will prove to be a boon to our place in the market. Pat and Chris Martinas, our VP of Product Development, are now working on a new venture that we will launch by the end of the year. This is a new kind of project for us at AcuScan, as we have not developed a new product or market since the inception of the company. However, with Pat?s creativity and Chris?s expertise, I?m confident that we will recapture our position as a market leader with our technology. However, before the new product emerges, we still face a short?term budget crisis. Accordingly, and after significant analysis with senior management, we are asking that every department (except Sales and Marketing, our key revenue generators) find ways to reduce budgets by 15% in the coming quarter. I recognize that, on top of last year?s staff reductions, this is a heavy burden. But I?m confident that we can do this by evaluating every expenditure across the board. I?m leaving the decision of how to reach a 15% budget cut to you, who know your people and your possibilities better than anyone in the company. My door, as always, is open to discuss the ramifications of this budget reduction for the coming year. If you have concerns, please see me directly. Cliff O?Connor Clifford J. O?Connor, CEO Critical Thinking GEN 480
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Needless to say, you are the only Organizational Development consultant available in the company, and will be the only one for the near future. A week after your orientation, you received a Progress Report on Operation Optimize from Chris Martinas and Pat Lambert. ACUSCAN, INC. Progress Report: ?Operation Optimize? CONFIDENTIAL: FOR INTERNAL USE ONLY TO: AcuScan Management FROM: Chris Martinas, Vice President of Product Development Pat Lambert, Director of Marketing Date: February 17, 2003 OUR CHARTER: A NEW MARKET TO CREATE NEW REVENUES AcuScan created the retinal scanning security marketplace with the cutting?edge technology of the iScanner. But today, ten years later, AcuScan is barely sustaining 40% of the market share in a mature and competitive market. Prices for the iScanner and similar devices are dropping as the product becomes a commodity. Service revenues, with their lower profit margins and higher overhead, are rapidly becoming the mainstay of the company?s income. It?s clear that, to succeed in today?s tough economy, AcuScan needs to expand its technology into new markets, and again become the cutting?edge leader by creating a solution to an as?yet unrecognized customer need. To make this leap successful, AcuScan must act quickly: competitors are already looking into new ways to apply their technologies, and if we are to carve out a new niche, the time to act is now. Critical Thinking GEN 480
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Progress Report: ?Operation Optimize? (continued) DEFINING THE PRODUCT: REVAMPING ISCANNER In January of this year, CEO Cliff O?Connor requested that Marketing and Product Development conceive of a use for iScanner technology in a new marketplace, to address ongoing revenue and market share declines. After initial design meetings with Product Development, Marketing developed a product concept in line with past new product trends. We developed our marketing objectives, and contracted with Wilson Marketing for the initial prototype tests (concept tests and focus groups). We concluded that a strong potential existed to use iScanner technology and equipment in a retail setting ? thus, ?Operation Optimize.? By enabling retailers to identify incoming customers and track their movements, information about each consumer?s needs, wants, and desires can be linked to the consumer?s unique retinal scan. Data about the customer, down to actual eye color, can be reported to retailers to help them tailor their products and displays for maximum effect. Relational data bases can be built on top of the iScanner technology to enable retailers to call up reports in a multitude of formats, from purchase patterns and trends to individual consumer tastes. Initial research done in the AcuScan Marketing Department reveals that no competitor has the technology to date to create an application similar to the iScanner retail application described above. However, a confidential source states that Secur-A Corp. is in the process of developing some kind of retail application. It is only a matter of months before Secur-A will come to market with a competitive product. Critical Thinking GEN 480
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Progress Report: ?Operation Optimize? (continued) COSTS: MINIMAL INVESTMENT, MAXIMUM REVENUES Because of present revenue pressures, capital to invest in new product development is minimal. Thankfully, because of the flexibility and power of the iScanner?s present software and operating system, Marketing and Product Development foresee that developing ?Operation Optimize? sufficiently to take to a small test market will require minimal investment of existing staff time and effort. Essentially, the retail application of the iScanner involves additional software programming, with little need for redesigning the hardware components. Some repackaging will be required to fit the product into a retail environment and eliminate the ?high security? look of the outside housings, but this is not foreseen to be a major roadblock in the development of the product itself. Based on initial analysis, we project that ?Operation Optimize? will require the following minimum investment: ? Software design and reprogramming: $ 200,000* ? Repackaging design and development: 75,000* ? Launch marketing: 50,000* ? Advertising costs: 250,000 Total cost to market: $ 575,000 * Existing staff costs Given the potential return on this product in the first year, this is a reasonable capital outlay with a substantial ROI. Critical Thinking GEN 480
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Progress Report: ?Operation Optimize? (continued) DEVELOPMENT PROGRESS To deliver ?Operation Optimize? before our competition gets a foothold in the market, AcuScan must announce and deploy its first installations within six to eight months. Marketing has already identified a potential customer for a beta test, who is expecting to begin the test in late August. Given the minimal alterations to the original iScanner device, this deadline seems to be a reachable, if aggressive, objective. To date, progress on developing ?Operation Optimize? seems to be stalling, due to concerns within Product Development that software programming alone cannot be completed before the beginning of FY 2004 in order to deliver all of the features outlined above. PD engineers also claim that initial analysis of the application requires that all features be implemented in the first release, as opposed to creating a staged release that would enable AcuScan to establish a foothold in an emerging market. The financial implications of this kind of delay are significant. ? Based on estimates of programmer time alone from PD engineers, AcuScan would have to add about $250,000 to the budget outlined above. ? Coming to the market in early 2004 may put AcuScan at a disadvantage in terms of the competition, which is already in progress on its own version of a similar application (see ?Defining the Product? above). Critical Thinking GEN 480
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Progress Report: ?Operation Optimize? (continued) CONCLUSIONS Based on initial market research and the slowdown of the product development, Marketing concludes that ?Operation Optimize? needs a significant increase in its product development budget to reach August product launch goals. This capital outlay could be used to hire contract programmers to augment existing staff, to speed the redevelopment of the software running the product. Because of contractor costs, this would significantly overreach the estimated $ 250,000 needed in existing staff time, but would enable AcuScan to bring this product to market on time. To resume progress on ?Operation Optimize,? we need approval of the following revised budget as soon as possible to meet deadlines: ? Software design and reprogramming: $ 200,000* ? Contract software reprogramming: 350,000 ? Repackaging design and development: 75,000* ? Launch marketing: 50,000* ? Advertising costs: 250,000 Total cost to market:
