- A 10-15 slide PPT.
- Prepare a presentation script for the PPT that is under 20 minutes (it should be edited in a conversational style and submitted to me as a Word document).
- "Assignment Submission Form AS1 MN7031SR Aug 24" is the grading rubric for this assignment.
- The rest of the content consists of teaching PPTs.
- I need you to complete the task strictly according to the grading rubric.
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AssignmentSubmissionFormAS1MN7031SRAug24.docx -
Topic7EvaluatingYourCompany1.pptx
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Topic3CompetitiveAdvantageVLE.pptx
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Topic9TechnologyBasedIndustriesandInnovation1.pptx
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Topic2CompanyDiagnosisFinal.pptx
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Topic10StrategicAlignment.pptx
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Topic6HowDoWeCreateStrategiesVLE.pptx
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Topic5VUCAEnvironmentv2.pptx
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Topic4IndustryProfitabilityTutorv4VLE.pptx
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Topic1StartingandGrowingaBusiness.pptx
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Topic8MergersAcquisitionsandAlliances.pptx
Feedback/Feedforward Coversheet
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MN7032SR Global Strategy and Innovation |
Academic Year 2024/25 Assessment 1 Group PresentationPpt slides 10 to 15 slides |
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First Marker: |
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Second Marker: |
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Assessment criteria |
Level of achievement |
1st Marker |
2nd Marker |
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An introduction of The Virgin Group (10 marks) |
To analyse and summarise Virgin Group and present an Executive Summary |
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Past and Current Performance (20 marks) |
An analysis report on · Revenue and profit (by products/regions) · Production strategy · R & D activities · Marketing strategy · Financial report (return on capital and shareholders) |
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Competitive Position (20 marks) |
An analysis report on competitors · Financial performance · Production capacity · Marketing strategy · Prediction of their future strategy |
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Your strategy (30 marks) |
A business plan consists of · Vision and mission · Market and sales forecast · Financial forecast · Product roadmap and R & D strategy · Manufacturing and suppliers · ECG strategy |
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Group Reflection (10 marks) |
Provide a report of your group member’s reflection |
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Presentation (10 marks) |
Structure and format In text citation and references |
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Total marks |
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Areas for improvements |
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Knowledge and understanding |
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From Second Marker |
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Knowledge and understanding |
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Analysis and evaluation |
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Agreed Mark First marker’s marks/date: Second marker’s marks/date: |
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Please upload the Turnitin Report |
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MN7031 Topic 7 – How Is Your Company Performing and What Is Your Strategy?
londonmet.ac.uk
Maurizio Sammarco
Module Overview
Business Simulation – Cesim Global Challenge
1. How and Why Do Businesses Grow?
2. How Do We Diagnose Company Strategy?
5. How Do We Make Sense of the VUCA External Environment?
8. Does Your Simulation Company Need A New Strategy?
10. Why DO Firms Undertale Acquisitions, Mergers and Alliances?
7. How Is Your Simulation Company Performing?
11. How Do Companies Innovate Successfully?
12. Does Strategic Alignment Matter?
4. Why Are Some Industries More Profitable Than Others?
3. How Does A Company Create Competitive Advantage?
6. How Do We Identify future opportunities and threats?
9. Summative Assessment Presentations
Strategic Diagnosis
External
Internal
Global
National
Regional
Local
PESTEL
5 Forces
Blue Ocean Theory
Industry Lifecycle
Competitor Analysis
Scenario Planning
Resource Based View
Core Competencies
Organisational Structure
Culture
Systems
Market Analysis
Red Queen Theory
Theories and Frameworks
Business Model
We will look at competitors in a later topic.
Industry (or Sector)
Development stage
Markets and Competitors
Market Segments
Scope of activities
The Organisation
Resources
Capabilities
Competencies
Politics
The Macro-environment
Concentration
Value network
Products and/or services
Critical success factors
Resource commitment
Economics
Social
Technological etc.
Business Model
Business Model – How A Firm Makes Profit
Resource Base:
Manufacturing plants – number and location, environmental impact
Technologies and Features
People (HR)
Brand/Reputation
Activity System:
Use of outsourcing
Logistics
Product Offering
Techs
Features
Price
The Simulation Value Chain
R&D Headcount, Training and Policies
Component Suppliers
In-house R&D or Licence
Product
Price
Promotion
Make or Buy
Capacity
Plant Location
Plant Activity
Priorities
Financing
Tax
Environmental Impact
Product and Service Offerings
The key question is which products and services should be developed and which markets should be served
Companies that do not focus on a limited set of product-market combinations risk:
low economies of scale
Reduced experience curve effects
slow organisational learning
unclear brand image
unclear corporate image
high organisational complexity
limits to flexibility
Resources, Capabilities and Competencies
Resources, Capabilities and Competencies and the Link to Strategy
Hill et al, 2015
Able to do things
Able to do things successfully or efficiently
Distinctive Competencies
Competitive advantage is based upon distinctive competencies. Distinctive competencies are firm-specific strengths that allow a company to differentiate its products from those offered by rivals, and/or achieve substantially lower costs than its rivals.
Resources
A company’s resources can be divided into two types:.
Tangible resources are physical entities, such as land, buildings, manufacturing plants, equipment, inventory, and money.
Intangible resources are nonphysical entities that are created by managers and other employees, such as brand names, the reputation of the company, the knowledge that employees have gained through experience. We could also include the intellectual property of the company, including patents, copyrights, and trademarks.
Valuable resources are more likely to lead to a sustainable competitive advantage if they are rare, in the sense that competitors do not possess them, and difficult for rivals to imitate; that is, if there are barriers to imitation.
Capabilities
Capabilities refer to a company’s resource-coordinating skills and productive use.
These skills reside in an organisation’s rules, routines, and procedures.
More generally, a company’s capabilities are the product of its organisational structure, processes, control systems, and hiring strategy. They specify how and where decisions are made within a company, the kind of behaviours the company rewards, and the company’s cultural norms and values.
Resources, Capabilities, and Competencies
The distinction between resources and capabilities is critical to understanding what generates a distinctive competency.
A company may have firm-specific and valuable resources, but unless it also has the capability to use those resources effectively, it may not be able to create a distinctive competency. Additionally, it is important to recognize that a company may not need firm-specific and valuable resources to establish a distinctive competency so long as it has capabilities that no other competitor possesses.
In sum, for a company to possess a distinctive competency, it must—at a minimum— have either:
(1) a firm-specific and valuable resource, and the capabilities (skills) necessary to take advantage of that resource, or
(2) a firm-specific capability to manage resources (as exemplified by Nucor).
