3. Strategy 1: Minimal development
Minimal risks/conservative development for the Delta division responsible for the new product
Advantages:
- Low capital risks in short term for Delta division that is responsible for the new product
- Maximizes investment capital today for Gamma division (the “new” division responsible for untapped
markets that is developing three new products)
- Greater protection for surviving a bad year
- Low investments (in R&D, tech, recruiting, etc)
- Focus on what we know/do best with Delta
- Control quality of the Delta product/services we are producing/manufacturing
Disadvantages:
- Low investment on Delta could be high-risk in the long-term, company could lose its core Delta market
share before investment in Gamma pays off
- Opens markets for Delta competitors to establish strength/ownership
- Less “future-proof” if Gamma requires greater investments
- Low Return On Investment
4. Strategy 2: High development
Ambitious and high development of the Delta division responsible for the new product
Advantages:
- Focus investment on known products (as Delta is the “traditional” division of ZyrTex) in markets to be
confirmed by research
- Potentially greatly increased market share, income and cashflow once the ROI/break even points are
reached, due to increased pool of customers and next-gen fabrication process
- Potentially generates greater future investment capital for Gamma division, if Delta pays off
- More global recognition of the brand, overall stronger value proposition, making ZyrTex a stronger
competitor
Disadvantages:
- High investment in next gen manufacturing and entry in new market implies high risks
1) Greater exposure to losses
2) Potential of borrowing from future cash flow
3) Less capital for Gamma at first and potentially in the long term if results from Delta expansion are
lackluster
- Could disrupt the core activity, if global entry falters or new fab process fails in current market
