2.7 There are always risks associated with the experimentation of a new manufacturing process or with the entry into a new global market, the risks of failure. How should one decide to proceed or not to proceed with a risky venture? What is the proper level of risks to take?

All new ventures have inherent uncertainties. In deciding to take the risks of going forward with the venture, several questions need to be answered first:A.Should it luckily turn out to be successful, what is themaximum pay-out (e.g., value) of the venture?B.Why is the venture deemed to be risky? How likely are allrisk factors expected to play out in reality? What contingency steps are available to minimize the impact of these risky factors? Answers to these questions will lead to an assessment of the probability of success for the venture. C.Should the venture fail (e.g., time delay, reputation,company bankruptcy, loss of market share, etc.), what is the adverse impact on company?