Innovation and its Relevance - Assignment Example

Question No Discuss, using examples, what is meant by the term innovation. Innovation The term innovation means creating a new concept or way of doing thing which is much different from the existing one. To simplify it, definition provided by innovation-unit.co.uk is worth while to mention which states that innovation is "the successful exploitation of new ideas.i This may include producing a new product, new production method or a new marketing style. This may enable the company to reduce its production cost or increase its sales and profit. Innovation is a basic characteristic of management and is one of the main factors used to out way the competitor. As a matter of fact, innovation is the main tool which can be effectively used by the management to have an edge on the competitors. Most of the renowned business organization has used it effectively in their competition strategy. Company lacking in this field may soon find them out of market or facing shrinking market share. It is said that innovation is not just the creative idea of your mind but it should be practically done to make something different.ii Quote by Ted Levitt quotes is worth mentioning here. He says, “Just as energy is the basis of life itself, and ideas the source of innovation, so is innovation the vital spark of all human change, improvement and progress”iii Question No. 2: Why innovation is important for an organization? Innovation enable management to carry on business activities in a more efficient and effective manner by either capturing a new market or increasing the share of the company in an existing market which will place it in a better position as compared to its competitors. For example, by introducing a cheaper but same quality of raw material, a company can reduce its cost of production which will in effect reduce the product price and increase the sale and profit. Similarly, by introducing a new product such as Hair Color having no side effect, the company can create a new block of customers which will give place it on a advantageous position viz. a competitor. Another example can be introducing new method of marketing its product such as home delivery of food items which will enhance its market share and thus increase its sales and profit. Innovation has become so important in business enterprises that a new subject, “Management of Innovation” has been developed. The study of this subject will help in understanding the process of innovation, improving the skills to create new ideas and in managing the innovation process. The subject will also help to understand the dynamics of change and there effects on the leadership amid the competitive world. In words of renowned management thinker Peter F. Drucker, “Innovation is real work that can and should be managed like any other corporate function”iv Regarding to him, success is more likely to result from the systematic pursued of opportunities than from a slash of genius. Most innovative business ideas arrived through the methodological analysis of these areas of opportunities which can be within a company or industry or outside. Innovation has a characteristic which can be used to distinguish between manager. A good manager will always look for innovative ways for doing things after taking into accounts the future trends and difficulty. Innovation also entails risks. As Peter F. Druker said, “It often takes decades before the ideas are translated into actual product, process or services”. In the process, the condition may change which may upset the innovation plans and may bring opposite results. There are examples when key managers have been expelled from companies due to failure of there innovative plans but yet there is the need to innovate in order to adjust the company to the changes that may come with time and change in technology. As such, innovation is basically a long-term strategy. Question No. 3: Discuss what is meant by a product life cycle. Choose an innovative product and describe its history using a life cycle graph. There are four stages for every new products through which it passes in a sequential manner. These four stages are introduction, growth, maturity and decline. We may also say that it describes the sale and profit margin of any specific product over a particular time period. The strategies for every stage are different from that of another. Products should be assessed by their companies to see what stage the product is passing from and then make suitable strategies for coping with that particular stage. Product Life Cycle (PLC) indicates that the product passes from different stages and has a limited life. On every new stage, there must be different Marketing, Financial, Management, Advertisement etc style. As the stages pass, the seller will experience unique problems, challenges and opportunities which are to met in wise manner as it is not necessary that a product may pass all the stages, it may directly turn into a DOG during its introduction stage. Let’s discuss all these stages in a comprehensive manner: Introduction: This is the most challenging period for the seller. The product is new to the customer which means there have to be an aggressive advertisement scheme for promoting the product and increasing the knowledge of the potential customers. The advertisement scheme at this stage may be very aggressive which will require a huge amount of money. Companies usually provide samples of their product to the potential customer in order to seduce them to buy. Cost is obviously very high because of very less sales of the product. But it doesn’t mean that the business scheme is going on loss. It is normal when your product is new. The seller also set its target market during the introductory stages. The target market may be set by advertisement scheme, design of the product, and etc.v Setting your target market is very vital to achieve the market share. For example, Apple’s target market is the elite class while Acer’s target market is the middle class. In this level, all the intellectual properties are obtained such as patent, trademarks, copyrights etc. Prices may also be lowered down for diverting customers’ attention. Growth