A New Product Risk Model for the Electric Vehicle Industry in South Korea

CHU,, W. , HONG,, Y. , PARK,, W. , IM,, M. , & SONG,, M. R. (2020). A New Product Risk Model for the Electric Vehicle Industry in South Korea. The Journal of Distribution Science, 18(9), 31-43, https://doi.org/https://doi.org/10.15722/jds.18.9.202009.31

copy

Downloaded
Viewed

PDF Download

Abstract

Purpose: This study examined a comprehensive model for assessing the success probability of electric vehicle (EV) commercialization in the Korean market. The study identified three risks associated with successful commercialization which were technology, social, policy, environmental, and consumer risk. Research design, methodology: The assessment of the riskiness was represented by a Bayes belief network, where the probability of success at each stage is conditioned on the outcome of the preceding stage. Probability of success in each stage is either dependent on input (i.e., investment) or external factors (i.e., air quality). Initial input stages were defined as the levels of investment in product R&D, battery technology, production facilities and battery charging facilities. Results: Reasonable levels of investment were obtained by expert opinion from industry experts. Also, a survey was carried out with 78 experts consisting of automaker engineers, managers working at EV parts manufacturers, and automobile industry researchers in government think tanks to obtain the conditional probability distributions. Conclusion: The output of the model was the likelihood of success - expressed as the probability of market acceptance - that depended on the various input values. A model is a useful tool for understanding the EV industry as a whole and explaining the likely ramifications of different investment levels.

keywords: Electric vehicle, New product development, Innovation, Bayes belief network, Market risk

Reference

Aleixo, G. G., & Tenera, A. B. (2009). New product development process on high-tech innovation life cycle. World Academy of Science, Engineering and Technology, 58(135), 794-800.

Ayala-Cruz, J. (2016). Project risk planning in high-tech new product development. Academia Revista Latinoamericana de Administración, 29(2), 110-124.

Baccarini, D., & Archer, R. (2001). The risk ranking of projects: A methodology. International Journal of Project Management 19(3), 139-145.

Barber, R. B. (2005). Understanding internally generated risks in projects. International Journal of Project Management, 23(8), 584-590.

Bendoly, E., Bharadwaj, A., & Bharadwaj, S. (2012). Complementary drivers of new product development performance: Cross-functional coordination, information system capability, and intelligence quality. Production and Operations Management, 21(4), 653-667.https://doi.org/10.1111/j.1937-5956.2011.01299.x

Bhaskaran, S. R., & Krishnan, V. (2009). Effort, revenue, and cost sharing mechanisms for collaborative new product development. Management Science, 55(7), 1152-1169.

Breetza, H.L., & D. Salon (2018). Do electric vehicles need subsidies? Ownership costs for conventional, hybrid, and electric vehicles in 14 U.S. cities. Energy Policy, 120(Sep),238-249. https://doi.org/10.1016/j.enpol.2018.05.038

Chin, K. S., Tang, D. W., Yang, J. B., Wong, S. Y. & Wang, H.(2009). Assessing new product development project risk by Bayesian network with a systematic probability generation methodology. Expert Systems with Applications, 36(6), 9879-9890. https://doi.org/10.1016/j.eswa.2009.02.019

Chu, W. I. M., Song, M. R. & Park, J. (2019). Psychological and behavioral factors affecting electric vehicle adoption and satisfaction: A comparative study of early adopters in China and Korea. Transportation Research Part D: Transport and Environment, 76(Nov), 1-18.https://doi.org/10.1016/j.trd.2019.09.009

10.

Cooper, R. G. (1990). Stage-gate systems: a new tool for managing new products. Business horizons, 33(3), 44-54.

11.

Cooper, R. G. (2017). Winning at new products: Creating value through innovation. New York, USA: Basic Books.

12.

Crawford, C. M. (2011). New products management (10th ed.). New York, USA: McGraw-Hill.

13.

Feng, S., & Magee, C. L. (2020). Technological development of key domains in electric vehicles: Improvement rates, technology trajectories and key assignees. Applied Energy,260(Feb), 1-14. http://doi.org/10.1016/j.apenergy.2019.114264

14.

Glueck-Chaloupka, A. A., Capella, L. M., & Coggins, P. C. (2005). Food product development, food regulations and policies -compatible or not? Journal of Nonprofit & Public Sector Marketing, 13(1-2), 199-212. https://doi.org/10.1300/J054v13n01_11

15.

Goswami, M. (2018). An enterprise centric analytical risk assessment framework for new product development. Cogent Business & Management, 5(1), 1-13.https://doi.org/10.1080/23311975.2018.1540255

16.