Distinctive competencies shape the strategies that the company pursues, which lead to competitive advantage and superior profitability. However, it is also very important to realise that the strategies a company adopts can build new resources and capabilities or strengthen the existing resources and capabilities of the company, thereby enhancing the distinctive competencies of the enterprise.
I worked for 10 years for Capgemini, a firm that had a wide range of technology capabilities that enabled it to provide the design and build large and complex IT systems successfully. These capabilities, combined with the intangible resources of the firm, gave Capgemini a distinctive competence in Systems Integration. At the time. however. Capgemini lacked the ability to win large IT service contracts and was losing market share in services to EDS.
I moved to EDS to understand the companies deal making Competence, which was very strong, but embedded in a relatively small number of people. Unfortunately the EDS delivery capability, particularly System Integration, was far less strong than Capgemini.
Ultimately Capgemini acquired the deal making competence mainly through selective recruitment of key people, but EDS failed to with a number of over-ambitious projects because it lacked the necessary capabilities and some key resources; for example the right project management culture, to create the necessary delivery competence.
Types of Firm Resources
Not All Resources Are Equal
Asian Plants
Techs 3 and 4
Short Term Debt
High Debt
Low Share Price
US Plants
Two Perspectives On Shaping The Business Model
Strategic Analysis of A Firm
Holistic Models
An alternative approach is to start by looking at the ‘big picture’ before drilling down to explore particular components in more detail.
This might be by a series of executive and senior management interview to gain an overview of possible problems as perceived from above.
Management
practices
Work unit
climate
Motivation
Individual and
organizational performance
Structure
Systems
(policies and procedures)
Tasks and individual roles
Individual needs and values
External
environment
Leadership
Mission
and
strategy
Organization
culture
Strategy Diagnosis – An Iterative and Incremental Process
Start with the 7 areas in the diagram, beginning with financial performance over the last 5 years:
Is the business profitable?
Is it growing or declining?
How does it compare with the rest of its industry?
Share price and capitalisation
Investigate the other 5 areas
The process of diagnosis may lead to questions in other areas e.g.:
Leadership
Ownership
Information Systems
Acquisition Integration
Culture
Sustainability
Etc..
Strategy
Diagnosis
Financial Performance
Competencies
Industries, Product Offerings and Market Segments
Resources – Tangible and Intangible
Business Model and Value Network
Capabilities
Competitive Advantage
The Components of Competitor Analysis
PORTER, M.E., 2004. Competitive strategy. 1. Free Press export ed. edn. New York, NY [u.a.]: Free Press.
Competitors Response Profile
Future Goals
Current Strategy
Assumptions
Capabilities
Strengths
Weaknesses
About itself
About its industry
How is the business competing?
All levels of management
Multiple dimensions
Sources of Competitive Advantage
Hill et al, 2015
What Is Quality and How Does A Firm Deliver It Consistently?
Strong governance to define the organisation's aims and translate them into action
robust systems of assurance to make sure things stay on track
a culture of improvement to keep getting better.
Fit for purpose
Intangibles
Four factors help a company to build and sustain competitive advantage:
superior efficiency
quality
innovation
and customer responsiveness
I am going to focus on quality and innovation.
Firstly quality – a simple way to understand quality if “fitness for purpose”. Does the product have the necessary attributes to satisfy my needs?
When customers evaluate the quality of a product, they commonly measure it against two kinds of attributes: those related to quality as excellence and those related to quality as reliability.
From a quality-as-excellence perspective, the important attributes are things such as a product’s design and styling, its aesthetic appeal, its features and functions. This is an are that Apple particularly understand.
With regard to quality as reliability, a product can be said to be reliable when it consistently performs the function it was designed for, performs it well, and rarely, if ever, breaks down. Apple in recent years have been less successful in this respect, as have a number of highly respected firms – Boeing, Toyota and Samsung currently to name but a few.
When products are reliable, less employee time is wasted making defective products, or providing substandard services, and less time has to be spent fixing mistakes—which means higher employee productivity and lower unit costs. Thus, high product quality not only enables a company to differentiate its product from that of rivals, but, if the product is reliable, it also lowers costs.
Innovation refers to the act of creating new products or processes. There are two main types of innovation: product innovation and process innovation.
Product innovation is the development of products that are new to the world or have superior attributes to existing products.
Process innovation is the development of a new process for producing products and delivering them to customers.
Innovation is linked very much to culture. In an organisation where there is a strong desire for centralised control, innovation will be less likely to occur. There is a tension then between control and creativity.
Positioning A Business
Where and How to compete?
Bases of competitive advantage:
Price, Features, Bundling
Efficiency
Quality
Innovation
Customer responsiveness
Availability
Image and relations
Porter’s three generic competitive advantages:
operational excellence
product leadership
customer intimacy
Stuck in
the Middle
Efficiency and Economies of scale
Efficiency – Measured by the quantity of inputs that it takes to produce a given output
Economies of scale: Reductions in unit costs attributed to a larger output
Ability to spread fixed costs over a large production volume and produce in large volumes
To achieve greater division of labor and specialization
Diseconomies of scale: Unit cost increases associated with a large scale of output
Learning Effects
Cost savings that come from learning by doing
More significant when a technologically complex task is repeated, as there is more to learn
Diminish in importance after a period of time
Triggered by changes in a company’s production system
Simulation
Developing and launching new products or features
Manufacturing a new phone
Commissioning new plants
Experience Curve
Systematic lowering of the cost structure, and consequent unit cost reductions – occur over the life of a product
A product’s per-unit production costs decline each time its accumulated output doubles – accumulated output – Total output of a product since its introduction
Useful in industries that mass-produce a standardised output
Hill et al, 2015
Examples of Price Declines
What’s Your Strategy?
SALES REVENUE
There are clearly two strategies in the game, which are visible from the turnover:
1. Volume-directed, based on economies of scale and learning effects in production that enable lower pricing.
2. Premium-price strategy, based on the launching of new technologies and higher pricing that covers the higher production costs.
Which of these two strategies is better, or any intermediate strategy in between, depends on the implementation of the strategy and the development of the markets.
The relevant target is to maximize the profit, i.e. the difference between turnover and costs.
VARIABLE PRODUCTION COSTS
Production costs are influenced by the location of plants, the capacity usage and the learning curve (production of new technologies is initially more expensive until learning curve starts reducing the average production costs).
Initially there are plants only in the U.S. and hence the variable production costs are all incurred in the USA. It is possible to reach lower production costs in Asia, especially in older technologies. Starting the production of a new technology in Asia is poor judgment, because initial competence is lower there and thus initial production of a new technology is costly. However, utilizing the lower production costs in Asia through more established technologies is worthwhile in Asia.
