1. Discuss the major sources of risk in this project.

Infinity & Beyond, Inc., produces high-tech fashion merchandise. The company’s marketing department has identified a new product “concept” through discussions with three customer focus groups. The department is excited about the new concept and presents it to top management, who approves it for further study. Lisa Denney, senior director of new product development, is asked to create a plan and cost breakdown for the development, manufacture, and distribution of the product. Despite the enthusiasm of the marketing department, Lisa is unsure about the product’s market potential and the company’s ability to develop it at a reasonable cost. To her way of thinking, the market seems ill defined, the product goals unclear, and the product and its production technology uncertain. Lisa asks her chief designer to create some product requirements and a rough design that would meet the requirements and to propose how the product might be manufactured.
After a few weeks, the designer reports back with requirements that seem to satisfy the marketing concept. She tells Lisa that because of the newness of the technology and the complexity of the product design, the company does not have the experience to develop or even manufacture the product on its own. Lisa checks out several design/development firms, asking one, Margo-Spinner Works Company, MSW, to review the product concept. MSW assures Lisa that although the technology is new to them, it is well within their capability. Lisa reports this to top management, who tells her to go ahead with the development project.