Le Petit Chef

Le Petit Chef is a French manufacturer of kitchen counter top appliances, typically for the upper end market. Specifically, Le Petit Chef has been battling the "microwave wars," in which their performance has been steadily declining since 1994. Unfortunately, Le Petit Chef has spent a great deal on research and development and there are significant problems within the Microwave division itself.

The company's new Director of Research and Development, Brigitte Gagne', is faced with declining sales, poor moral, incomplete staffing positions, and an industry challenge that places their particular niche in jeopardy. The complexity is exacerbated with a call she received from the CFO, Alain Nadeau, remarking that he had never seen a year where the business answers were as clear cut -- quite polar from Brigitte's view.

Factors Explaining Le Petit's Performance -- as the microwave industry evolved, the number of households in the EU and Developed World who had at least one microwave dramatically increased. Of course, the technology had been around since World War II, but consumer acceptance was slow until the price dropped and the demographic/psychographic issues of the modern family made the convenience of cooking with a microwave more of a perceived necessity than luxury.

By 1999 almost 60% of households had a microwave. The conundrum came in two basic areas: in some segments the upper end, highly technical line was growing as more and more people replaced their outdated ovens; and, the inexpsieve import machine was flooding the market at prices no reasonable European or American manufacturer could meet. For a number of years, Le Petit Chef was able to defend its position in the market by focusing on the merits of its higher-end, higher-quality machines. However, both fiscal performance and moral declined as the Asian imports gained market share and penetration.

Le Petit seems to also have lost its focus in that they panicked at the crisis and assigned thirty engineers to work concurrently on seven product development projects while still supporting the needs of the existing models and other internal divisions. This eventually caused inventory and shipping issues, which further complicated the situation, but now at the retail/consumer end. Everyone in the company was aware it was the microwave division bringing the company down, only increasing stress, burn-out, and low morale.

Clearly, it is the evolution of the industry and the stragegic direction of the company that are part of the macro-challenge. The consumer has limited needs regarding the product -- it needs to efficiently and cost-effectively assist in the preparation of meals. There are only so many high-tech or design advances that are even feasible for a microwave. In fact, the labor and shipping costs of the Asian markets have not only whittled away penetration levels for Le Petit, but also from other manufacturers in the developed world who are also required to pay higher wages, benefits, and have soaring internal costs.

Thus, the lack of strategic vision and the spreading of intellectual resources -- reaction rather than strategic vision, seems to be at the core of Le Petit's issue. Spreading research dollars and human capital across so many platforms, in fact, does not allow for a focused approach to a specific market niche, but diffuses the line and makes it even more vulnerable to market cannibalization.

Gagne's Task -- Brigitte Gagne' has quite a difficult task, considering that her position in the company is as Director of Research and Development. We are not clear about her horizontal level of authority, but assume she must make recommendations, not necessarily decisions. Her initial tasks, though, seem fairly straightforward:

Institute a strategic plan and stay focuses; if that is high-end, fuzzy logic, so be it.

Move R&D resources onto that project, with only minimal human capital supporting older brands.

Reinvigorate the division with realistic goals, information sharing sessions, and the ability for staff to contribute and buy-in to the new project and focus.

Work with marketing to aggressively appeal to a certain level of customer: use mystery, exclusivity, and uniqueness.

Work with an international public relations firm to provide some sort of "prize" incentive launched in conjunction to the new product (trip to Paris, for example).

Glean 100% buy-in from executive management to refrain from trying to be something for everyone and focus on what Le Petit is good at.