$ 925,000 * Existing staff costs This is a significant increase, and would reduce our ROI over the first year of the product?s life. However, given the ?shelf life? that the iScanner has had in the industry (10 years), we conclude that over the coming decade, the ROI justifies this capital investment, even in a tight economy and with company revenues in flux. Chris Martinas Chris Martinas, Vice President of Product Development Pat Lambert Pat Lambert, Director of Marketing Critical Thinking GEN 480
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THE PROBLEM The day after you read the progress report on ?Operation Optimize,? the CEO called you into the office. ?I just received this from Marketing,? said Cliff, handing you the following email: AcuScan, Inc. From: < pat.lambert@acuscan.com To: < cliff.o.connor@acuscan.com CC: < chris.martinas@acuscan.com; kelly.thomas@acuscan.com Sent: February 20, 2003 Attach: Subject: Bringing ?Operation Optimize? to life Dear Cliff, It?s clear to me that, in spite of a great vision and commitment by the top ranks of management to make ?Operation Optimize? come alive, there are certain factions within the company that do not see a path to the product launch. Accordingly, I would like to talk to you about alternatives, namely, contracting with an outside software design firm to manage our project and develop the software to bring the iScanner into a retail environment. May I request about 30 minutes of your time this morning to talk about this? I?ll have some numbers by 10:30 a.m. for you to look at. Pat Lambert Director of Marketing AcuScan, Inc. ?What do you think?? asked the CEO. You didn?t know what to say from such scanty information. ?Find out what?s going on,? said the CEO. ?And get back to me tomorrow with some ideas about what we should do next.?
Critical Thinking GEN 480
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GATHERING INFORMATION To find out more about the problem, you decide to email all the principle players. You receive the first response from Chris Martinas. AcuScan, Inc. From: Assessment Case page 10 of 10
He also sent you the following documents. ACUSCAN, INC. Memo TO: All Department Managers FROM: Chris Martinas RE: Strategic budget cuts for remaining fiscal year Date: February 2, 2003 Well, folks, the pressure is on. Our project revenues are still falling, with both sales and service revenues sinking. It?s time for us to take extreme action. As you know, I?m working with Pat Lambert on a new product that we will launch by the end of the year. But in the interim, we have to get serious about our budget crisis. As a department, we must find ways to reduce our budget by 15% in the coming quarter. This is a heavy load, but I?m confident we can make the tough decisions together and maintain our department?s strength and productivity. So during the coming week, look at your personal budget areas, and highlight potential savings. Next Tuesday, be prepared to walk all of the department?s managers through your thinking, your results, and your concerns. We will work as a team to determine the final cuts that will make this 15% reduction a reality. Don?t panic ? I am determined to see this budget cut through without laying off existing employees. We are open to early retirement packages and similar voluntary reductions, but I prefer that we all tighten our belts equally and in small increments to reach our budget goals. Chris Martinas Chris Martinas, Vice President of Product Development Critical Thinking GEN 480
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ACUSCAN, INC. ?Operation Optimize?: Product Concept CONFIDENTIAL: FOR INTERNAL USE ONLY DEVELOPED BY: Pat Lambert, Director of Marketing Date: February 4, 2003 THE PRODUCT: ISCANNER RETAIL (WORKING NAME) FEATURES: Enables retailers to ? identify incoming customers through retinal scanning ? track customer movements through the store ? track customer?s eye movements and focus throughout the store ? capture data about each consumer?s needs, wants, and desires ? capture data about customer?s specific characteristics, e.g., eye color, vision needs, etc. ? link data to each consumer?s unique retinal scan ? report data in real time to any retailer, in flexible, customizable reports FUNCTIONS: ? Relational data bases can be built on top of the iScanner technology to enable retailers to call up reports in a multitude of formats, from purchase patterns and trends to individual consumer tastes. ? AcuScan retains database management, thus building a valuable source of retail information and customer trends; additional sales of this data may provide new sources of income in the future
Critical Thinking GEN 480
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COSTS: MINIMAL INVESTMENT, MAXIMUM REVENUES Based on initial analysis, we project that ?Operation Optimize? will require the following minimum investment: ? Software design and reprogramming: $ 200,000* ? Repackaging design and development: 75,000* ? Launch marketing: 50,000* ? Advertising costs: 250,000 Total cost to market: $ 575,000 * Existing staff costs Given the potential return on this product in the first year, this is a reasonable capital outlay with a substantial ROI. Pat Lambert Pat Lambert, Director of Marketing Critical Thinking GEN 480
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Chris also forwarded an email from Cliff and a series of emails from Pat and Kelly. AcuScan, Inc. From: Assessment Case page 14 of 14
AcuScan, Inc. From: Assessment Case page 15 of 15
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AcuScan, Inc. From: < pat.lambert@acuscan.com To: < cliff.o.connor@acuscan.com CC: < chris.martinas@acuscan.com; kelly.thomas@acuscan.com Sent: February 20, 2003 Attach: Subject: Bringing ?Operation Optimize? to life Dear Cliff, It?s clear to me that, in spite of a great vision and commitment by the top ranks of management to make ?Operation Optimize? come alive, there are certain factions within the company that do not see a path to the product launch. Accordingly, I would like to talk to you about alternatives, namely, contracting with an outside software design firm to manage our project and develop the software to bring the iScanner into a retail environment. May I request about 30 minutes of your time this morning to talk about this? I?ll have some numbers by 10:30 a.m. for you to look at. Pat Lambert Director of Marketing AcuScan, Inc. Critical Thinking GEN 480
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FROM PAT LAMBERT When you emailed Pat Lambert, she sent you an email with some personal notes attached. AcuScan, Inc. From: Assessment Case page 23 of 23
ACUSCAN, INC. FROM THE DESK OF: PAT LAMBERT, DIRECTOR OF MARKETING ?Operation Optimize? History (Notes; my reference only) ? January 27, 2003: CEO Cliff O?Connor asks me to work with VP of Product Development Chris Martinas to develop a new market for the iScanner because of lackluster product sales and dropping service revenues. ? January 28: Chris and I meet for the first time to work through ideas. Chris is thinking extended security applications: banks, government offices, other vertical markets. A good way to extend in the short term, but not a new market: these are very competitive vertical markets already, and we would be fighting the same battle we now face of being only one of many retinal scanning security vendors. ? January 28 (night): In a dream, I watch myself walking through a store, and can see everything my ?shopping? self sees, but from an office. When I wake, I think the magic word: retail. Critical Thinking GEN 480
