Innovation Management: Blu-ray versus HD-DVD, and Dyesol - Case Study Example

INNOVATION MANAGEMENT: CASE STUDY Question In the case of Blu-ray versus HD-DVD: A standard battle in high-definition video (Schilling, 2013, pp 65-66), what factors do you think influenced whether 1) consumer, 2) retailers and 3) movie-producers supported Blu-ray versus HD-DVD? Discuss and justify your answer using the theory behind the selection of dominant designs. In the case of Blu-ray versus HD-DVD, following the standard battle in high-definition video, the different players; the consumers, retailers, and movie producer had their own reasons for choosing one particular standard as opposed to the other. Since the different players have different needs and preferences in the selection of the two standards, their selection is completely different from each other. The main factors that influenced the consumers may be categorized into two based on the two groups of consumers which are; the majority and the early developers. The major factor is technology. In this regard, early adopter consumers are more interested in technology as opposed to the overall functionality of the brand. As such, they concentrate more on researching about the different brands with a view of determining the better standard. On the other hand, the majority consumers are more interested in the size of the installation base on format. For example, consumers who prefer the standard made by Blu-ray technology select it for the brand it is due to brand loyalty. Moreover, consumers consider the complementary nature of the two standards when choosing them. Complementary nature of the standards depend on the number of movies that can be released on either Blu-ray or HD-DVD players. This is an important aspect for consumers as the preference on the number of movies released is different (Schilling, 2013, p. 65). Retailers are also influenced by different factors when choosing between either HD-DVD or Blu-ray. Since retailers are interested in stocking the standard that is most preferred by the customers, they are not interested in holding extra inventory for either of the standards. Also, the availability of two brands in the market for the consumers will require the retailers to balance the two formats which will in turn affect the cost of the products. This will be a determining factor of the number of products sold. For instance, Sony specialized in the purchase of movie content and therefore possess more adequate control on the process of decision making related to purchase and sale of content. However, the HD-DVD format had limited control on the decision drive due to their limit of content handling. Retailers are also influenced by logistics and production facilities involved in the supply chain of the products. Movie producers are more influenced by the preference of consumers and retailers. Their motivation is the presentation of the movies to the consumers in the best way possible and increase the acceptance of the movies to the consumers. Movie producers also prefer the aspect of technology in order to enhance the quality of service such as improvement of capacity of memory for optical storage products. This is the case for Blu-ray which provides great development. As such, these are some of the aspects which are deemed important by movie producers for great benefits. Movie producers are also influenced by technology. The development of complementary products is a development that requires important technological capability which helps the producers to trigger the product network to effectively link to the consumer level. Furthermore, movie producers are influenced by diffusion and marketing of their products. As such, they need to collaborate with other companies in order to expand the market and encroach new horizons as an expanded front (Schilling, 2013, p. 65). The emergence of a dominant design in the Blu-ray versus HD-DVD technological battle was unpredictable as the battle involved two giant companies that were very relentless in the battle. Both companies believed in themselves to conquer the whole market share by themselves without having to share it with each other. As such, there was no interest in concessions. In the end, HD DVD succumbed to its fate after it was dropped by Wal-Mart and Netflix. Furthermore, more and more consumers, retailers and movie producers were in the preference of Blu-ray over HD-DVD. The emergence of Blu-ray as the dominant design has greatly been associated with technological dominance (Katz &Shapiro, 1986, p. 832). Although both the formats were almost the same in the utilization of the blue laser light, Blu-ray was produced with great technological aspects such as internet integration, interactive capabilities, enforcement, and usage control. Such aspects of the player were considered very important in any player and as such, it gave Blu-ray an edge in the market (Suarez, 2004, p. 274). One of the factors that propelled Blu-ray to dominant design was technological superiority. The market is largely technological and Blu-ray was well-technologically driven compared to HD-DVD especially towards the end of the battle. Blu-ray was also favored by its complementary assets and credibility based on the reputation and manufacturing capabilities. This allowed the company to benefit from continued innovation. Furthermore, the company has effective strategic maneuvering which allowed it to successfully dominate the market through proper timing into entry into the market, policy and pricing among others. Question 2 In the case study Dyesol: partnering to harness the power of the sun (Schilling, 2013, pp 151-153), discuss the advantages and disadvantages of collaborating with external partners. Justify your answer. Overview of the case study In the year 2012, Australia-based Dyesol was presumed to be the world’s foremost producer of building materials coated with dye-sensitized solar cells (DSC). The production of this power involved a two-step process, which is contrary to the production of conventional photovoltaic. In this regard the production process can be said to be less expensive as compared to other forms of solar panels. If Dyesol had to consider remaining solo it would be taking futile decision since energy conversion efficiency of DSCs were very less compared to other thin-film solar cells. Many scientists believed that the technology was in very early stages of development cycle, which means that if the company was to consider partnership with another firm it could achieve deliverance of clean energy at a cost that was more competitive with the