R&D
As the technological evolution forms an essential part of the simulation, R&D decisions are of great importance. There are two ways of developing new products: own development and technology license purchases. Difference between these two is in the costs and time-to-market. In-house R&D yields results with one period delay, whereas licensed technology becomes available immediately.
License purchases are paid as a lump sum. No annual fees are related to license purchases. Moreover, using in-house resources to develop technologies and features does not make license purchases more affordable.
It is notable that all R&D costs are expensed to the income statement immediately during the period when the investment is made. This can cause large fluctuations in the periodical results.
ADVERTISING
Marketing expenses are completely under the management's control through decisions. The amount spent on promotion should be in line with the company's volume of operations and the product contribution margin. A useful rule-of-thumb is:
[Marketing budget = product contribution margin*elasticity]
The advertising elasticities of demand in this case range from 0.1 to 0.3. Therefore, the amount spent on advertising should be on average 10-30% of product contribution margin.
Companies that have chosen an aggressive technology-strategy should also use relatively large investment-like advertising efforts when launching new products. This helps to create a positive image of the product to customers, and also has long-term effect. Despite the long-term impact, all advertising costs are expensed during the period when the investment is made.
Marketing affects not only the demand for the product being advertised but also the company's image in the particular market area. There are positive long-term effects associated with advertising.
OPERATING PROFIT (EBIT)
EBIT, earnings before interest and taxes, indicates the company's operating efficiency. Generally a team that has the highest EBIT relative to the capital employed makes the best results in the simulation, assuming that they have not jeopardized the future cash flows in order to maximize short-term wins. It should be noted that in the short-run (one or two periods) differences in marketing and R&D efforts affect the EBIT a great deal. These investment-like costs are reported as costs in the year in which they occur even though they have long-term impact. Normally the effect of these factors towards the end of the game tends to be much less than in the first few rounds.
NET FINANCING EXPENSES
Financing costs depend on the chosen leverage and the effectiveness of treasury management (one can move and repatriate funds to and from Europe and Asia). Interest rates vary between countries and the moving cash between group companies can be used to place the company debt wherever it is the cheapest. This requires both careful sales budgeting and cash flow budgeting.
It is easy to get into a situation where you have excess cash in some areas and debt in other areas. In such a situation the company is losing the difference between the cost of debt and the interest rate earned for cash (i.e. takes debt in one area and saves it in a bank account in another area).
Management of the debt-to-equity ratio is important. The objective is not to minimize the explicit financing expenses, which could be done with 100% equity. The leverage effect of debt should be taken into account when aiming for a high share price. The company can use share issues and buybacks to manage the company capital structure. Additional leverage can be searched through buying own shares when they are undervalued and selling when they are overvalued. Note that shares can be repurchased only if the company has accumulated sufficient funds in retained earnings.
Equity is an expensive method of financing growth. Not only will you dilute your control of the business, but the investors will also expect healthy returns. Injecting money into a business is a risky prospect for an investor, so they’ll typically expect to see a return of at least 10 percent to compensate for the risks. Debt can usually be sourced at a much lower rate.
Financial leverage has value due to the interest tax shield that is afforded by the U.S. corporate income tax law.
The use of financial leverage also has value when the assets that are purchased with the debt capital earn more than the cost of the debt that was used to finance them.
Blue Ocean Strategy
Companies can build competitive advantage by redefining their product offering through value innovation – creating a new market space
Blue Ocean – Wide open market space where a company can chart its own course
Red Ocean – fiercely competitive
W. Chan, K, & Mauborgne, R 2005, 'Blue Ocean Strategy: FROM THEORY TO PRACTICE', California Management Review, 47, 3, pp. 105-121, Business Source Complete, EBSCOhost, viewed 10 August 2016.
A New Value Proposition
Reduce
Create
Raise
Eliminate
Bibliography
De Wit, R & Meyer, R, (2017) Strategy, An International Perspective, Andover, Hampshire: Cengage Learning, 6th ed.
Prahalad, C. K. and Hamel, G. (1990) ‘The Core Competence of the Corporation’, Harvard Business Review, 68(3), pp. 79–91. Available at: http://0-search.ebscohost.com.emu.londonmet.ac.uk/login.aspx?direct=true&db=bth&AN=9006181434&site=ehost-live (Accessed: 10 May 2021).
Joseph, G. (2009) ‘Mapping, Measurement and Alignment of Strategy using the Balanced Scorecard: The Tata Steel Case’, Accounting Education, 18(2), pp. 117–130. doi: 10.1080/09639280802436731.
Osterwalder, A, & Pigneur, Y 2010, Business Model Generation : A Handbook for Visionaries, Game Changers, and Challengers, John Wiley & Sons, Incorporated, Chichester. Available from: ProQuest Ebook Central. [11 July 2019].
‘Porter’s generic strategies’ (2005) A to Z of Management Concepts & Models, pp. 272–277. Available at: http://0-search.ebscohost.com.emu.londonmet.ac.uk/login.aspx?direct=true&db=bth&AN=22366647&site=ehost-live (Accessed: 12 April 2021).
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MN7031 Topic 3 – How Does A Company Create Competitive Advantage?
londonmet.ac.uk
Daniel Jones
Module Overview
Business Simulation – Cesim Global Challenge
1. How and Why Do Businesses Grow?
2. How Do We Diagnose Company Strategy?
5. How Do We Make Sense of the VUCA External Environment?
8. Does Your Simulation Company Need A New Strategy?
10. Why DO Firms Undertale Acquisitions, Mergers and Alliances?
7. How Is Your Simulation Company Performing?
11. How Do Companies Innovate Successfully?
12. Does Strategic Alignment Matter?
4. Why Are Some Industries More Profitable Than Others?
3. How Does A Company Create Competitive Advantage?
6. How Do We Identify future opportunities and threats?
9. Summative Assessment Presentations
Today’s Agenda
Lecture
Sources of competitive advantage
Positioning – Porter’s Generic Strategies
Low cost and differentiation
Efficiency and economies of scale
Learning effects
Strategy creation
Mature industries
Declining Industries
Blue Ocean Theory
First mover advantages
Simulation
Round 1
Strategy in Firms
1st Goal of a firm: survive
Rate of return above the cost of capital
How do we make money?
Industry Attractiveness
Where do we compete?
Competitive Advantage
How do we compete?