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? January 29: I catch up to Kelly Thomas in the hallway, and ask him what it would entail to expand some of the iScanner?s capabilities into a new market. Kelly shrugs, and says it?s simple to build on existing applications. New apps are another thing, but when I ask if additional databases are a problem, Kelly says not usually. I meet with Chris again and outline my ?dream? product: a retail retinal scanner that can identify what customers are looking for and link relational databases to each customer?s identity. Chris hesitates, but when I describe a store owner?s ability to know how often a customer visits and at what a specific customer is gazing, Chris sees the light. We?re on! ? January 31: Cliff announces the new product development project ? ?Operation Optimize? ? to department heads in a memo. I contact Frank Wilson at Wilson Marketing, and ask him to help us do some of the research ? we?re thinking testing a concept prototype in a few focus groups, mostly to save money. A statistical analysis at this point would take too long, and cost more than
Critical Thinking GEN 480
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this company can afford. I work up a product concept sheet, and design objectives for the marketing work. Wilson gets on it immediately. ? February 4: Frank has already set up focus groups, and is ready to do the work. He?ll have results by the end of next week. I set my staff on doing a competitive analysis, focusing on Secur-A, our biggest competitor.
Critical Thinking GEN 480
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? February 5: On Chris?s recommendation, gave Kelly Thomas a copy of our product concept for the marketing tests. Kelly promised to get back to me soon. ? February 10: Spoke with Frank, and asked to attend one of the focus groups. He agreed. I talked to one retail owner of a small chain of clothing stores. He loves the idea, and wants to see it in his store ASAP. I convince him to be a beta test site, and tell him we?ll have something by the end of August. In the afternoon, Kelly drops by and explodes on me. Scribbled all over my product concept doc. Denies promising we could do this stuff, and we?re asking for the moon, there?s no way we can deliver this in six months. I ask how Kelly developed the iScanner in the first place; apparently it took a year. Plus there?s no plan in place for developing new products at AcuScan, as we?ve never done this before. I?ll talk to Chris about it in the morning. ? February 11: Chris says I have to work with Kelly, because Kelly is the expert on the iScanner and the one who holds the real reins to the department. Kelly?s been here so long, the programmers are in
Critical Thinking GEN 480
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awe. Oh well ? I?ll work through this somehow. Critical Thinking GEN 480
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FROM KELLY THOMAS Kelly Thomas sent you an email with two attachments in response to your query: AcuScan, Inc. From: Assessment Case page 29 of 29
Kelly sent these documents along as well: ACUSCAN, INC. PRESS RELEASE: FOR IMMEDIATE RELEASE For more information: Contact Marketing at AcuScan, Inc. The iScanner: Security With Confidence Recent security lapses at major airports highlight the need for sophisticated, accurate technology that can track individuals and provide secure access to vulnerable airport gates and facilities. AcuScan?s key product, the iScanner, is still the best resource for maintaining tight security in an airport environment. Based on accurate retinal scanning technology and AcuScan?s proprietary software, encrypted data about every individual?s unique retinal characteristics ensures that security is consistent, safe, and reliable. The iScanner, launched nearly five years ago, quickly became the leader of retinal scanner security devices because of its hyperfast processing software and seemingly endless database. Initial scans completed at ticketing counters virtually guarantee that only authorized individuals have access to any airport facilities beyond security. In addition to its instantaneous identification of ticketed passengers and authorized personnel, the iScanner provides access to data bases of customers and employees, through reports that can be requested by airport management on a daily, weekly, or monthly basis. The reports are available in a variety of formats that can address nearly every concern of management: individual access points and patterns, access by demographic groups, and seasonal access patterns. In addition, customized reports can be created to address other information needs. Yet database contents are secured by each facility, to protect valuable information and individual privacy. Critical Thinking GEN 480
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ACUSCAN, INC. ?Operation Optimize?: Product Concept CONFIDENTIAL: FOR INTERNAL USE ONLY DEVELOPED BY: Pat Lambert, Director of Marketing Date: February 4, 2003 THE PRODUCT: ISCANNER RETAIL (WORKING NAME) FEATURES: Enables retailers to ? identify incoming customers through retinal scanning ? track customer movements through the store ? track customer?s eye movements and focus throughout the store ? capture data about each consumer?s needs, wants, and desires ? capture data about customer?s specific characteristics, e.g., eye color, vision needs, etc. ? link data to each consumer?s unique retinal scan ? report data in real time to any retailer, in flexible, customizable reports FUNCTIONS: ? Relational data bases can be built on top of the iScanner technology to enable retailers to call up reports in a multitude of formats, from purchase patterns and trends to individual consumer tastes. ? AcuScan retains database management, thus building a valuable source of retail information and customer trends; additional sales of this data may provide new sources of income in the future Critical Thinking GEN 480
Assessment Case page 31 of 31
COSTS: MINIMAL INVESTMENT, MAXIMUM REVENUES Based on initial analysis, we project that ?Operation Optimize? will require the following minimum investment: ? Software design and reprogramming: $ 200,000* ? Repackaging design and development: 75,000* ? Launch marketing: 50,000* ? Advertising costs: 250,000 Total cost to market: $ 575,000 * Existing staff costs Given the potential return on this product in the first year, this is a reasonable capital outlay with a substantial ROI. Pat Lambert Pat Lambert, Director of Marketing Critical Thinking GEN 480
Assessment Case page 32 of 32
Your assignment Prepare a report for the CEO about this situation in two parts: ? Respond to the specific questions on the worksheets that follow. ? Write an executive summary for the CEO 1: ANALYSIS Use the case materials to complete the worksheets below. THE SITUATION 1) Describe all assumptions you see in any documents. 2) Explain the arguments made by each of these people. 3) Evaluate each argument. a. Cliff O?Connor b. Pat Lambert c. Kelly Thomas d. Chris Martinas THE CONFLICT 4) Describe specific fallacious arguments, and identify the people who hold them. Critical Thinking GEN 480
Assessment Case page 33 of 33
2: CONCLUSIONS 1. Describe all problems in this situation. 2. For each problem, describe the data, arguments, and reasoning that contribute to each problem. Use your reasoning to complete the worksheet below. 3. What is the underlying problem that is the base cause of the conflict within the company? 4. Alternative solutions 5. Strengths/weaknesses 6. Which solution will you recommend to the CEO? Why? Critical Thinking GEN 480
Assessment Case page 34 of 34

