Dennis, a senior manager at VST Corporation, is considering the acquisition of a revolutionary water treatment technology from a small development firm. The asking price is $5 million. However, the environmental uncertainty of the water treatment marketplace is both complex and dynamic. Dennis wants to acquire the new technology but seeks to manage the risk associated with his decision, or "hedge his bets." Key elements of his risk management strategy might be to

Question

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The best choice for Dennis to manage the risk associated with acquiring the new technology is to conduct environmental scanning to gain competitive intelligence, develop business scenarios to assess potential outcomes, forecast sales to estimate revenue, and benchmark the technology against competitors. These actions will enable him to make an informed decision and minimize risk. Diversification, merging, and defending technologies are strategic options, but they do not address the uncertainty of the marketplace. Establishing visible artifacts, developing symbols, rites, and ceremonies, and developing stories about the technology are tools to manage organizational culture, not risk. Deciding upon a culture from which to market the technology is relevant to market segmentation and targeting, but it is not relevant to risk management. Buffering, smoothing, and empowering can be part of a supply chain management strategy but are not directly relevant to managing risk associated with an acquisition.

Dennis, a Senior Manager at VST Corporation, Is Considering the Acquisition