Every decision involves some measure of risk. However, some decisions are
more significant than others. If you are facing a question regarding product,
political, trade, investment, management or country risk let our experts help you.
We can identify, quantify and work with you to develop plans to reduce or eliminate
the risks inherent in operation in today’s global marketplace.
When introducing a new product, there are four primary risks:
- Product risk;
- Market risk;
- Business risk; and
- Financial risk.
The nature of these risks differs with the stage of product development organization
is. Given below is an illustration of how these four risks change with the product
life cycle.
Investigation Stage:
Product risk: Product may not be feasible or lacks unique qualities
and cannot be protected.
Market risk: Limited understanding or knowledge of the market can
cause a misrepresentation of the growth and size of the market.
Business risk: Great product or technology, but a new product or
technology does not translate into a great business.
Finance risk: Proof-of-concept funding for product/prototype is
difficult to identify.
Feasibility Stage:
Product risk:The company is focused on product innovation rather
than business development. Intellectual property rights remain a concern.
Market risk: Unrealistic market study results can cause misallocation
of scarce recourses. Final product design is dependent on successful outcome of
market study.
Business risk: Exploring business formation and the plan still
lacks expertise and business skills to commercialize.
Finance risk: Cash flow is a problem due to lack of revenues and
early proof-of-concept funding is difficult to attract.
Development Stage:
Product risk:Advancing the product from prototype to manufacturing
or production environment requires new skill sets. No longer developing product
revenue features.
Market risk: Field tests are not positive and / or competitors
respond more rapidly than planned.
Business risk: If choosing a business over licensing, an experienced
professional management team will need to be identified. The business needs to enter
a revenue mode as opposed to the R&D mode of the past.
Finance risk: Significant expenses and no product revenue realized.
Introduction Stage:
Product risk: Demonstrating product features reveals a limited
market driven functionality after scaling product production.
Market risk: The reality of the market is rarely as planned. Market
acceptance and competitor response are different than anticipated. Limited repeat
business can cause uncertainty.
Business risk: Lack of focus as the company moves from a emerging
environment to a true business mode of operations.
Finance risk: The burn rate exceeds capital and management tends
to focus on safes rather than profits.
Growth Stage:
Product risk: It becomes necessary to refine product features to
stay competitive. The demand of new product features drains capital from the growing
business.
Market risk: Poor distribution, customer satisfaction and product
features are concerns as competitors respond to your initial product launch.
Business risk: Focus becomes an issue as the business becomes more
formal with increased demands.
Finance risk: Poor finance or investment strategy can limit ability
to grow new personnel and execute new contracts.
Maturity Stage:
Product risk: Minor changes in the product features provide less
of an impact. The established product makes it difficult to accept new innovations
with the existing structure.
Market risk: Growth rates begin to decline as the existing line
of products becomes mature.
Business risk: It becomes difficult to innovate as the need to
focus on monthly, quarterly, and annual results becomes the focus.
Finance risk: Poor finance or investment strategy can limit ability
to grow new personnel and execute new contracts.