Essay Instructions: Case Study Assignment

Assignment Overview

Prepare a report for the CEO about this situation in two parts:

Part One: Respond to the specific questions on the worksheet that follows (100 points possible).

Part Two: Write an executive summary for the CEO (100 points possible).

PART ONE:

Use the case materials to complete this assignment.



ANALYSIS

1. Describe all assumptions seen in any documents provided.

For full credit, provide AT MINIMUM: four to six (4-6) assumptions held by Kelly; six to nine (6-9) assumptions held by Pat; two to three (2-3) assumptions held by Cliff; two to three (2-3) assumptions held by Chris.

a. Kelly

b. Pat

c. Cliff

d. Chris

2. Explain the arguments made by each of these people.

Explanations should be comprised of two to six (2-6) sentences for each of the following.

a. Cliff O?Connor

b. Pat Lambert

c. Kelly Thomas

d. Chris Martinas

3. Evaluate each argument listed above as sound or unsound and why. Indicate whether they are emotional or logical in nature.

Evaluations should be comprised of two to six (2-6) sentences for each of the following.

a. Cliff O?Connor

b. Pat Lambert

c. Kelly Thomas

d. Chris Martinas

4. Describe specific fallacious arguments, and identify the people who hold them.

For full credit, provide AT MINIMUM four to six (4-6) fallacious arguments



CONCLUSIONS

1. Describe all problems in this situation.

Describe a minimum of two to three (2-3) problems that characterize the situation. Single sentence format is acceptable.

2. For each problem listed above, describe the data, arguments, and reasoning that contribute to the problem.

Describe issues of data, arguments, and reasoning related to each problem, within two to six (2-6) sentences.

3. What is the underlying problem that is the base cause of the conflict within the company?

Present the underlying problem in one to four (1-4) sentences.

4. What alternative solutions would you propose for this situation?

Present a MIMINUM of two (2) potential solutions, in the format of two to four (2-4) sentences each.

5. State the relative strengths and weaknesses of each alternative solution.

Describe at least one (1) strength and one (1) weakness for each alternative solution.

6. Which solution will you recommend to the CEO, and why?

In two to six (2-6) sentences, fully articulate the exact solution you would propose and the reason(s) for that choice.



PART TWO:

EXECUTIVE SUMMARY

Write an executive summary of the case for the CEO of the company. The executive summary should give readers the essential contents of the master document(s) in approximately 2 pages. It should preview the main points of your document, enabling readers to build a mental framework for organizing and understanding the detailed information you are presenting, and helping them determine the key results and recommendations reported in your document. Be sure to include the following:

1. Purpose and scope of document

2. Summary of the situation

3. Key points relating to the situation

4. Conclusions

5. Recommendations/actions to be taken, and why

6. Other supportive information

The executive summary should be comprised of 700-1050 words in length.



The Case:

Critical Thinking: Assessment Case

Introduction
The Critical Thinking 480 Assessment Case tests your critical thinking skills by presenting you with realistic information about a typical company problem.
In this assessment, you are being evaluated on the following skills:
? Evaluate the unspoken assumptions that influence behavior.
? Differentiate between logical and emotional thought processes/responses.
? Evaluate the soundness of arguments.
? Recognize fallacious reasoning.
? Identify problem(s) in a given situation.
? Construct alternative solutions to a problem(s).
? Select the appropriate solution to a given problem.
? Hypothesize the outcome of a selected solution to a problem.
Assessment assignment
YOUR NEW JOB BEGINS
You are a newly hired executive within AcuScan, Inc., maker of the iScanner, a retinal scanner security product. You are the company?s new VP of Organizational Development, and will be responsible for creating the Organizational Development department over the coming year. Cliff O?Connor, the CEO of the company hired you to help AcuScan make the transition into retail markets with a new product while maintaining its traditional product quality and excellent employment environment.
When you were hired in early February, you received the Scanner?s Weekly and a Memo from Cliff O?Connor as part of your orientation to the company.

SCANNERS? WEEKLY
February 5, 2003 Vol. 10, No. 5
The employee newsletter of AcuScan, Inc. Copyright ? 2003 by AcuScan, Inc. All Rights Reserved.
SCANNERS LOOK BACK
A Decade of Security from AcuScan
The iScanner in action
Ten years ago today, AcuScan, Inc. launched its cutting-edge retinal security product iScanner at a security conference in Houston, TX. Based on software created by our own Chief Engineer of Product Software Kelly Thomas, the iScanner quickly became the leader in the emerging retinal scanning security business.
?The iScanner is the security scanner of choice for airports throughout the nation,? says AcuScan CEO Cliff O?Connor, one of the visionaries for the potential of the iScanner. ?We?re confident that, with our superior experience and terrific service, AcuScan will continue to take the market by storm in the coming year.?
Today, the iScanner claims nearly 40% of the market. In just a decade, the company has grown to 1,500 employees based across the United States. Regional centers in Los Angeles, Houston, and Maryland provide service to customers, while the company?s Chicago?based HQ drives technology forward into the next century.
Last year, AcuScan revenues hit $100 million, a new record for the company despite the recent economic slowdown. After last year?s traumatic labor reductions, the company is bouncing back stronger than ever, with four sales and service centers in each of the country?s four regions: West, South, North, and East.
- Staff writer

ACUSCAN, INC.
Memo
TO: All Department Heads
FROM: Cliff O?Connor, CEO
RE: Strategic budget cuts for remaining fiscal year
Date: January 31, 2003
Mid-year numbers continue to pressure us from all sides in spite of last year?s tremendous cost-cutting sacrifice of nearly 500 employees and a revamping of our supply chain management system, which cut costs by almost 15%. Project revenues continue to fall in this economy, with both sales and service revenues sinking. Based on recent numbers, the present sales/services ratio of 50/50 will slide about 30%, with services expected to provide about 70% of our revenues during the rest of this fiscal year.
Based on this extreme situation, we are taking extreme action. As you know, Pat Lambert recently joined AcuScan as the company?s new Director of Marketing. Pat?s history as a talented and creative marketing force within the cereal industry will prove to be a boon to our place in the market. Pat and Chris Martinas, our VP of Product Development, are now working on a new venture that we will launch by the end of the year. This is a new kind of project for us at AcuScan, as we have not developed a new product or market since the inception of the company. However, with Pat?s creativity and Chris?s expertise, I?m confident that we will recapture our position as a market leader with our technology.
However, before the new product emerges, we still face a short?term budget crisis. Accordingly, and after significant analysis with senior management, we are asking that every department (except Sales and Marketing, our key revenue generators) find ways to reduce budgets by 15% in the coming quarter. I recognize that, on top of last year?s staff reductions, this is a heavy burden. But I?m confident that we can do this by evaluating every expenditure across the board. I?m leaving the decision of how to reach a 15% budget cut to you, who know your people and your possibilities better than anyone in the company.
My door, as always, is open to discuss the ramifications of this budget reduction for the coming year. If you have concerns, please see me directly.
Cliff O?Connor
Clifford J. O?Connor, CEO

