New Product Development Example #1

Resource Allocation Strategy for Market Entry

Techniques:
  • Downstream decisions
  • Asymmetry
  • Perform subtree
  • Real option valuation
Files:

Overview: DPL Case - Market Entry
Model: Market Entry.da

DPL Influence Diagram for Market Entry Decision

Imagine a company has core technology in the embedded systems market and has connections in the automotive and telecom sectors. This has served to position them well in the as of yet non-existent internet appliances market. While most of their technology has been developed in-house -- a crucial piece of intellectual property was licensed. Final negotiations on the IP are on-going. They need to know where to concentrate their resources and present a convincing case to investors.

A rigorous DPL analysis provided the clarity needed to avoid chasing the more speculative (yet highly fashionable) internet appliances market and stick with the more established embedded systems market. The transparency of the problem structuring, analysis and results brought the parties together behind a solid plan.