Automotive company seeks to expand its products through integration of technology and innovation. This is the process where the non-automotive companies will be merged with automotive company to come up with a product that has the features of both companies. Tesla motors in conjunction with Apple aim to innovate a car that can be controlled by using applications from an Apple product, such that the car will have the features of an IPhone or Apple tablet. The process will involve manufacturing an electronic motor vehicle that will only accept commands from an Apple product; in this case, IPhone will be used to control the car. Also the company could come up with Apple remote whereby the car will operate through a remote control from Apple Company. This form of technology integration is however challenging and therefore there are risks associated with it. According to Haimes, (2015) assessing the risk is important as it enables a company to make a decision on whether to pursue the innovation or not.
Risk analysis has identified three risks that the operation will experience in the course of this technology integration. The first risk is that of technology; it is important to note that technology has resulted to companies changing their mode of operations. In this regards, Tesla and Apple are seeking to advance technologically, however, it will be challenging to design a car that bears applications of the two companies. Therefore merging the technology will be a risk. The second risk is on production level, when it comes to merging two technological innovations; it requires a team of experts who are going to spend their time in researching, production and testing the product. This has been analyzed as a risk factor that will require the efforts of the two companies. Cost of production could also be another financial risk to the companies, this is because the high technology strategy will involve very expensive designing, and cost of labor and also the materials to be used will be costly. Therefore the companies will encounter a financial risk ( Lave, 2013).
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Analyzing these risks is important for the purpose of making a decision to pursue the technology advancement or to abort the mission. The two companies have done the risks analysis with the effort to determine whether the risk is worth taking or pulling down. Risk are assessed according to the benefit it will fetch the company. In this case, the projected product will be beneficial as it will be on high demand, according to the market research, however, the cost of production and the innovation will set the product at high price making it less affordable to the same target market.
Using the quadrant to way the level of risk, it has been divided into four; the first quadrant focuses on the high risk, low benefit, the second focuses on the high risk high benefit, the third focuses on the low risk low benefit and the fourth focuses on the low risk high benefit. Taking a look at the risk for their two merging company, there is a high probability that the risk will fall under the second quadrant of high risk high benefit (Covello, et al, 2013). Assessing the level of the risk makes the company decision to fall under this quadrant, the reason is because the operation involves taking high risks associated with production, finance and technology, and this therefore means that the company will experience high benefit as a result of the high demand for the product. However, according to the second quadrant; there is a high possibility that the risks will result to failure of the operation, even though the operation has a high chance benefit.
Reference
Lave, L. B. (Ed.). (2013). Risk assessment and management (Vol. 5). Springer Science & Business Media.
Haimes, Y. Y. (2015). Risk modeling, assessment, and management . John Wiley & Sons.
Covello, V. T., Lave, L. B., Moghissi, A. A., & Uppuluri, V. R. R. (Eds.). (2013). Uncertainty in risk assessment, risk management, and decision making (Vol. 4). Springer Science & Business Media.
Brown, L., & Osborne, S. P. (2013). Risk and innovation: Towards a framework for risk governance in public services. Public Management Review , 15 (2), 186-208.
