Case 5.1: Managing New Ventures You work for Brighten Enterprises, a Fortune 500 company with annual sales of more than $23 billion. Your company has been on the cutting edge in new product innovation. It has grown rapidly and has produced many good jobs that help stimulate the local economy. Recently, you persuaded a small company, Sunshine Electronic Devices and Precision Equipment, to purchase, finance, install, and maintain new equipment that would be used almost exclusively to produce components for Brighten. You told Sunshine, which has about $10 million in annual sales, that it could possibly earn $70 million in sales over a number of years. The total cost of the equipment was about $15 million. It was a big step for Sunshine but one it was eager to take. You got along well with Sunshine's managers and looked forward to working with them. The negotiations lasted more than 10 months, and you were pleased with the capability of Sunshine's people. The equipment was now more than 85% installed. Brighten Enterprises was then hit with some bad news. Marketing forecasts were not met, and revenues were much lower than anticipated. Your unit was the hardest hit; sales were down by 31%. Although your business is cyclical, these numbers surprised you. Top management at Brighten decided your unit could not afford any new investments at this point. All new projects were terminated immediately until a fuller evaluation could be carried out and decisions made about restructuring. Though your job was secure because of your strong track record in product development, Sunshine was sure to suffer. Without the Brighten contracts, Sunshine could not service its debt. It faced bankruptcy. More than 300 Sunshine workers might lose their jobs. To your mind, Sunshine had taken a chance, while Brighten, cautious as usual, had cut its losses. This was the best way to manage the risk of new ventures. Brighten is the local powerhouse, the engine that gives dynamism to the economy and provides many people with jobs. Its impact is also large at the national and international levels, and its health is more important than that of Sunshine. Sunshine can be sacrificed, or so you think. What are the issues at stake in this case, and how should you address them? What can you do to navigate from a quick fix to a long-term solution? Case 5.2: Where Highways Dare Not Go You are a marketing professional who is offered a promotion that would place you as the leader of a team developing a new recreational vehicle. This vehicle has a rough ride and few amenities but can travel at high speeds and take people to places "where highways dare not go." The vehicle will be marketed to young people interested in thrills and adventure. The product will have to sell at a low price, so there will be severe limits on engineering and material costs. The vehicle might have to sacrifice safety to keep its price low, Foreign competition has created financial difficulties, but your company is betting on this product becoming very profitable. Accepting the promotion would put you in line for a top management spot. Should you take the job? Why or why not? What should you do