Corporate Strategy
Scope of business
Big choices; sustainability, structure etc
(Top management)
Business Strategy
Markets, segments, (Divisional
management)
Resources, Capabilities and Competencies and the Link to Competitive Advantage
Hill et al, 2015
Able to do things
Able to do things successfully or efficiently
Distinctive Competencies
Competitive advantage is based upon distinctive competencies. Distinctive competencies are firm-specific strengths that allow a company to differentiate its products from those offered by rivals, and/or achieve substantially lower costs than its rivals.
Resources
A company’s resources can be divided into two types:.
Tangible resources are physical entities, such as land, buildings, manufacturing plants, equipment, inventory, and money.
Intangible resources are nonphysical entities that are created by managers and other employees, such as brand names, the reputation of the company, the knowledge that employees have gained through experience. We could also include the intellectual property of the company, including patents, copyrights, and trademarks.
Valuable resources are more likely to lead to a sustainable competitive advantage if they are rare, in the sense that competitors do not possess them, and difficult for rivals to imitate; that is, if there are barriers to imitation.
Capabilities
Capabilities refer to a company’s resource-coordinating skills and productive use.
These skills reside in an organisation’s rules, routines, and procedures.
More generally, a company’s capabilities are the product of its organisational structure, processes, control systems, and hiring strategy. They specify how and where decisions are made within a company, the kind of behaviours the company rewards, and the company’s cultural norms and values.
Resources, Capabilities, and Competencies
The distinction between resources and capabilities is critical to understanding what generates a distinctive competency.
A company may have firm-specific and valuable resources, but unless it also has the capability to use those resources effectively, it may not be able to create a distinctive competency. Additionally, it is important to recognize that a company may not need firm-specific and valuable resources to establish a distinctive competency so long as it has capabilities that no other competitor possesses.
In sum, for a company to possess a distinctive competency, it must—at a minimum— have either:
(1) a firm-specific and valuable resource, and the capabilities (skills) necessary to take advantage of that resource, or
(2) a firm-specific capability to manage resources (as exemplified by Nucor).
Distinctive competencies shape the strategies that the company pursues, which lead to competitive advantage and superior profitability. However, it is also very important to realise that the strategies a company adopts can build new resources and capabilities or strengthen the existing resources and capabilities of the company, thereby enhancing the distinctive competencies of the enterprise.
I worked for 10 years for Capgemini, a firm that had a wide range of technology capabilities that enabled it to provide the design and build large and complex IT systems successfully. These capabilities, combined with the intangible resources of the firm, gave Capgemini a distinctive competence in Systems Integration. At the time. however. Capgemini lacked the ability to win large IT service contracts and was losing market share in services to EDS.
I moved to EDS to understand the companies deal making Competence, which was very strong, but embedded in a relatively small number of people. Unfortunately the EDS delivery capability, particularly System Integration, was far less strong than Capgemini.
Ultimately Capgemini acquired the deal making competence mainly through selective recruitment of key people, but EDS failed to with a number of over-ambitious projects because it lacked the necessary capabilities and some key resources; for example the right project management culture, to create the necessary delivery competence.
Sources of Competitive Advantage
Hill et al, 2015
What Is Quality and How Does A Firm Deliver It Consistently?
Strong governance to define the organisation's aims and translate them into action
robust systems of assurance to make sure things stay on track
a culture of improvement to keep getting better.
Fit for purpose
Intangibles
Four factors help a company to build and sustain competitive advantage:
superior efficiency
quality
innovation
and customer responsiveness
I am going to focus on quality and innovation.
Firstly quality – a simple way to understand quality if “fitness for purpose”. Does the product have the necessary attributes to satisfy my needs?
When customers evaluate the quality of a product, they commonly measure it against two kinds of attributes: those related to quality as excellence and those related to quality as reliability.
From a quality-as-excellence perspective, the important attributes are things such as a product’s design and styling, its aesthetic appeal, its features and functions. This is an are that Apple particularly understand.
With regard to quality as reliability, a product can be said to be reliable when it consistently performs the function it was designed for, performs it well, and rarely, if ever, breaks down. Apple in recent years have been less successful in this respect, as have a number of highly respected firms – Boeing, Toyota and Samsung currently to name but a few.
When products are reliable, less employee time is wasted making defective products, or providing substandard services, and less time has to be spent fixing mistakes—which means higher employee productivity and lower unit costs. Thus, high product quality not only enables a company to differentiate its product from that of rivals, but, if the product is reliable, it also lowers costs.
Innovation refers to the act of creating new products or processes. There are two main types of innovation: product innovation and process innovation.
Product innovation is the development of products that are new to the world or have superior attributes to existing products.
Process innovation is the development of a new process for producing products and delivering them to customers.
Innovation is linked very much to culture. In an organisation where there is a strong desire for centralised control, innovation will be less likely to occur. There is a tension then between control and creativity.
Components of A Business Model
Determining Competitive Scope
Positioning A Business
Where and How to compete?
Bases of competitive advantage:
Price, Features, Bundling
Efficiency
Quality
Innovation
Customer responsiveness
Availability
Image and relations
Porter’s three generic competitive advantages:
operational excellence
product leadership
customer intimacy
Stuck in
the Middle
Low Cost Airlines
“What is the key indicator of an airline's cost efficiency?”
cost per available seat kilometer is the main cost indicator, i.e. the cost of flying one passenger, one kilometer.
Business Model Canvas – Low Cost Airline
Key Partners
Terminal Operators
Aircraft Maintenance
Catering
Aircraft suppliers
Air traffic control
Government
Key Activities
Marketing
Scheduling
Aircraft turnaround
Staff training and motivation
Key Resources
Staff – non-unionised, flexible
Terminal slots
Aircraft
Reputation
Value Propositions
Low seat price
Every thing else is an extra
High seat density
Transparent pricing
Friendly staff
Reliable
Safe
Cost Structure
Low fixed cost
Outsource for scale economies
Low margins – utilisation is key
Above average staff rewards
Revenue Streams
Ticket sales
Seat reservation
Baggage
In-flight Sales – food, drink, duty free, entertainment
Customer Segments
Price sensitive
Business travellers
Families
Young Independent Travellers
Channels
Online only
Customer Relationships
Online
Inflight – cabin crew
Terminal Staff
Are there Really Only 3 Business Level Strategies?
Strategies of Differentiation
Price Differentiation – charge a lower or higher price
Image Differentiation – marketing is sometimes used to feign differentiation where it does not otherwise exist
Support differentiation – during selling e.g. fast delivery, after-sales service, or providing a related or complementary product or services
Quality Differentiation – make it better
Design Differentiation – offer something truly different
Undifferentiation Strategy – the copycat approach
Scope Strategies
Unsegmented – one size fits all
Segmentation – comprehensive or selected segments
Niche – focus on a single segment
Customising – each customer represents a unique segment
Lampel J, Mintzberg H, Quinn J, and Ghoshal S. (2014). The strategy process. 5th ed. Harlow: Pearson.