Jenna, A., Springel, K., & Gopal, A. R. (2018). Effectiveness of EV incentives in the United States. Energy Policy, 119(Aug), 349-356.

17.

Jensen, F. V. (1996). An introduction to Bayesian networks. London: UCL press.

18.

Kahn, K. B. (2013). The PDMA handbook of new product development. New Jersey: Wiley.

19.

Kasemset, C., Wannagoat, J., Wattanutchariya, W., & Tippayawong, K. Y. (2014). A risk management framework for new product development: A case study. Industrial Engineering and Management Systems, 13(2), 203-209.

20.

Keizer, J. A., Halman, J. I., & Song, M. (2002). From Experience:Applying the risk diagnosing methodology. Journal of Product Innovation Management 19(3), 213–232. https://doi.org/10.1016/S0737-6782(02)00138-8

21.

Kirkire, M. S., Rane, S. B., & Jadhav, J. R. (2015). Risk management in medical product development process using traditional FMEA and fuzzy linguistic approach: A case study, Journal of Industrial Engineering International, 11(4), 595-611.

22.

Landuyt, D., Broekx, S., D'hondt, R., Engelen, G., Aertsens, J., & Goethals, P. L. (2013). A review of Bayesian belief networks in ecosystem service modelling. Environmental Modelling &Software, 46(Aug), 1-11.

23.

Liu, X. W., & Liu, X. Y. (2012). A study on risk assessment of the commercial development stage of new product in manufacturing enterprises. Applied Mechanics and Materials, 248(Dec), 495-498.

24.

Loch, C., & Kavadias, S. (2008). Handbook of new product development management.UK: Routledge.

25.

Murray, S. L., Grantham, K., & Damle, S. B. (2011). Development of a generic risk matrix to manage project risks. Journal of Industrial and Systems Engineering, 5(1), 35–51.

26.

Nielsen, K.R. (2006). Risk management: Lessons from six continents. Journal of Management in Engineering, 22(2), 61–67. https://doi.org/10.1061/(ASCE)0742-597X(2006)22:2(61)

27.

Oehmen, J., Olechowski, A., Kenley, C. R., & Ben-Daya, M.(2014). Analysis of the effect of risk management practices on the performance of new product development programs. Technovation, 34(8), 441-453. https://doi.org/10.1016/j.technovation

28.

Pinheiro, M. A. P., Seles, B. M. R. P., De Camargo Fiorini, P., Jugend, D., Lopes de Sousa Jabbour, A. B., da Silva, H. M. R.,& Latan, H. (2019). The role of new product development in underpinning the circular economy: A systematic review and integrative framework. Management Decision, 57(4), 840-862. https://doi.org/10.1595/205651320X15706349546439

29.

Porananond, D., & Thawesaengskulthai, N. (2014). Risk management for new product development projects in food industry. Journal of Engineering, Project, and Production Management, 4(2), 99-113.https://doi.org/10.1016/j.promfg.2018.10.090

30.

Qazi, A., Quigley, J., Dickson, A., & Kirytopoulos, K. (2016). Project complexity and risk management (ProCRiM): Towards modelling project complexity driven risk paths in construction projects. International Journal of Project Management, 34(7),1183-1198. http://10.1016/j.ijproman.2016.05.008

31.

Stosic, B., Mihic, M., Milutinovic, R., & Isljamovic, S. (2017). Risk identification in product innovation projects: New perspectives and lessons learned. Technology Analysis &Strategic Management, 29(2), 133-148.https://doi.org/10.1080/09537325.2016.1210121

32.

Trott, P. (2008). Innovation management and new product development (6th ed.). New Jersey, USA: Prentice Hall

33.

Wahyudin, N. E., & Santoso, I. (2016). Modelling of risk management for product development of yogurt drink using house of risk (HOR) method. Asian Journal of Technology Management, 9(2), 98-108.http://doi:10.12695/AJTM.2016.9.2.4

34.

Yadav, O. P., Nepal, B. P., & Jain, R. (2007). Managing product development process complexity and challenges: A state-ofthe art review. Journal of Design Research, 6(4), 487-508.https://doi.org/10.1504/JDR.2007.016853

35.

Zhang, X., Yang, Y., & Su, J. (2015). Risk identification and evaluation of customer collaboration in product development. Journal of Industrial Engineering and Management, 8(3), 928-942. http://dx.doi.org/10.3926/jiem.1423

바로가기메뉴

Article Contents

Vol.18 No.9

A New Product Risk Model for the Electric Vehicle Industry in South Korea

Abstract

Reference

The Journal of Distribution Science