A study of the product development practices of small manufacturing companies in New Zealand : a thesis presented in partial fulfilment of the requirements for the degree of Master of Technology in Product Development at Massey University
Companies' existing products are increasingly coming under pressure through competitive forces, changing market demands and rapidly advancing technologies. A continual stream of new products is required to maintain a competitive portfolio of products in the marketplace. Therefore, more and more attention is being focused on the systems that companies use to develop their new products. These systems involve the discipline of Product Development. The aims of this study were to investigate the practice of Product Development in small companies in New Zealand and to study the effects of the New Zealand environment on the attitudes and undertaking of Product Development. Specifically, the objectives of the study were to investigate the Product Development process used and the techniques used for conducting Product Development; compare the New Zealand practice with those obtained from overseas studies; to assess the management, organisation and attitudes of managers to Product Development; and to investigate the outcomes of the companies' Product Development efforts. The small companies in the manufacturing sector were the subject of the research and the food, electronics, and light engineering industries were selected to represent Product Development in this sector and to provide inter-industry comparisons. Eight-four companies responded to a questionnaire sent out nationally in April 1993. The Product Development process used by the small companies was truncated, utilising on average 8 of the 13 prescribed stages of the process. This was due in part to a concentration on the physical development of the product, leading to the omission of vital stages such as marketing research and financial evaluations. Use of a more complete Product Development process was related to product and company success. The stages in the Product Development process used by these small manufacturing companies were Idea Screening Preliminary Market Assessment Preliminary Technical Assessment Prototype Design and Development In-House Prototype Testing Customer Prototype Testing Production Start-Up Market Launch The techniques used for conducting Product Development were simple and easy to use, particularly for the more intangible activities, thus providing simple information upon which managers make important development decisions. In comparison with studies conducted in Canada and Spain, the use of the Product Development process was remarkably similar both in the type of stages undertaken and the number of stages undertaken suggesting there exists a 'base-level' of Product Development knowledge and understanding regardless of company demographics or geographics. The techniques of Product Development as used in New Zealand companies were more aligned to that used in Spanish small companies both in level of use and simplicity. The Canadian companies used fewer techniques but they tended to be more complex. Company managers were found to play a crucial role in product development within their companies in terms of being actually involved in product development, generating new product ideas, and recognising the appropriate environment for development to occur. In these small companies usually only two people were involved in Product Development, the manager almost always was one of these people. The time awarded to developing new products was typically only five hours per week. Although the managers recognised the importance of Product Development, they had little resources to undertake it effectively. Finally, the study found that these small companies were producing only moderate results from their Product Development efforts in terms of product success, innovativeness, the number of new products introduced, and overall company growth. Over simplistic Product Development methods and resource constraints were preventing companies from fully capitalising on their potential for innovation. A more complete Product Development process, utilising techniques that provide and analyse more relevant information, and giving more attention, resources, and control to Product Development could significantly improve these small companies' performance in terms of developing and introducing new products. Overall, greater awareness of Product Development as a total system within the company, and disseminating the practice and benefits of Product Development is needed to effect change in the New Zealand small manufacturing sector.