(a) What would be your line of action? (b) In case of lengthy product design and development time, what kinds of risks are there?
A new phenomenon called ‘Apparel on Demand’ is slowly making its presence felt. It is an You have the opportunity to invest INR 100 billion for your company to develop a jet engine for commercial aircrafts. Development will span 5 years. The final product costing Rs. 500 million / unit could reach a sales potential, eventually of Rs. 2500 billion. The new engine can be placed in service 5 years from now, but only if it qualifies four years from now for certification clearing commercial use and only if it meets America’s Federal Aviation Administration’s (FAA) ever tightening standards for noise reduction. Certification also has to be obtained from India’s Director General of Civil Aviation (DGCA). There is competition from world-class manufacturers like Pratt and Whitney and Rolls Royce who are developing competing engines. If you decide to proceed with the project, you must also determine where the new engines will be produced and develop the manufacturing facilities. If you decline to proceed, your company could invest its resources elsewhere and based on its track record, get attractive returns.
(a) What would be your line of action?
(b) In case of lengthy product design and development time, what kinds of risks are there?
Step by step
Solved in 3 steps
