For the first question- whether or not the project should be continued we decided to use risk analysis to make decisions. Because it could help us have a comprehensive understanding about the macro environment that the business will operate in.
We develop the risk analysis following the standard steps. The first step is identifying organizational risk. The first risk identified is prototype failure. If the prototype failure happens it will delay the overall progress significantly, increase the cost and might even lead to the giving up of the program. The other risk is the uncertain market condition and it will directly affect the revenue.
At the next step, we identified the environmental threats following the tool PESTLE. ①The main political threat is the government procurement cutting in military sector. Since Sea Spray which target military customer stands for a significant part of the products sold in Waveriders, your company should considering the development in other market area. ②For the economic condition, the overall economic market is stagnant after the financial crisis and the market shows a risk of changes in the following years. Besides, since leisure industry is your main market, we investigated this area and found that the leisure sector is highly competitive in the UK and the two main competitors have already taken major market share. ③ As for the social aspects, the life-style change could lead to the threat of less spending on leisure. ④ Then, the main technological threat is from your competitors that they have develop more advanced technology. ⑤ There are also some general legal threats. There are restrictions on working hours, the health and safety law and also the employment regulations. Your company must following the instructions even if it could increase your cost. ⑥ Finally the environmental threat. Since Waverider is a manufacturing company, there are restrictions over pollution treatment and noise level that you should follow during the producing process.
The next step we estimate the risk and rank them. We summarize that the prototype failure is more serious than the uncertain market condition. To mange these risk, the technology development and regular marketing are required. Finally, these threats should be reviewed regularly to ensure those risks are effectively controlled.
Based on the analysis over external risk, we could conclude that, the external environment for the current business is not optimistic, a further development in new market area is necessary. Therefore, we suggest your company continue the Sea Catch program.