Needless to say, you are the only Organizational Development consultant available in the company, and will be the only one for the near future.
A week after your orientation, you received a Progress Report on Operation Optimize from Chris Martinas and Pat Lambert.
ACUSCAN, INC.
Progress Report: ?Operation Optimize?
CONFIDENTIAL: FOR INTERNAL USE ONLY
TO:
AcuScan Management
FROM:
Chris Martinas, Vice President of Product Development Pat Lambert, Director of Marketing
Date: February 17, 2003
OUR CHARTER: A NEW MARKET TO CREATE NEW REVENUES
AcuScan created the retinal scanning security marketplace with the cutting?edge technology of the iScanner. But today, ten years later, AcuScan is barely sustaining 40% of the market share in a mature and competitive market. Prices for the iScanner and similar devices are dropping as the product becomes a commodity. Service revenues, with their lower profit margins and higher overhead, are rapidly becoming the mainstay of the company?s income.
It?s clear that, to succeed in today?s tough economy, AcuScan needs to expand its technology into new markets, and again become the cutting?edge leader by creating a solution to an as?yet unrecognized customer need. To make this leap successful, AcuScan must act quickly: competitors are already looking into new ways to apply their technologies, and if we are to carve out a new niche, the time to act is now.


Progress Report: ?Operation Optimize? (continued)
DEFINING THE PRODUCT: REVAMPING ISCANNER
In January of this year, CEO Cliff O?Connor requested that Marketing and Product Development conceive of a use for iScanner technology in a new marketplace, to address ongoing revenue and market share declines. After initial design meetings with Product Development, Marketing developed a product concept in line with past new product trends. We developed our marketing objectives, and contracted with Wilson Marketing for the initial prototype tests (concept tests and focus groups). We concluded that a strong potential existed to use iScanner technology and equipment in a retail setting ? thus, ?Operation Optimize.? By enabling retailers to identify incoming customers and track their movements, information about each consumer?s needs, wants, and desires can be linked to the consumer?s unique retinal scan. Data about the customer, down to actual eye color, can be reported to retailers to help them tailor their products and displays for maximum effect. Relational data bases can be built on top of the iScanner technology to enable retailers to call up reports in a multitude of formats, from purchase patterns and trends to individual consumer tastes.
Initial research done in the AcuScan Marketing Department reveals that no competitor has the technology to date to create an application similar to the iScanner retail application described above. However, a confidential source states that Secur-A Corp. is in the process of developing some kind of retail application. It is only a matter of months before Secur-A will come to market with a competitive product.
Critical Thinking GEN 480
Assessment Case page 5 of 5
Progress Report: ?Operation Optimize? (continued)
COSTS: MINIMAL INVESTMENT, MAXIMUM REVENUES
Because of present revenue pressures, capital to invest in new product development is minimal. Thankfully, because of the flexibility and power of the iScanner?s present software and operating system, Marketing and Product Development foresee that developing ?Operation Optimize? sufficiently to take to a small test market will require minimal investment of existing staff time and effort. Essentially, the retail application of the iScanner involves additional software programming, with little need for redesigning the hardware components. Some repackaging will be required to fit the product into a retail environment and eliminate the ?high security? look of the outside housings, but this is not foreseen to be a major roadblock in the development of the product itself.
Based on initial analysis, we project that ?Operation Optimize? will require the following minimum investment:
? Software design and reprogramming:
$ 200,000
*
? Repackaging design and development:
75,000
*
? Launch marketing:
50,000
*
? Advertising costs:
250,000
Total cost to market:
$ 575,000
* Existing staff costs
Given the potential return on this product in the first year, this is a reasonable capital outlay with a substantial ROI.

Progress Report: ?Operation Optimize? (continued)
DEVELOPMENT PROGRESS
To deliver ?Operation Optimize? before our competition gets a foothold in the market, AcuScan must announce and deploy its first installations within six to eight months. Marketing has already identified a potential customer for a beta test, who is expecting to begin the test in late August. Given the minimal alterations to the original iScanner device, this deadline seems to be a reachable, if aggressive, objective.
To date, progress on developing ?Operation Optimize? seems to be stalling, due to concerns within Product Development that software programming alone cannot be completed before the beginning of FY 2004 in order to deliver all of the features outlined above. PD engineers also claim that initial analysis of the application requires that all features be implemented in the first release, as opposed to creating a staged release that would enable AcuScan to establish a foothold in an emerging market.
The financial implications of this kind of delay are significant.
? Based on estimates of programmer time alone from PD engineers, AcuScan would have to add about $250,000 to the budget outlined above.
? Coming to the market in early 2004 may put AcuScan at a disadvantage in terms of the competition, which is already in progress on its own version of a similar application (see ?Defining the Product? above).

Progress Report: ?Operation Optimize? (continued)
CONCLUSIONS
Based on initial market research and the slowdown of the product development, Marketing concludes that ?Operation Optimize? needs a significant increase in its product development budget to reach August product launch goals. This capital outlay could be used to hire contract programmers to augment existing staff, to speed the redevelopment of the software running the product. Because of contractor costs, this would significantly overreach the estimated $ 250,000 needed in existing staff time, but would enable AcuScan to bring this product to market on time.
To resume progress on ?Operation Optimize,? we need approval of the following revised budget as soon as possible to meet deadlines:
? Software design and reprogramming:
$ 200,000
*
? Contract software reprogramming:
350,000
? Repackaging design and development:
75,000
*
? Launch marketing:
50,000
*
? Advertising costs:
250,000
Total cost to market:
$ 925,000
* Existing staff costs
This is a significant increase, and would reduce our ROI over the first year of the product?s life. However, given the ?shelf life? that the iScanner has had in the industry (10 years), we conclude that over the coming decade, the ROI justifies this capital investment, even in a tight economy and with company revenues in flux.
Chris Martinas
Chris Martinas, Vice President of Product Development
Pat Lambert
Pat Lambert, Director of Marketing

THE PROBLEM
The day after you read the progress report on ?Operation Optimize,? the CEO called you into the office.
?I just received this from Marketing,? said Cliff, handing you the following email:
AcuScan, Inc.
From:
< pat.lambert@acuscan.com
To:
< cliff.o.connor@acuscan.com
CC:
< chris.martinas@acuscan.com; kelly.thomas@acuscan.com
Sent:
February 20, 2003
Attach:
Subject:
Bringing ?Operation Optimize? to life
Dear Cliff,
It?s clear to me that, in spite of a great vision and commitment by the top ranks of management to make ?Operation Optimize? come alive, there are certain factions within the company that do not see a path to the product launch.
Accordingly, I would like to talk to you about alternatives, namely, contracting with an outside software design firm to manage our project and develop the software to bring the iScanner into a retail environment.
May I request about 30 minutes of your time this morning to talk about this? I?ll have some numbers by 10:30 a.m. for you to look at.
Pat Lambert
Director of Marketing
AcuScan, Inc.
?What do you think?? asked the CEO.
You didn?t know what to say from such scanty information.
?Find out what?s going on,? said the CEO. ?And get back to me tomorrow with some ideas about what we should do next.?