Low Cost Versus Differentiated Companies
Low-cost companies
Charge low prices and still make profits
Absorb cost increases from suppliers
Offer deep discount prices for buyers
Differentiated companies
Withstand pricing pressure from powerful buyers and increase prices without buyer resistance
Absorb price increases from suppliers and pass them to customers without losing market share
Withstand substitute goods, as a result of brand loyalty
Comparison of Market Segmentation Approaches
Standardisation Strategy
Associated with lower costs than a segmented strategy
Segmentation
Strategy
Involves customisation of product offerings, which drive up costs as:
Focus
Strategy
Attempts to attain economies of scale through high sales volume
Achieving economies of scale is difficult
Production and delivery costs tend to be high
Have a higher cost structure as:
New product features and functions need to be added
Attaining economies of scale is difficult
Lowering Costs Through Functional Strategy and Organisation
Achieve economies of scale and learning effects
Adopt lean production and flexible manufacturing technologies
Implement quality improvement methodologies to produce reliable goods
Streamline processes
Use information systems to automate business process
Differentiation Through Functional-Level Strategy and Organisation
Customise product offering and marketing mix to different market segments
Design product offerings that have a high perceived quality regarding their:
Functions
Features
Performance
Reliability
Handle and respond to customer queries and problems promptly
Efficiency and Economies of Scale
Efficiency and Economies of scale
Efficiency – Measured by the quantity of inputs that it takes to produce a given output
Economies of scale: Reductions in unit costs attributed to a larger output
Ability to spread fixed costs over a large production volume and produce in large volumes
To achieve greater division of labor and specialization
Diseconomies of scale: Unit cost increases associated with a large scale of output
Learning Effects
Cost savings that come from learning by doing
More significant when a technologically complex task is repeated, as there is more to learn
Diminish in importance after a period of time
Triggered by changes in a company’s production system
Simulation
Developing and launching new products or features
Manufacturing a new phone
Commissioning new plants
Experience Curve
Systematic lowering of the cost structure, and consequent unit cost reductions – occur over the life of a product
A product’s per-unit production costs decline each time its accumulated output doubles – accumulated output – Total output of a product since its introduction
Useful in industries that mass-produce a standardised output
Hill et al, 2015
The Origins of the BCG Matrix
Examples of Price Declines
The BCG Matrix – Market Share Leadership = Profit Leadership?
Flexible Production Technology
Reduces setup times for complex equipment
Increases the use of individual machines through better scheduling
Improves quality control at all stages of the manufacturing process
Increases efficiency and lower unit costs
Enables better customisation of product offerings
Tradeoff Between Costs and Product Variety
Hill et al, 2015
3D Printing – Additive Manufacturing
Adidas Printed Trainers
Aerospace Components
Strategy Creation
Two Perspectives On Shaping The Business Model
The Outside-in Perspective
Firms should take their environment as the starting point when determining their strategy – externally oriented and market-driven
Strategy begins with an analysis of the environment to identify market opportunities
Insights into markets and industries is essential
Firms that are market-driven are often the first
to realise that new resources and/or activities need to be developed – ‘first mover advantage’
We take portable music for granted these days. Any commuter in any big city in the world is more likely than not to have a pair of earbuds or headphones on as they walk, bike, or ride to their destination. The thing is, personal portable music didn't exist for most of human history, at least not in any mainstream fashion. Not until the Sony Walkman came along.
The first of Sony's iconic portable cassette tape players went on sale on this day, July 1st, back in 1979 for $150. As the story goes, Sony co-founder Masaru Ibuka got the wheels turning months before when he asked for a way to listen to opera that was more portable than Sony's existing TC-D5 cassette players. The charge fell to Sony designer Norio Ohga, who built a prototype out of Sony's Pressman cassette recorder in time for Ibuka's next flight.
After a disappointing first month of sales, the Walkman went on to become one of Sony's most successful brands of all time, transitioning formats over the years into CD, Mini-Disc, MP3 and finally, streaming music. Over 400 million Walkman portable music players have been sold, 200 million of them cassette players. Sony retired the classic cassette tape Walkman line in 2010, and was forced to pay a huge settlement to the original inventor of the portable cassette player, Andreas Pavel. But the name lives on today in the form of new MP3 players and Sony's Walkman app. They heyday of the Walkman may be over, with kids today baffled and disgusted by the relative clumsiness of cassettes. But the habit it spawned — listening to music wherever and whenever you want — is bigger than ever.
http://www.theverge.com/2014/7/1/5861062/sony-walkman-at-35
The Inside-Out Perspective
Strategy should be built around a company’s strengths
Successful companies build up a strong resource base which offers them access to unfolding market opportunities in the medium and short term
The starting point is which resource base it wants to have
Importance of a firm’s competences over its physical assets
But – companies with competence specialisation may be locked in by past choices and cannot adapt to a changing market
Fragmented Industry
Composed of a large number of small- and medium-sized companies
Reasons for fragmentation
Lack of scale economies
Brand loyalty in the industry is primarily local
Low entry barriers due to lack of scale economies and national brand loyalty
Focus strategy works best for a fragmented industry
Can competitive advantage in the industry be created by consolidation e.g. by chaining and franchising?
Stages in the Industry Life Cycle
Hill, C., Jones, G. & Schilling, M. (2015) Strategic Management; Theory & Cases: an integrated approach, 11e, Stamford, Cengage
Embryonic Industries
An embryonic industry refers to an industry just beginning to develop (for example, personal computers and biotechnology in the 1970s, wireless communications in the 1980s, Internet retailing in the late 1990s, and AI today).
Growth at this stage is slow because of factors such as buyers’ unfamiliarity with the industry’s product, high prices due to the inability of companies to reap any significant scale economies, and poorly developed distribution channels.
Rivalry in embryonic industries is based not so much on price as on educating customers, opening up distribution channels, and perfecting the design of the product.
Growth Industries
Once demand for the industry’s product begins to increase, the industry develops the characteristics of a growth industry. In a growth industry, first-time demand is expanding rapidly as many new customers enter the market. We can see this happening today in the taxi ride platform industry, with now numerous companies seeking to grow their marker share – Uber, Gett, Juno, Kabbee, Hailo etc
Industry Shakeout
Explosive growth cannot be maintained indefinitely. Sooner or later, the rate of growth slows, and the industry enters the shakeout stage. In the shakeout stage, demand approaches saturation levels: more and more of the demand is limited to replacement because fewer potential first-time buyers remain.
