The Potential Risks Of A Product Launch

1411 WordsMar 8, 20176 Pages
A. Potential Risks The introduction of new products can be a huge risk for a company, and for many reasons. In some instances, the success or failure of a product launch can make or break a company. One of the most serious risks a company takes on with new products is the financial risk. The amount of effort that goes into the research and development, design, and manufacture of a product is translated into significant capital. The process of developing televisions is a huge undertaking for Apple, just because of the size and specifications of the raw materials used to create it and how greatly they differ from Apple’s flagship products like the iPhone. The risk increases tenfold when you are developing a new product and are unsure…show more content…
Apple acknowledges and accepts that they have already used a large amount of capital in the planning and production of the new product. Some risk cannot be avoided, and the company must accept that. Secondly, they will need to use the concept of risk limitation in the manufacturing of the new product. Apple is accustomed to manufacturing millions of units to be available soon after product launch. However, this has been done with products that are proven sellers. The new product will be manufactured on a much smaller scale in relation to number of units. This will be done to limit the amount of risk in the new product before they can develop a proper demand forecast. Fewer units will save money, and decrease overhead in storage and shipping costs. It will also work to Apple’s advantage if the initial interest is favorable. Less supply will further drive up demand for the product. Risk transference is a concept that Apple is quite familiar with. “Risk transference is the involvement of handing risk off to a willing third party” (Herrera, 2013). Apple is notorious for doing this with the manufacturing phase of their production. Apple is able to transfer and mitigate risk in the manufacturing process since all of the labor is outsourced to China, where the assembly and packaging takes place. This transfers risk associated with factory safety,

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