How can product innovation help build competitive advantage for cosmetic firms in London Case Unilever - Essay Example

The researcher states that intense competition from globalisation, more sophisticated consumers from the fragmentation of markets, and constant changes in technology have forced the companies in the last two decades to focus on the process of product development. These three forces that lead to the process of product development also intensified competition between firms. According to Porter the process of product development is characterised by the continuing need to research new materials and introduction of innovations in their product lines.

This fact can be considered an important factor to competitiveness in the sector. In this highly competitive and globalised world, according to Gerry and Whittington, companies have changed the way they conduct business. However, organisation must bring new ideas such as product innovation and management, which can be used as a tool to achieve higher productivity. The modern enterprise world is full of innovation that can help build competitive advantage. In virtually every field companies are faced with new products, new processes and new services which are available to the consumer market at a pace never seen before.

The velocity of the transformations of the last decade is impressing even in the largest companies.To achieve a position of market leadership it is not the product quality that matters; product innovation is an essential ingredient to gain competitive advantage. Products, processes and services are the new aggregate values which generate advantages over competitors. Innovators have a considerable advantage over the other participants in various consumer markets. (Burgelman and Grove 2007). In the past decade, product innovation has been approached by many authors, scholars, businessmen and academics.

Every business wants to be innovative, but they sometimes encounter obstacles and difficulties which block the path to product innovation. In trying to be innovative in the pursuit to gain competitive advantage, an organization can face several difficulties. For instance, there could be restriction of resources or they could have difficulties in implementing an environmental and an innovative organisational culture that emerge due to the resistance (Makari 2000). In addition, they may not reach a suitable level of innovation.

The cosmetics industry includes the areas of personal care, perfumery and cosmetics. The cosmetics companies focus on product development to gain competitive advantage. The product development process, according to Gill and Johnson (2011), is characterised by the continuing need for research in new materials and introduction of innovations in its product lines. This fact can be considered an important factor to achieve competitiveness in the sector. There is heterogeneity in this industry, because of the presence of large international companies, diversified and specialised in the sector of cosmetics, is contrasted with a large number of small and medium-sized companies with operations focused in the production of cosmetics (Gill and Johnson 2011).

According to Gerry and Whittington (2011) transnational corporations adopt strategies defined with respect to the development of new products by investing in specialised centres of research and development (R & D), in partnerships that are external and in management processes with structured knowledge. Small and medium sized businesses often lack the necessary capital to carry out research and development. They are apprehensive of investment or an economic-financial situation as they are aware of the risks inherent in new product development.

Also, many of these companies do not have knowledge management essential for product development processes.. London predominantly has the presence of l