Expect this soon in taxi app platforms!
Mature Industries
The shakeout stage ends when the industry enters its mature stage: the market is totally saturated, demand is limited to replacement demand, and growth is low or zero. Typically, the growth that remains comes from population expansion, bringing new customers into the market, or increasing replacement demand.
As a result of the shakeout, most industries in the maturity stage have consolidated and become oligopolies.
Declining Industries
Eventually, most industries enter a stage of decline: growth becomes negative for a va- riety of reasons, including technological substitution (for example, air travel instead of rail travel), social changes (greater health consciousness impacting tobacco sales), demographics (the declining birth rate damaging the market for baby and child products), and international competition (low-cost foreign competition helped pushed the U.S. steel industry into decline).
It is important to remember that the industry life-cycle model is a generalization and that the time span of these stages can also vary significantly from industry to industry.
A criticism of industry models is that they overemphasize the importance of industry structure as a determinant of company performance, and underemphasize the importance of variations or differences among companies within an industry or a strategic group.
Research by Richard Rumelt and his associates, for example, suggests that industry structure explains only about 10% of the variance in profit rates across companies.
Strategies to Deter Entry In Mature Industries
Product proliferation strategy – Catering to the needs of all market segments to deter entry by competitors
Limit price strategy – Charging a price that is
lower than that required to maximise profits in the short run
above the cost structure of potential entrants
Strategic commitments – Investments that signal an incumbent’s long-term commitment to a market or a segment of the market
Strategies to Manage Rivalry
Price signaling – Companies increase or decrease product prices to:
Convey their intentions to other companies
Influence the price of an industry’s products
Price leadership – When one company assumes the responsibility for determining the pricing strategy that maximises industry profitability
Non-price competition – Use of product differentiation strategies to deter potential entrants and manage rivalry within an industry
Market penetration – a company concentrates on expanding market share in its existing product markets
Product development – Creation of new or improved products to replace existing products
Market development – When a company searches for new market segments to increase the sale of its existing products
Product proliferation – Large companies in an industry have a product in each market segment
Capacity Control
Companies devise strategies to control or benefit from capacity expansion programs
Factors causing excess capacity
New technologies that produce more than the old ones
New entrants in an industry
Economic recession that causes global overcapacity
High growth of demand in an industry that triggers rapid expansion
Strategy Selection in a Declining Industry
Hill et al, 2015
Cheque Processing
Camera Film
Blue Ocean Strategy
Companies can build competitive advantage by redefining their product offering through value innovation – creating a new market space
Blue Ocean – Wide open market space where a company can chart its own course
Red Ocean – fiercely competitive
W. Chan, K, & Mauborgne, R 2005, 'Blue Ocean Strategy: FROM THEORY TO PRACTICE', California Management Review, 47, 3, pp. 105-121, Business Source Complete, EBSCOhost, viewed 10 August 2016.
A New Value Proposition
Reduce
Create
Raise
Eliminate
References
De Wit, B. (2017). Strategy An International Perspective. 6th ed. Andover: Cengage
Grant, R.M. 2012. Contemporary strategy analysis : text and cases 8th ed. New York: John Wiley and Sons Ltd.
Hill, C., Jones, G. & Schilling, M. (2015) Strategic Management; Theory & Cases: an integrated approach, 11e, Stamford, Cengage
Porter, M.E., 2008. The Five Competitive Forces That Shape Strategy. Harvard Business Review 86, 78–93.
Reeves,M, Moose,S and Venema,V. (2014). BCG Classics Revisited: The Growth Share Matrix. Available: https://www.bcg.com/publications/2014/growth-share-matrix-bcg-classics-revisited.aspx. Last accessed 26th November 2019.
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MN7031 Topic 4.2 – Successful Innovation and Strategic Renewal
londonmet.ac.uk
Daniel Jones
Module Overview
Business Simulation – Cesim Global Challenge
1. How and Why Do Businesses Grow?
2. How Do We Diagnose Company Strategy?
5. How Do We Make Sense of the VUCA External Environment?
8. Does Your Simulation Company Need A New Strategy?
9. Why Do Firms Undertale Acquisitions, Mergers and Alliances?
7. How Is Your Simulation Company Performing?
10. How Do Companies Innovate Successfully?
12. Does Strategic Alignment Matter?
4. Why Are Some Industries More Profitable Than Others?
3. How Does A Company Create Competitive Advantage?
6. How Do We Create Strategies?
11. Summative Assessment Presentations
Today’s Agenda
Innovation
Definition
Four dimensions
Process
Innovation and the free market
Government organisations as engines of innovation
Global innovation
New Product Development
Strategic Innovation
Strategic renewal
Exploitation and Exploration
First mover advantages
Dominant Designs and Technical Standards
Organisations, Culture and Innovation
Innovation
What Is Innovation?
“the generation, acceptance, and implementation of new ideas, processes, products, and services.”
“conceptually a process beginning with an original idea and concludes with a market introduction”
“Innovation is a multi-faceted process, not a single or discrete act”
“Innovation must add value to meet customer’s unique needs”.
Roach, O. O., McLaughlin, G. C. and McLaughlin, H. M. (2020) ‘Innovation and Value: Customer Perception, Application, and Concept’, Journal of Management & Public Policy, 12(1), pp. 4–16. doi: 10.47914/jmpp.2020.v12i1.001.
W. Chan, K, & Mauborgne, R 2005, 'Blue Ocean Strategy: FROM THEORY TO PRACTICE', California Management Review, 47, 3, pp. 105-121, Business Source Complete, EBSCOhost, viewed 10 August 2016.
Four Dimensions of Innovation Space
Tidd and Beasant state that there are “Four Dimensions of Innovation Space”:
Product innovation (a new product / service)
Process innovation (a new process, or a change to a process)
Position innovation (adapting to your industry / market – business model)
Paradigm innovation (a new concept altogether)
Each of these four ‘dimensions’ can either apply to:
‘incremental development’ (i.e. improving something to make it better, easier, simpler, more efficient), or (ii)
‘radical development’ (i.e. coming up with something radically new)
Simplified Model of the Innovation Process
The Simplified Model of Innovation is in Four Stages:
Search
Select
Implement
Capture
The Theory And Practice Of ‘Innovation’ Has Many Paradoxes:
is ‘innovation’ a personal thing, i.e. it resides in the individual, or is an ‘organisational’ thing, i.e. it resides in the ‘collective’?
can innovation be taught and developed, or is something that some individuals and organisations have, and others do not have?
does innovation reside in the organisation, or can it reside in a whole nation / country?
