We are not sure whether or not Toyota Corporation's hybrid car will be successful in the market.  We know that the Iridium project is an example of a good idea that did not work.  The company failed miserably in predicting the demand for satellite-phones at the price they were being offered.  A properly conducted economic analysis in the latter case would have prevented the situation that the company had to face.

To increase its market value or simply to remain profitable a company should always be striving for new ideas.  But not all new ideas will lead to  success stories.  Companies should devise ways of screening new ideas that are presented to them.  The screening can be best done by classifying potential projects into the following types: 1) equipment and process selection, 2) equipment replacement, 3) new product and product expansion, 4) cost reduction, and 5) service improvement.

Some of the questions management needs to ask relate to the adequacy of the existing plant for the new production levels and the knowledge and skills of its personnel to undertake the new investment.  The answers to these questions will lead to the screening out of infeasible projects.

The text provides examples of various types of projects listed above.   These case histories are informative as they describe a broad spectrum of economic decisions that engineers  make routinely.