Case 1: Product Development Risks
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?
Case 2: Service Blues
Jyoti had given her branded laptop for servicing to an authorized service centre to repair a damaged USB port. The laptop was to be given the next day, but when she went to take it that day, she was told that it was not ready. Jyoti had to wait for four more days before she was finally given her laptop. Because she was in a hurry while receiving the repaired laptop, she did not check the workings of the laptop at that time. On reaching home and switching on the laptop, she noticed that that LCD display had become problematic. The next day, she again went to the service centre and reported the display problem. Jyoti was aghast when she was informed that as she had signed the...