Seatech

SEATECH

SeaTech manufactures many kinds of small craft, including dinghies, canoes, kayaks, inflatable rafts, small sail boats (under 30' in length), and outboard ski boats. These boats have traditionally been made of aluminum, wood and/or fiberglass, but recently SeaTech has led the way in developing newer hull materials designed for strength and lightness, using carbon fiber laminates similar to materials used in advanced aircraft bodies. Such material is ideal for river canoes and kayaks, which must be easy to transport and able to withstand the impact of crashing into rocks.

Another important characteristic of boat materials is protective coatings. Most people who own large boats (like the larger sail boats that SeaTech manufactures) choose to leave their boats moored in water year round, often in salt water. Boats moored in salt water accumulate algae and barnacle growth. Such growth increases water friction, which slows hull speed, and also eats away at the hull. Consequently, most boat owners must clean their hulls frequently, which is both time consuming and expensive. Therefore, hull materials and hull paints which can retard salt water corrosion or "fouling" would be very desirable to boat owners and would have an advantage in this marketplace.

SeaTech has been trying to improve the anti-fouling quality of the hulls of its larger boats by developing better hull materials. A few engineers at SeaTech have suggested that anti-fouling paints could be developed in addition to, perhaps even instead of, anti-fouling materials. Anti-fouling paints might prove to be cheaper and easier to develop than other anti-fouling materials. Furthermore, the paints could be sold to other boat and ship manufacturers, and that would open up another market for SeaTech.

You are Pat Peterson, an employee taking courses in Stern's MBA program at night, and one of SeaTech's senior engineers in materials development, an area within the Research & Development department. In the course of trying to improve the anti-fouling properties of SeaTech's special fiberglass, you have come up with a formula for how to design a very effective anti-fouling paint. You wish to pursue research on this anti-fouling paint. In fact, you would like to make the development of this paint a full-time project.

SeaTech's R&D department has a history of entrepreneurial spirit uncommon for boat manufacturers. Senior engineers are sometimes allowed to work full time on pet projects. Promising projects, such as the development of carbon composite fiberglass, which SeaTech now uses in 30% of its boats, have even been funded and staffed before having demonstrated profit potential. It is the responsibility of the head of R&D to approve and to arrange funding for such new projects that are brought forth by senior engineers. In past projects, the senior engineer has been allowed to give up some (occasionally all) other responsibilities to head up a small staff of junior engineers and assistants who work in a laboratory designated for the project.

Tracy Jacobson heads up the R&D department. In addition to you, R&D has 6 other senior engineers, 20 junior engineers, 30 laboratory and drafting assistants, and 10 departmental staff assistants. Presently, funding is tighter than usual, and upper management is not enthusiastic about starting new projects unless they are confident that the projects can show profits relatively quickly. As head of R&D, Tracy Jacobson has the authority to approve or kill new projects.

Writing Assignment

Prepare a memo to Tracy Jacobson, head of R&D, requesting permission to pursue further research and development on the anti-fouling paint. Make a case for setting up the project and define it in terms that make strategic sense for the company. Work within the confines of the data provided in the case.