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FEASIBILITY STUDY OF A NEW FOOD PRODUCT DEVELOPMENT PROJECT: EVIDENCE FROM A MULTI-FACTOR SENSITIVITY ANALYSIS
Abstract
The commercialization of innovations in the food industry faces many risks. Only one in ten products successfully reaches supermarket shelves. In particular, the Latvian fish processing industry faces significant difficulties on the path to a successful launch of innovative products still depending on the production of one type of product ? canned fish. Continuing the study on the possibilities of using the fish species available in the country, Latvia University of Life Sciences and Technologies, in 2018-2019, developed one more innovative product made of Baltic sprats (Sprattus Sprattus Balticus) ? salted fermented anchovy, analogous to the Mediterranean counterpart. Together with the recipe and technology, a technological project for the production of such a product was developed. The study aims to carry out an economic feasibility evaluation for the production of a new innovative product made of Baltic sprats. Multivariate sensitivity analysis of the project?s net present value to changes in the key factors allows for assessment of the degree of risk. It assists the decision-making on the measures necessary to limit such risks. The described method allows not only to more profoundly assess the project before implementation but also highlights the critical risks for the managers of such projects during their implementation. The application of this method will reduce the number of failures on the way to successful innovation commercialization.
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