GATHERING INFORMATION
To find out more about the problem, you decide to email all the principle players. You receive the first response from Chris Martinas.
AcuScan, Inc.
From:
To:
Sent:
February 24, 2003
Attach:
Misc emails; Product concept
Subject:
RE Progress Report ?Operation Optimize?
Dear _____,
Thanks for your questions about the ?Operation Optimize? project. We seem to be having a bit of conflict here between Marketing and Product Development ? though I?m not sure how it began. I do know that Pat Lambert and Kelly Thomas, our Chief Engineer of Product Software, are at a loggerhead about how to proceed to meet the deadline. Maybe you can talk to them and see what?s going on. I can?t seem to get the same story from both sides.
I?m attaching several documents to give you a little more background on the project, including the initial marketing concept product that Pat put together in February.
Be sure to contact me if you have any other questions.
Chris Martinas
VP, Product Development
AcuScan, Inc.

He also sent you the following documents.
ACUSCAN, INC.
Memo
TO: All Department Managers
FROM: Chris Martinas
RE: Strategic budget cuts for remaining fiscal year
Date: February 2, 2003
Well, folks, the pressure is on. Our project revenues are still falling, with both sales and service revenues sinking. It?s time for us to take extreme action.
As you know, I?m working with Pat Lambert on a new product that we will launch by the end of the year. But in the interim, we have to get serious about our budget crisis.
As a department, we must find ways to reduce our budget by 15% in the coming quarter. This is a heavy load, but I?m confident we can make the tough decisions together and maintain our department?s strength and productivity. So during the coming week, look at your personal budget areas, and highlight potential savings. Next Tuesday, be prepared to walk all of the department?s managers through your thinking, your results, and your concerns. We will work as a team to determine the final cuts that will make this 15% reduction a reality.
Don?t panic ? I am determined to see this budget cut through without laying off existing employees. We are open to early retirement packages and similar voluntary reductions, but I prefer that we all tighten our belts equally and in small increments to reach our budget goals.
Chris Martinas
Chris Martinas, Vice President of Product Development

ACUSCAN, INC.
?Operation Optimize?: Product Concept
CONFIDENTIAL: FOR INTERNAL USE ONLY
DEVELOPED BY:
Pat Lambert, Director of Marketing
Date: February 4, 2003
THE PRODUCT: ISCANNER RETAIL (WORKING NAME)
FEATURES:
Enables retailers to
? identify incoming customers through retinal scanning
? track customer movements through the store
? track customer?s eye movements and focus throughout the store
? capture data about each consumer?s needs, wants, and desires
? capture data about customer?s specific characteristics, e.g., eye color, vision needs, etc.
? link data to each consumer?s unique retinal scan
? report data in real time to any retailer, in flexible, customizable reports
FUNCTIONS:
? Relational data bases can be built on top of the iScanner technology to enable retailers to call up reports in a multitude of formats, from purchase patterns and trends to individual consumer tastes.
? AcuScan retains database management, thus building a valuable source of retail information and customer trends; additional sales of this data may provide new sources of income in the future

COSTS: MINIMAL INVESTMENT, MAXIMUM REVENUES
Based on initial analysis, we project that ?Operation Optimize? will require the following minimum investment:
? Software design and reprogramming:
$ 200,000
*
? Repackaging design and development:
75,000
*
? Launch marketing:
50,000
*
? Advertising costs:
250,000
Total cost to market:
$ 575,000
* Existing staff costs
Given the potential return on this product in the first year, this is a reasonable capital outlay with a substantial ROI.
Pat Lambert
Pat Lambert, Director of Marketing
Critical Thinking GEN 480
Assessment Case page 13 of 13
Chris also forwarded an email from Cliff and a series of emails from Pat and Kelly.
AcuScan, Inc.
From:
To:
Sent:
February 18, 2003
Attach:
Subject:
Operation Optimize budget
Chris,
Read the progress report ? looks good so far, but the budget is problematic. Can we make our deadlines with about 2/3 of the initial budget request ? the $575K? The mil is completely out of the question ? and of course, we need to make that August launch date.
Cliff

AcuScan, Inc.
From:
To:
Sent:
February 18, 2003
Attach:
Subject:
Opt budget crunch
Pat and Kelly,
Just talked to Cliff ? we?re limited to about $400K for the Optimize product. How can we make the August deadline and deliver a true AcuScan product? Let?s talk.
Chris
AcuScan, Inc.
From:
< pat.lambert@acuscan.com
To:
< chris.martinas@acuscan.com; kelly.thomas@acuscan.com
Sent:
February 18, 2003
Attach:
Subject:
RE Opt budget crunch
Team,
That?s a crunch, but I don?t see why we can?t produce something by August with it. From what I?ve seen, our programmers are the best! I?ll continue to work with my folks to see if we can refine the features a little.
Pat Lambert
Director of Marketing
AcuScan, Inc.

AcuScan, Inc.
From:
< kelly.thomas@acuscan.com
To:
< chris.martinas@acuscan.com; pat.lambert@acuscan.com
Sent:
February 19, 2003
Attach:
Subject:
RE RE Opt budget crunch
Chris,
We are totally putting ourselves on the line with this project ? how can we maintain our existing service with our already short staff, and find time to make up something new? Product development just doesn?t work that way.
Kelly
AcuScan, Inc.
From:
< chris.martinas@acuscan.com
To:
< kelly.thomas@acuscan.com; pat.lambert@acuscan.com
Sent:
February 19, 2003
Attach:
Subject:
RE RE RE Opt budget crunch
Kelly and Pat,
I know we?ve got a challenge here. But we have to find a way to get it done. It?s the future of the company, frankly.
Why don?t you two sit down and work out a detailed project development plan for this? It would help us all get a handle on our progress and our challenges.
Chris

AcuScan, Inc.
From:
< pat.lambert @acuscan.com
To:
< kelly.thomas@acuscan.com
Sent:
February 19, 2003
Attach:
Subject:
Meeting
Kelly,
When do you want to get together?
Pat
AcuScan, Inc.
From:
< kelly.thomas@acuscan.com
To:
< pat.lambert@acuscan.com
Sent:
February 19, 2003
Attach:
Subject:
RE Meeting
To do what? Argue again?
I keep telling you we can?t come up with all those features just like that. Programming isn?t just keystrokes ? there?s planning, testing, oh, and something you may not have heard about ? QC.
I can design one feature completely and make it work by August. One. So pick.
Kelly Thomas
Senior Engineer
Product Development
AcuScan, Inc.

