You run an electronics company (designing and manufacturing). Your company is market’s low cost provider of electronic assemblies (tablets and phones) due to your exceptional automation and low costs/multifunctional labor force.
Your Board has directed you to diversify and develop a new product line to increase profits by 25%. There are afew suggestions. One is to become a second source producing ruggedized electronics for the military, which would entail some changes to your existing products plus encasing them in a metal or “hardened” case and undergo addition testing. The second option is to expand your existing operation to make a “knock off of your product for Costco and Amazon. This would entail using less reliable parts and a minor user interface, plus new packaging (with a new name)
The first option would result in higher profits than the second and entails start up risks. The second requires 125% of your existing capacity plus potential loss of revenue from your flagship product as clients may opt for the lower cost version.
Which would you do?
Please post your response by Friday.