Artemis Controls (a)

Abstract

Avion Chemicals has approached Artemis Controls regarding the purchase of an Artemis smart valve to manage the highly volatile phenol in its production process. Although an existing valve could be used, discussions lead to the possibility of designing a new and potentially much improved valve. Time, engineering, and software constraints make the valve-redesign project a risky endeavor. The tension between delivering the old valve and developing the new valve is centered on the marketing opportunity and financial risk. The A case decision can be structured with a basic decision diagram, but the analysis cannot be completed because likelihood statements are presented as “weasel words.” In addition to the alternatives presented in the case, students might propose several risk-reducing possibilities: delivering the standard valve if the new valve is only moderately successful, delivering the standard valve if the software development is extended, reframing the price structure for the resultant new valve, and proposing a contingent contract with the software developer.The A case is a modification of “Orion Controls (A)” (UVA-QA-0480). The probability statements of Orion have been replaced by the weasel words of Artemis. This modification allows the discussion to be less “numbers” oriented, more structural, and more strategic. Excerpt UVA-QA-0756 Nov. 30, 2010 Artemis Controls (A) Even though the hiking trip to Shenandoah National Park was intended to be a restful interlude in his frenetic work pace, Nathan Armstrong, head of marketing at Artemis Controls (Artemis), found his mind wandering to his recent conversation with Andre Gide, executive vice president of Avion Chemicals (Avion). Contract discussions with Gide, who was responsible for worldwide corporate safety programs at Avion, had taken an interesting turn. Gide had initially contacted Artemis to place an order for 50 of Artemis's Model SV44A-10 smart-valve systems to manage the phenol flows at Avion's nine chemical plants worldwide. Their conversation, however, had led to the possibility that Artemis would develop an improved model for Avion at a substantially increased price. The new system that Gide wanted would require an improvement in the flow-sensing-and-control part of the existing valve system to allow for real-time information processing and dynamic responses to changes in process states. In addition, the new system would require substantial improvement in valve capability to enable quick changes in valve-gate positions. Because of the dynamic nature of the real-time information flow, these improved valve systems would need to respond to instruction changes far more rapidly than the existing model could. The Avion Contract . . .