AcuScan, Inc.
From:
< pat.lambert@acuscan.com
To:
< kelly.thomas@acuscan.com
Sent:
February 19, 2003
Attach:
Subject:
RE RE Meeting
Look, Kelly, I?m really not trying to make your life difficult. But why can?t we put together some kind of prototype by August that includes all of the features? So what if they?re not complete ? the customer will be thrilled and we?ll be first to market. Maybe YOU haven?t heard about iterations. Let?s get V 1.0 out first, and make it perfect next year with 1.1.
BTW, I do know what QC means ? I don?t appreciate the snide comments.
Pat Lambert
AcuScan, Inc.
From:
< kelly.thomas@acuscan.com
To:
< pat.lambert@acuscan.com
Sent:
February 19, 2003
Attach:
Subject:
RE RE RE Meeting
One. Pick.
Kelly Thomas
Senior Engineer
Product Development
AcuScan, Inc.

AcuScan, Inc.
From:
< pat.lambert@acuscan.com
To:
< kelly.thomas@acuscan.com
Sent:
February 19, 2003
Attach:
Subject:
RE RE RE RE Meeting
Just give me one good reason why we can?t create a quick prototype by August.
One.
Pat Lambert
AcuScan, Inc.
From:
< kelly.thomas@acuscan.com
To:
< pat.lambert@acuscan.com
Sent:
February 19, 2003
Attach:
Subject:
RE RE RE RE RE Meeting
You want a reason? OK. Based on our workload analysis two years ago, when we had more people BTW, every hour of every support engineer is promised to existing customers. Sure, the product is more mature, and needs less support, but we also have 25% fewer programmers because of last year?s layoff.
Does ?We don?t have time? mean anything to you?
Anyway, I stopped by Chris?s office yesterday, and he said even the budget is looking flimsy unless we can come up with something workable. I told him I didn?t think this was it.
Kelly Thomas
Senior Engineer
Product Development
AcuScan, Inc.

AcuScan, Inc.
From:
< pat.lambert@acuscan.com
To:
< kelly.thomas@acuscan.com
Sent:
February 19, 2003
Attach:
Subject:
RE RE RE RE RE RE Meeting
Come on, Kelly, I talked to one of the programmers last week and explained what we?re trying to do, and he said for sure we could build this product. We didn?t get into details, but he said one of the installations is down and they do have time to do other things.
Can we meet in person instead of doing this silly email string?
Pat Lambert
AcuScan, Inc.
From:
< kelly.thomas@acuscan.com
To:
< pat.lambert@acuscan.com
Sent:
February 19, 2003
Attach:
Subject:
RE RE RE RE RE RE RE Meeting
Pick me a feature, and I?ll give you a date. And BTW, don?t go behind my back to my programmers. They have enough to do without dealing with you. If you want information, ask me.
Kelly Thomas
Senior Engineer
Product Development
AcuScan, Inc.

AcuScan, Inc.
From:
< pat.lambert@acuscan.com
To:
< kelly.thomas@acuscan.com
Sent:
February 19, 2003
Attach:
Subject:
RE RE RE RE RE RE RE RE Meeting
Like you didn?t just undercut me with Chris. Thanks for the support ? just what I need.
Never mind. I?ll get this done without you. This could save the company, and all you want is to do the same old things in the same old way and CYA in the process. I don?t need this.
Pat Lambert
Director of Marketing
AcuScan, Inc.

AcuScan, Inc.
From:
< pat.lambert@acuscan.com
To:
< cliff.o.connor@acuscan.com
CC:
< chris.martinas@acuscan.com; kelly.thomas@acuscan.com
Sent:
February 20, 2003
Attach:
Subject:
Bringing ?Operation Optimize? to life
Dear Cliff,
It?s clear to me that, in spite of a great vision and commitment by the top ranks of management to make ?Operation Optimize? come alive, there are certain factions within the company that do not see a path to the product launch.
Accordingly, I would like to talk to you about alternatives, namely, contracting with an outside software design firm to manage our project and develop the software to bring the iScanner into a retail environment.
May I request about 30 minutes of your time this morning to talk about this? I?ll have some numbers by 10:30 a.m. for you to look at.
Pat Lambert
Director of Marketing
AcuScan, Inc.

FROM PAT LAMBERT
When you emailed Pat Lambert, she sent you an email with some personal notes attached.
AcuScan, Inc.
From:
To:
Sent:
February 24, 2003
Attach:
Pat?s notes
Subject:
RE Progress Report ?Operation Optimize?
I?m in the middle of trying to get this so-called ?Operation? off the ground ? I have bigger problems at hand than replying to nit-picky questions. My analysis and conclusions are all in the progress report ? just go read that. Although it seems that you have already. Maybe you?ll see the problem once you look at my notes on this situation.
Pat Lambert
Director of Marketing
AcuScan, Inc.

ACUSCAN, INC.
FROM THE DESK OF:
PAT LAMBERT, DIRECTOR OF MARKETING
?Operation Optimize? History (Notes; my reference only)
? January 27, 2003: CEO Cliff O?Connor asks me to work with VP of Product Development Chris Martinas to develop a new market for the iScanner because of lackluster product sales and dropping service revenues.
? January 28: Chris and I meet for the first time to work through ideas. Chris is thinking extended security applications: banks, government offices, other vertical markets. A good way to extend in the short term, but not a new market: these are very competitive vertical markets already, and we would be fighting the same battle we now face of being only one of many retinal scanning security vendors.
? January 28 (night): In a dream, I watch myself walking through a store, and can see everything my ?shopping? self sees, but from an office. When I wake, I think the magic word: retail.

? January 29: I catch up to Kelly Thomas in the hallway, and ask him what it would entail to expand some of the iScanner?s capabilities into a new market. Kelly shrugs, and says it?s simple to build on existing applications. New apps are another thing, but when I ask if additional databases are a problem, Kelly says not usually. I meet with Chris again and outline my ?dream? product: a retail retinal scanner that can identify what customers are looking for and link relational databases to each customer?s identity. Chris hesitates, but when I describe a store owner?s ability to know how often a customer visits and at what a specific customer is gazing, Chris sees the light. We?re on!
? January 31: Cliff announces the new product development project ? ?Operation Optimize? ? to department heads in a memo. I contact Frank Wilson at Wilson Marketing, and ask him to help us do some of the research ? we?re thinking testing a concept prototype in a few focus groups, mostly to save money. A statistical analysis at this point would take too long, and cost more than

this company can afford. I work up a product concept sheet, and design objectives for the marketing work. Wilson gets on it immediately.
? February 4: Frank has already set up focus groups, and is ready to do the work. He?ll have results by the end of next week. I set my staff on doing a competitive analysis, focusing on Secur-A, our biggest competitor.

