It is no secret that companies desire to grow, but most of them avoid taking risks. But there is no gain, without taking risks. It does not mean that we should go on taking risks, left & right without thinking. If we take calculated risks, we can be reasonably sure of getting profits & growth in the long-run. It is for us to identify areas where, & how, to take risks & get the benefits. It is like getting honey from a beehive. In ten Chapters in two sections of this book, the author has examined this important topic from different angles, along with examples from different companies, to explain the good & bad strategic points.
However, in one of the important Chapters of the book, the author has discussed that case, when some company aims to shape a market from scratch, which is a very risky proposition. The new capabilities required for this purpose, must be developed, but the risks in the investments reduced. The author has discussed, along with examples, three strategies viz. using a new product, a new process & a new platform (multiple product line). In market shaping, the company makes a business model, which is not affected by competition, for quite some time. If such a company is successful, it gets profits for quite some time, even though there are risks of making large investments, without full & clear idea of the market demands. Hence aim is always, to minimize risks, & maximize prospects of profits. Sometimes demand received is much larger than expected, but the company must be prepared for it. Sometimes company may face competitioin also. But in the case of success, the company has to prevent entries of others, so that they do not reap the fruits of our success. Company must be financially strong, before it can think of taking up such risks, since all such strategies may not be successful. In the case of product strategy, one may have more clear ideas of the demand, & capabilities therefor. It is better to assess demand from the market, rather than to guess it. We may consider outsourcing for part of the components supply, besides other ways to increase quantity of supplies, if & when required. In this case demand may be limited, & for a short time. The company has also to think of strategy for taking exit from the scene, in case of failure. In case of process strategy, the company makes investments in the process first, even without any sales. Thus the risks are much more here. Companies have to make strategies for reducing capability risks, taking few projects at a time. In case of a platform strategy, the demand risk & capability risks are much more, but with success here, products have a longer life. Demand forecasts are very difficult. Its success is linked, to the success of the derivative products also. Risks can be reduced by starting with, an existing product or process, & extending it towards a platform. We can also modify unsuccessful platforms, for other end markets. We may be having objectives of high level, but we must assess associated risks & manage them, & keep our options open, before embarking on such a venture.
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