Is Innovation Best Left to the Free Market?
But one thing almost all economists, business analysts, technology theorists, and philosophers agree on is that innovation, and its associated areas (creativity, artistry, invention, enterprise), is at its best when it is left to the ‘free market’, and not run by the ‘state’.
In other words, the state ‘gets in the way’ of innovation, as it is too bureaucratic, slow, dull, and lacks the spark of ideas that true innovation processes require…
…on the other hand, the free market of hi-tech-savvy individuals, entrepreneurs, venture capitalists, crowd-funders, and designers are creating a dynamic economy and culture, based around innovation, and leaving governments a step behind…
“Governments have always been lousy at picking winners, and they are likely to become more so, as legions of entrepreneurs swap designs on-line, turn them into products, and market them globally. As the business –technology revolution rages, governments should stick to the basics, like schools. Leave the rest to the revolutionaries.” (Economist, 2012)
Government Organisations as Engines of Innovation
But one person who disagrees with this is Professor Mariana Mazzucato, see: http://marianamazzucato.com
Mazzucato says the reverse: the State (or the government, or government departments) are the true ‘engines’ of innovation, and the ‘free market’ companies simply reap the financial / commercial benefits.
The Entrepreneurial State
And in her influential book, The Entrepreneurial State, Mazzucato explains that Apple (yes Apple!) is not innovative, and that the technology behind it was actually developed in the publically-funded State / university world, not within the ‘free market’.
“Without the frequently targeted investment and intervention of the US-government it is likely that most would-be Apples, would be losers in the global race to dominate the computing and communications age…it is indisputable that most of Apple’s best technologies exist because of the prior collective and cumulative efforts of the driven by the State.” (Mazzucato, 2014: 112)
Is the idea then that the ‘free market’ is more innovative than the State a complete myth?
Innovation, Like Many Things, Is Increasingly ‘Global’.
This means that organisations and firms involved in innovation are doing so across nation states, across continents, and across industries.
This has changed the research and development (R&D) function of many organisations and industries, as R&D is no longer ‘located’ in one place, but is ‘networked’ across a range of organisations, places, and nations, and is also ‘virtual’ or ‘digital’, making its location on-line only.
Clustering
One of the paradoxes of ‘globalisation’ is clustering’. For firms to ‘cluster’, they need to be close to each (finance in the City; retail in the West End; digital start-ups in Shoreditch; jewellers in Hatton Garden; the ‘Garment District’ in NYV; Silicone Valley in California; car manufacturing in Wolfsburg). But this ‘paradox’ goes against ‘globalisation’ and ‘digitisation’.
Michael Porter (one of the advocates of ‘clustering’), recognises this paradox: “In theory, location should no longer be a source of competitive advantage. Open global markets, rapid transformation and high-speed communications should allow any company to source any thing from any place at any time. But in practice, location remains central to competition…” (from Trott, page 243)
Innovation networks: some critics say that contemporary-sounding phrases such as ‘innovation networks’ is just a new term to describe old things that have been going on for years (such as supply chains; import-export; cartels; access to markets; trade quotas; vertical integration).
New Product Development
“conceptually a process beginning with an original idea and concludes with a market introduction”
Prod-ject
Albaidhani et al (2018)
New Product Development Stage Gate Process
Smolnik and Bergmann (2020)
Stage Gate Process
Smolnik and Bergmann (2020)
Strategic Innovation and Strategic Renewal
Nokia – A Long History Of Strategic Renewal
1865 – Nokia founded as a wood-pulp mill making paper.
1922 – partnership with Finnish Rubber Works and Kaapelitehdas (the Cable Factory)
1967 – new Nokia Corporation, restructured into four major businesses: forestry, cable, rubber and electronics.
1981 – builds world’s first mobile network
1982 – launches its first mobile phone
1992 – sell off of the non-tech businesses
1998 – the best-selling mobile phone brand in the world
2007 – Apple launches the iPhon
2008 – first Android device launched
2011- Strategic partnership with Microsoft to adopt Windows Phone 7
2014 – sells mobile phone business to Microsoft to focus on Network equipment
2016 – licensing deal with HMD Global, who now make Nokia mobile phones
2020 – New business groups are Mobile Networks, IP and Fixed Networks, Cloud and Network Services and Nokia Technologies
Innovation
Resources and Capabilities growth and contraction
Turnaround
Partnerships
Mergers and Acquisitions
Licensing
Outsourcing
Disruption
The Issue Of Strategic Renewal
There are 4 different processes for strategic renewal:
Strategising
Entrepreneuring
Changing
Investing
Strategising and Entrepreneuring
Strategic innovation as a Strategising Process
Strategising managers must be aware of the unfolding opportunities and threats in the environment and the evolving strengths and weaknesses of the organisation
Strategists are working in a context of ‘bounded creativity’, constrained by, e.g. lead time and resource availability
Strategic innovation as an Entrepreneurial Process
Companies make use of entrepreneurial managers for strategic activities e.g. finding new markets for existing products and services, applying new technologies in current markets and setting up new businesses
Changing and Investing
Strategic Innovation as a Change Process
The company’s business model needs to be adjusted.
Some strategic innovation processes require organisational restructuring
Organisational processes may need to be redesigned and a change of the firm’s culture may be needed.
Strategic innovation as an Investing Process
Strategic innovation requires resources
Investments in innovation compete with mergers, acquisitions and entering new countries
Investments that promise to generate returns in the long term are riskier than short-term options
Managers must think of the entire process of change
Strategic innovation combines: Strategising, Entrepreneuring, Changing and Investing processes
Inhibitors of Strategic Innovation
Effects of innovation results – strategists may be reluctant to explore alternatives which have not been successful in the past
Effects of inertia and bias
Effects of feedback – when innovation results are satisfying strategists are not challenged to explore innovations that could be even more successful
Business Model Renewal
In order to prepare for a competitive future, strategising managers may need to renew several elements of the business model
Strategists can renew each element of the company’s business model:
resource base
value chain
product offering
The Issue of Strategic Renewal
Outside-in Renewal – Managers can renew their value proposition by increasing the perceived product and service value and lowering prices, e.g. improve reliability of its products or create new markets or market segments with existing products
Inside-out Renewal – Managers can renew the company’s resource base to create new products and services and improve existing ones e.g. invest in technological R&D, marketing campaign and training of staff
Value Chain Renewal – Managers can renew some or all elements of the value chain e.g. IKEA has redesigned its processes, from standardising production processes, developing flat pack designs and lowering transportation costs.
