Business Innovation Issues - Essay Example

Innovation corporate culture Finnish based Nokia is the largest maker of mobile telephones in the world and boasts of more than 50,000 employees at16 countries in nine countries. Its innovative corporate culture has played a key role in capturing 40 percent share of the global handset market. Nokia corporate culture is one of the companys strategic and competitive advantages. Nokia does not believe in hierarchy and has a flat, networked organization that provides speed and flexibility in decision-making (HRM Digest, 2004). Nokia insists on a healthy work-life balance, which is in line with their changing needs and life situations. The companys goals and culture are embedded into the actual design and management of its facilities (Fitzgerald, 2001). For instance, the company’s buildings have large windows, warm colors and fabrics, open floor plans, recreation areas and fitness centers. This enables the company to connect indirectly with its employees while providing an environment that allows for a more productive and interactive workforce. The companys catch phrase too, Connecting People, is symbolic of the culture, which helps define the purpose of its physical facilities. Their culture encourages employee participation through open discussions and debates. Nokia’s culture promotes good communications, which is integrated into every day interaction with and between employees (Nokia, 2006). They have performance-management system, called Investing in People (IIP) involves discussions between employees and their managers, twice a year. They have flexible working hours, study leave and health-care services and recreational activities (HRM Digest). Another company having innovative culture is Procter & Gamble (P&G), America’s biggest maker of household products. There is a shift in P&G’s culture from a conservative, slow-moving, bureaucratic attitude to a modern, fast-moving, internet-savvy organization (CorporateWatch, 2006). They have introduced a new system of attracting the right talents in its fold with a view to make faster and better decisions, cut red tape, reduce costs of systems and procedure while setting more aggressive sales goals. Go, Give and Grow is a scheme that has struck chord with the youth. This scheme gives the graduates the opportunity to make their personal contribution to humanitarian projects before they start their career with P&G (HRMID, 2006). The new graduates selected for employment with P&G get a chance to work for 12 months in a developing country with the World Health Organization (WHO) or Unicef. Along with the induction program to help the young graduates cope with the new living and working conditions in a developed country, P&G also covers the costs of return flights, insurance and medical expenses, and pays a local-rate salary. In an alien atmosphere, these young people get an opportunity for unrivalled learning, and personal and professional development. By the time they are ready to work with P&G, their horizons are expanded, and they have become resourceful. They only hire from universities, and promote from within. At the senior level, they do not take form outside. This is an integrated part of P&Gs philosophy of being a socially responsible corporate citizen, according to their executives. The young graduates found company culture to be extremely open and non-hierarchical. Through this program, they learn to work with different people, organize events, learn new information quickly and are able to complete the challenges of absolutely new tasks. Entrepreneurial Growing SMEs Entrepreneurs are those individuals who manage a business with the intention of expanding the business and who posses the leadership and managerial capabilities of achieving those goals (Gray, 2002). They keep ahead of competitors through better management and the introduction of new, innovative products and processes. Entrepreneurship is important for the economic development of a nation. It is an act of creating value by seizing opportunity and utilizing human, social and financial resources (Pfeifer, 2003). It involves a certain amount of risk taking on the part of an entrepreneur. An entrepreneur is expected to possess three main characteristics: innovation, risk-taking and proactiveness (cited by Kreiser et al.,). National culture influences the strategic decision making process of an entrepreneurial organization. The key decision makers within such firms determine the strategic orientation. Out come uncertainties exist in taking risks. Managers in societies that are willing to deal with ambiguities would be willing to take risks. Such entrepreneurs are urged by the motivation to achieve, according to Hofstede. They tend to be assertive and ambitious. Hence, Organizational risk-taking is negatively associated with the level of uncertainty avoidance in a culture. Further studies by Morris, Davis, & Allen (1994) suggest that managers in individualistic countries tend to be more autonomous than collectivist cultures (cited by Krieser). Such managers are more willing to violate group norms and will involve themselves in risky situations. They rely on their own judgment rather than taking group opinion. Managers in individualistic cultures