generation of electricity from fossil fuels (Schilling, 2013, p. 151). Collaboration of Dyesol with external partners Collaboration with TATA STEEL Dyesol collaborated with various external companies for strategic purposes. One of the company is TATA steel, which at that time (2012) was the fifth largest steelmaker with an annual revenue of 26 million USD. The steel is very important as this will form a source of raw material in the production of the DSC module. The following analysis presents the merits and demerits of this collaboration in relation to Dyesol as a company; Advantages I. Dyesol was able to access to capital and manufacturing expertise. The fact that TATA was a huge company that was producing steel worldwide, it would be very easy for Dyesol to access to capital, technical and manufacturing skill that TATA Company possessed. This can be based on the 26 million USD in revenue that the company attained in the year 2011. II. There was raised responsiveness of DSC technology. The partnership could make sure that Dyesol’s technology would be made cognizant thus achievable. III. Promote adoption of the technology across multiple international market. TATA’s market was large, the market was evenly distributed worldwide and this would make the Dyesol’s technology to be promoted and easily adopted around the globe as a result of this collaboration. Disadvantages I. Finding ways of distributing Dyesol’s patent. There will be great difficulty in finding techniques of distributing Dyesol’s technique since both the companies will want to control patent rights. II. Make strong competitor since there will be other firms who adopt the technology that will be applied. III. Tata group’s chemical learn to reserve engineer Dyesol’s dye product, the engineers of TATA will learn the concept of Dyesol’s product yet they have no direct return benefit to Dyesol. Collaboration with PILKINGTON Smart Glass This is a multinational glass manufacturer which had an estimate of 373 million USD in revenues in the year 2011. This collaboration was a 50/50 joint venture that they named DyeTec Solar, which was supposed to use Dyesol’s coating on the architectural glass to form photovoltaic functionality. The following are the advantages and disadvantage that could result from this joint venture; Advantages I. This collaboration would ensure that Dyesol firm will be able to reach to customers that valued solar energy, thus widening the market as well as the product line. II. The fact that coated sheet-glass Solar panels had not been utilized in the commercial market before would ensure that Dyesol was offering a new product that could be accepted in the market with a lot of positivity. Disadvantages I. The major drawback that will arise is this partnership would require significant time as well as investment. II. There is a very high uncertainty in regard to production of this new product since it was not fully utilized in the market. From the above options that Dyesol engaged in with external partners (TATA and PILKINGTON), there are various distinctive advantages and disadvantages that can be generalized when firms collaborate with external partner. The following advantages and disadvantages can arise as a result of collaborating with external partners. Advantages 1. Obtaining needed skills or resources more quickly. This skills can be in form of human resource that can help firms drive an innovation forward, resources such as technology and finances can also be acquired when a firm collaborates with external partners. 2. Reduction of asset commitment and increase flexibility. Collaboration will make sure that there is a wide base of assets as a result of the partnership. 3. Learning from partner and transfer of knowledge, which means that both the firms will be able to learn from each other whether in terms of financial, marketing or human resource management. 4. Sharing costs and risks, this is if the project is very expensive or its outcome becomes highly uncertain 5. Can build cooperation around a common standard The trend of collaboration can’t be said to be uniform and it has varied overtime, this can be shown from the following statistics (Schilling, 2013) Disadvantages 1. It is very likely that one of the collaborating partner might decide to exploit the partnership relationship by benefiting more and consequently issuing less. 2. Issues and situations of equity ownership might arise, which can result to a bad relationship of the collaborating partners. 3. The governance and control mechanisms of the collaborating firms might not be harmonized, which will make the collaborating firms have a bad contractual relationship. There are various reasons that a firm can find it necessary to collaborate with another firm, but the main and most significant factor is the firm’s capability to control the development process and the innovation formed. Some firms may prefer in-house rather than access partners capabilities. The advantages are collaborating are numerous as it is going to be discussed in the subsequent section of this paper. Forms of collaborating can be in terms of strategic alliance, outsourcing or collective research organizations. The factors that can influence collaboration or partnership f firms includes aspects such as cost, speed, control, and if there is potential for new competencies. Different set of trade-offs will arise as a result of the competencies that are formed in the collaborations, if the collaboration has to be successful both resource fit and strategic fit have to be in-existence as well as make sure that there is development of governance and monitoring mechanism. It is very important for a company to choose carefully a worth partner that will ensure a transparent monitoring.it is very important for firms to match the trade-offs of collaboration mode to their needs, which can be represented in the following table; References Birkinshaw, J., Crainer, S., & Mol, M. (2007). Special report on management innovation. Business Strategy Review, 18(1): 45–73. Howell, J. M., & Shea, C. M. (2001). Individual differences, environmental scanning, innovation framing and champion behavior: Key predictors of project performance. Journal of Product Innovation Management, 18: 15–27. Katz, M. L., &Shapiro, C. (1986). Technological Adaptation In The Presence Of Network Externalities. The Journal of Political Economy, 822-841. Schilling, MA (2013), Strategic Management of Technological Innovation, 4th Edition. McGraw- Hill. Suarez, F. F., (2004). Battles for Technological Dominance: An Integrative Framework. Research Policy, 33 (2), 271-286. Read More