The Paradox of Exploitation and Exploration
Should the company renew itself by improving the current organisation (exploitation) or by radically rejuvenating the organisation through disrupting technologies and processes (exploration)?
Renewal processes of exploitation can be measured in terms of realised client value (lower price and higher quality).
Radical renewal by exploration is measured by the extent to which a new industry is created or new customer value is realised.
Innovators, Followers and Winners
The Demand for Sustained Renewal
Refers to the process of permanently improving products and services to strengthen the company’s competitive position
Standards are continuously raised
Based on factual information e.g. customer feedback and market research as well as ideas from within and outside the firm
The Demand for Disrupting Renewal
Refers to the process in which current competitive positions are challenged by introducing new technologies and business models
Disruptive innovations do not follow from the facts but need to be invented
Creative thinking is necessary
2005: Steven Sasson poses with his 1975 prototype and Kodak’s latest digital camera offering, the EasyShare One
The Strategic Improvement Perspective
Companies should focus on improving their business model
All employees should be committed to improving all elements of the business model
Radical innovation initiatives are risky and absorb the most precious resources for corporate renewal
The Radical Rejuvenation Perspective
Companies should focus on breakthrough innovations
The more radical the departure from the industry rules, the more difficult it will be for competitors to follow and the higher the benefits for the innovator will be
Old ways must be discarded before new methods can be adopted – ‘creative destruction’
Strong company leadership is essential
Sustained improvement comes at the expense of strategically more effective innovations
The Emergence of Dominant Designs and Technical Standards
Emergence of a dominant design paradigm
Model T in autos
IBM 360 in mainframes
Douglas DC3 in passenger aircraft
Emergence of technical standards
Emerge in industries where they are network externalities
Entrenchment of the dominant designs and technical standards
Learning effects: incremental improvement of the dominant design
Switching costs
Need for coordinated action by multiple players
Dominant Design – Cars
1886 – Benz No.1
Companies that Own or Owned Technical Standards
| Company | Product Category | Standard |
| Microsoft | PC operating systems | Windows |
| Intel | PC microprocessors | X86 series |
| Sony/Philips | Compact disks | CD-ROM format |
| ARM (Holdings) | Microprocessors for mobile devices | ARM architecture |
| Oracle Corporation | Programming language for web apps | Java |
| Rockwell & 3Com | 56K modems | V90 |
| Adobe Systems | Common file formats for creating and viewing documents | Acrobat Portable Document Format |
| Adobe Systems | Web page animation | Adobe Flash |
| Adobe Systems | Page description language for document printing | PostScript |
| Bosch | Antilock braking system | ABS & TCS (Traction Control System) |
| IMAX Corporation | Motion picture filming/projection system | IMAX |
| Apple | Music downloading system | iTunes/iPod |
| Sony | High definition DVD | Blu-ray |
Parallel Processing
Involves separating exploitation and exploration processes in different organisational units while integration takes place at a different (higher) organisational level – ‘spatial separation’
Parallel processing internally – build a separate R&D unit that develops new technologies – outcomes are then transferred to other organisational units
Parallel processing with external partners
Navigating – the entrepreneur explores and then exploits – navigates over time ‘temporal separation’
Balancing – processes can be combined in the same unit
Apple, Alphabet, Microsoft, IBM and Facebook
Global Revenue
Apple 2001 2002 2003 2004 2005 200 6 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 5363 5742 6207 8279 13931 19315 24006 32479 42905 65225 108249 156508 170910 182795 233715 215639 229234 265595 Alphabet 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 86.4 439.5 1465.9 3189.2 6138.6 10604.9 16594 21795.6 23650.6 29321 37905 50175 59825 66001 74989 90272 110855 136819 Microsoft 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 25296 28365 32187 36835 39788 44282 51122 60420 58437 62484 69943 73723 77849 86833 93580 91154 96571 110360 IBM 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 85866 81186 89131 96293 91134 91424 98786 103630 95758 99871 106916 102874 98367 92793 81741 79919 79139 79591 Facebook 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 3711 5089 7872 12466 17928 27638 40653 55838
Strategic Innovation – an International Perspective
Countries differ in the strategies they prefer. Japanese companies generally favour the gradualist approach while Western companies generally favour the leap forward.
Geography and individual brilliance – differences in developmental trajectories are determined by the possibilities to foster technologies that enabled progress.
Governmental support – proactive governmental support is often crucial, e.g. development of aviation to support the war.
Culture and Technology
Tangible knowledge can be codified and transferred but culture plays an important role and its values are intangible
Countries that are considered to be the most individualistic, US and UK, are capable of great innovations. The US leads the world ranking of Nobel Prizes.
Collectivist cultures have different merits, e.g. Japanese very good at improving processes and products.
Different cultures deal differently with time – Kaizen sees time as a circle improving production methods also seen as a circle.
Ownership of inventions – Eastern societies have a different attitude towards private intellectual ownership. The teachings of Confucius stress that knowledge is for the benefit of everybody – an obligation to share your wisdom with others. What in the West is considered to be stealing intellectual property rights, in the East is seen as copying and improving on the findings of an honorable father figure.
Innovation In Practice
Paradox Of Control And Chaos
Managers want to control the development of the organisation but understand that letting go of control is often beneficial
Need for top-down imposition and bottom-up initiative
Demand for top management control – top managers need to be able to direct developments in the organisation and to have the power to make the necessary changes. They need strategic control.
Demand for organisational chaos – a period of disorder is often a prerequisite for strategic renewal, allows experimentation, pilot projects, encourages self-organization and frees the way for bottom-up ventures
WLGore
References
Chandler-McDonald, K (2013) Innovation: How Innovators Think, Act, and Change our World, Kogan Page
De Wit, B. (2017). Strategy An International Perspective. 6th ed. Andover: Cengage
Grant, R.M. 2012. Contemporary strategy analysis : text and cases 8th ed. New York: John Wiley and Sons Ltd.
Hill, C., Jones, G. & Schilling, M. (2015) Strategic Management; Theory & Cases: an integrated approach, 11e, Stamford, Cengage
Reeves,M, Moose,S and Venema,V. (2014). BCG Classics Revisited: The Growth Share Matrix. Available: https://www.bcg.com/publications/2014/growth-share-matrix-bcg-classics-revisited.aspx. Last accessed 26th November 2019.
Tidd, J and Bessant, J (2013) Managing Innovation: Integrating Technological, Market and Organizational Change, 5th Edition, John Wiley & Sons, (Chapter 1)