Stage: The product is known to the customers after aggressive advertisement campaign. The firm may now lower down the expenditure on advertisement and concentrate more on improving its distribution channels and infrastructure. The sales also increases and the cost lower down due to economies of scale. Competition increases at this stage. All the other firms would know that the entrance for this new firm has been successful. Therefore, competition would increase which would result in decrease in the price. The focus of the firm is only increasing the market share.vi Maturity Stage: Now the product has become a “Cash Cow”. The revenue generation is consistent at this stage. Firm do not make any further huge investment in design engineering. The economies of scale have helped the company to lower the cost to a great extent. The market saturation is reached. At this stage, the firms usually try to maintain the existing market share and try to avoid going to the next stage of declining. Also, product differentiation is given importance due to increased competition. For example, Pepsi or Cocacola are passing from this stage. They often differentiate there product by providing discounts and changing packaging style which keeps them moving toward the declining stage. Declining Stage: This is the declining phase where the sales of begins to decline because the market becomes saturated or there may be other reason for example, the technology become obsolete or consumer taste changes. The firm may also start rejuvenating the product by adding new features and offering discounts etc.vii Many firms opt to end their business, providing the competitors a chance to buy it and many firms do the opposite of this. Exit of some firms results in boom in the market. Let’s take the example of the camera. Some decades before, the film camera was in vogue. It was so aggressively promoted that every household wished to have one. However, when the film camera completed its life cycle and reached the decline stage, innovators introduced the VGA digital camera. The life cycle of the product got a new beginning. In the same way, the new camera was promoted as a revolutionary invention, promising to change the human lifestyle. But, again the VGA camera, after passing its maturity stage, reached its decline. The innovators, in order to regain the value of the camera, introduced the same product with mega pixel technology. It gave a new life to the camera. To cut it short, the same product has been upgraded with innovatory techniques to keep it attractive for the consumers. Every product has a life cycle. Firms use different techniques to keep their products alive. It is believed the top multinational firms use to introduce their technologies in phases in order to add more years to the lifecycle of their products. For example, the camera producing firms are in possession of technologies which they have not introduced so far. They will wait till their current product reaches the decline stage. Therefore, it is a real challenge for the firms to keep their products alive in the fast changing world by prolonging their lifecycle. Question No.4: Discuss what is meant by the term intellectual property and how it can be protected? As per the website of World Intellectual Property Organization, an Intellectual Property refers to “creations of the mind: inventions, literary and artistic works, and symbols, names, images, and designs used in commerce”viii There are two types of intellectual property – Industrial property and copyright. Let’s describe each of them briefly: 1. Industrial Property: It includes patents, trademarks, industrial designs and geographic indication of source. a) Patents: It provides protection to the inventor of his invention that it cannot be commercially made, used, distributed or sold unless or until the deliberate will of the patent’s owner. Certain criteria are required to meet by the owner for patenting his innovation. The patent is usually for a particular amount of period which is normally 20 years after which it expires.ix Laws of patents are available in order to motivate people to create innovative things. For example, Intel introduced the Intel 4004, the world’s first single chip microprocessor and obtained a patent for it. These patents also have specific codes. For example, the patent code for Intel 4004 is (U.S. Patent #3,821,715)x Patenting your innovation will require disclosing your innovation to professional patent counsel and also have to pay fee for submitting application. The professional patent counsel will carefully analyze your innovation and approve if it meets all the criteria. b) Trademarks: A trademark is a word, symbol, phrase or device which is used to identify any commodity. For example, the trademark for Mc Donald is its unique yellow colored M. A trademark distinguishes one company’s product with another product. It provides the right to the individual or to the company to use it to distinguish your product in market. A trademark can be renewed if its period is expired. Its period is also not fixed as oppose to patent. c) Industrial Designs: As per World Intellectual Property Organization, these are ornamental or aesthetic aspect of an article.xi It may be applied to any product. For having Industrial Design protection, one needs to create any product which must look very soothing and different to eyes and should be new and original. It is not about the technical features of the product rather the visual features. 2. Copyright: It includes literary and artistic works for example novels, reference works, newspapers, poems, plays, drawings, paintings, photographs and sculptures advertisements, architectural designs and etc.xii It is also called author’s right. Copyrighting your literary and artistic works ensures that the creator only reproduce or let anyone else to reproduce, reprint, or make copies. For example, it is illegal and against the law if any copyrighted book is reprinted by a person who didn’t take permission from its real owner. Similarly, illegal copies of software which are cracked to make them functional are also illegal. So these kinds of illegalities are protected under copyright laws. References Read More