? February 5: On Chris?s recommendation, gave Kelly Thomas a copy of our product concept for the marketing tests. Kelly promised to get back to me soon.
? February 10: Spoke with Frank, and asked to attend one of the focus groups. He agreed. I talked to one retail owner of a small chain of clothing stores. He loves the idea, and wants to see it in his store ASAP. I convince him to be a beta test site, and tell him we?ll have something by the end of August. In the afternoon, Kelly drops by and explodes on me. Scribbled all over my product concept doc. Denies promising we could do this stuff, and we?re asking for the moon, there?s no way we can deliver this in six months. I ask how Kelly developed the iScanner in the first place; apparently it took a year. Plus there?s no plan in place for developing new products at AcuScan, as we?ve never done this before. I?ll talk to Chris about it in the morning.
? February 11: Chris says I have to work with Kelly, because Kelly is the expert on the iScanner and the one who holds the real reins to the department. Kelly?s been here so long, the programmers are in

awe. Oh well ? I?ll work through this somehow.
Critical Thinking GEN 480
Assessment Case page 28 of 28
FROM KELLY THOMAS
Kelly Thomas sent you an email with two attachments in response to your query:
AcuScan, Inc.
From:
To:
Sent:
February 24, 2003
Attach:
Misc emails; Product concept
Subject:
RE Progress Report ?Operation Optimize?
_____,
Good to meet you with Chris when you came through the department yesterday ? you?ve got a helluva project to start off your career at AcuScan!
Yes, I?ve read Marketing?s ?progress? report on this new product, and I see a few inaccuracies in both the analysis and the conclusions. In the first place, the alterations to the iScanner are not ?minimal? by any stretch of the imagination; that Pat actually writes that in the report just shows a complete lack of knowledge on how the iScanner software works. And like most real products ? which, in my experience, marketing people don?t seem to have any understanding of ? just throwing money at a problem doesn?t make it go away. There is a process to follow to make sure whatever we develop will meet our QC standards and the customers? needs ? whatever they end up being, in this case. As far as I can tell, we?re making this one up as we go along, but I guess I didn?t pay much attention to how we ?developed? this thing. All I know is, the iScanner was a hit because we took our time and created something that worked well every time ? and relational databases aren?t something you can just add on and make work with a few more lines of code. Anyway, here?s some documents that might help you understand what?s going on. If you have questions, call.
Kelly

Kelly sent these documents along as well:
ACUSCAN, INC.
PRESS RELEASE: FOR IMMEDIATE RELEASE
For more information: Contact Marketing at AcuScan, Inc.
The iScanner: Security With Confidence
Recent security lapses at major airports highlight the need for sophisticated, accurate technology that can track individuals and provide secure access to vulnerable airport gates and facilities. AcuScan?s key product, the iScanner, is still the best resource for maintaining tight security in an airport environment.
Based on accurate retinal scanning technology and AcuScan?s proprietary software, encrypted data about every individual?s unique retinal characteristics ensures that security is consistent, safe, and reliable. The iScanner, launched nearly five years ago, quickly became the leader of retinal scanner security devices because of its hyperfast processing software and seemingly endless database. Initial scans completed at ticketing counters virtually guarantee that only authorized individuals have access to any airport facilities beyond security.
In addition to its instantaneous identification of ticketed passengers and authorized personnel, the iScanner provides access to data bases of customers and employees, through reports that can be requested by airport management on a daily, weekly, or monthly basis. The reports are available in a variety of formats that can address nearly every concern of management: individual access points and patterns, access by demographic groups, and seasonal access patterns. In addition, customized reports can be created to address other information needs. Yet database contents are secured by each facility, to protect valuable information and individual privacy.

ACUSCAN, INC.
?Operation Optimize?: Product Concept
CONFIDENTIAL: FOR INTERNAL USE ONLY
DEVELOPED BY:
Pat Lambert, Director of Marketing
Date: February 4, 2003
THE PRODUCT: ISCANNER RETAIL (WORKING NAME)
FEATURES:
Enables retailers to
? identify incoming customers through retinal scanning
? track customer movements through the store
? track customer?s eye movements and focus throughout the store
? capture data about each consumer?s needs, wants, and desires
? capture data about customer?s specific characteristics, e.g., eye color, vision needs, etc.
? link data to each consumer?s unique retinal scan
? report data in real time to any retailer, in flexible, customizable reports
FUNCTIONS:
? Relational data bases can be built on top of the iScanner technology to enable retailers to call up reports in a multitude of formats, from purchase patterns and trends to individual consumer tastes.
? AcuScan retains database management, thus building a valuable source of retail information and customer trends; additional sales of this data may provide new sources of income in the future

COSTS: MINIMAL INVESTMENT, MAXIMUM REVENUES
Based on initial analysis, we project that ?Operation Optimize? will require the following minimum investment:
? Software design and reprogramming:
$ 200,000
*
? Repackaging design and development:
75,000
*
? Launch marketing:
50,000
*
? Advertising costs:
250,000
Total cost to market:
$ 575,000
* Existing staff costs
Given the potential return on this product in the first year, this is a reasonable capital outlay with a substantial ROI.
Pat Lambert
Pat Lambert, Director of Marketing

Your assignment
Prepare a report for the CEO about this situation in two parts:
? Respond to the specific questions on the worksheets that follow.
? Write an executive summary for the CEO
1: ANALYSIS
Use the case materials to complete the worksheets below.
THE SITUATION
1) Describe all assumptions you see in any documents.
2) Explain the arguments made by each of these people.
3) Evaluate each argument.
a. Cliff O?Connor
b. Pat Lambert
c. Kelly Thomas
d. Chris Martinas
THE CONFLICT
4) Describe specific fallacious arguments, and identify the people who hold them.

2: CONCLUSIONS
1. Describe all problems in this situation.
2. For each problem, describe the data, arguments, and reasoning that contribute to each problem.
Use your reasoning to complete the worksheet below.
3. What is the underlying problem that is the base cause of the conflict within the company?
4. Alternative solutions
5. Strengths/weaknesses
6. Which solution will you recommend to the CEO? Why?