also have a tendency to place a higher value on individual accomplishments than collectivist managers (Hofstede, cited by Krieser). Hence, Organizational risk-taking is positively associated with the level of individualism in a culture. The entrepreneurial segment in the US comprises of a cross section of the American society. A large number of entrepreneurs are second or third generation entrepreneurs whose enterprises are mature industry businesses. Husband-and-wife entrepreneurial teams are also common and even some where the entire families are involved. Apart form these, there are those who have become jobless due to mergers, downsizing or Enron-type failures (Foy, 2002). Forty five percent of the GDP in US comes from the SMEs (Taplin, 2005). The success of the SMEs in US is due to innovation and the transfer of that innovation to applications. Positive social and legal attitude in US encourage risk taking and assure the entrepreneurs that business failure does not imply personal or financial failure. Success as an entrepreneur makes them the ‘stars’ of the business world but failure does not attach any stigma. The bankruptcy laws too are not harsh. This gives a boost to the entrepreneurs to collaborate with large corporations to create enhanced domestic and international oppurtunities. In US, competition is valued while corporate monopoly is prevented through state and federal laws. The financial markets are open to the SME needs and the corporate taxes are transparent, predictable, graduated, and affordable to SMEs. Companies can be formed easily in US and the paper work in minimal. The US intellectual property system supports owner of the patent, copyright or trademark. This not only protects innovation, it encourages entrepreneur to further innovate and research. MNCs (Multi National Corporations) Innovations. Multinational corporations, before entering a foreign market have to take into account various factors and considerations. Global competition, entry strategies, strategic timing and positioning, the government rules and policies, the local culture, investments, and the target market are some of the issues that confront the MNC. Due to advancement in information technology and communications, distances have diminished between nations and reach is easier. The host country benefits immensely with foreign direct investments. Due to globalization, situation has altered to keep pace with the changes. Nevertheless, challenges remain which can be overcome largely with the support of the local government machinery. Multinationals have to face stiff competition from local brands, which can offer products at cheaper prices but very large brands sometimes compete with locals by lowering their prices and raising their profile (Hollis, 2006). P&G’s corporate strategy is to sell common products throughout the world at locally acceptable prices. They work through agents for market penetration in foreign markets. To concentrate its marketing in China, it concentrated on channel policies and marketing activities (Hara & Nakanishi, 2004). P&G lowered their price for shampoo brand Rejoice in China while increasing category share of voice from 12 percent in 1998 to 21 percent in 2005 (Hollis). They offered a vertical brand strategy to expand its base. Different product formulations were offered at different price points for brands such as Tide detergent and Whisper feminine protection. This was accepted by the consumers because their standard of living improved as they got into the habit of using premium brands. As Chinese consumers are more brand loyal than western counterparts, P&G survived but if the consumers become price conscious, the P&G strategy might be risky. Nokia was once the leader in the mobile communications market but now, with the industry being saturated, they have to accept reduced profit margins. They now have to restructure and formulate new strategies. Nokia was aware even in 2002, when the components became cheaper and the price of handsets dropped. They realized that other revenue streams would have to be developed (Strategic, 2003). As such, they immediately responded to the current market needs at the same time maintaining its reputation as cutting-edge innovator. It turned its attention away from handsets and focused on software and fancy hardware like color screens and imaging technology. After its restructure in 2002, it transformed itself from a $21 billion mobile-phone unit to nine profit-and-loss centers. They targeted developing markets like China, India and Russia selling very cheap handsets to these markets. Srinivasan (2006) reports from Singapore that India will be the second biggest market for Nokia in terms of volume after China in 2010. Asia pacific contributes about 20 percent of the market share after Europe whereas in India it enjoys 72.5 percent market share. The company expects to sell about 80 million music enable phones this year and by 2010, around 900 million phones with music feature is expected to be sold globally. These trends and forward planning demonstrate how MNCs have to keep ahead of the market trends and technology to compete in the global market against various threatening forces. References: Corporate Watch (2006), Procter & Gamble, 27 July 2006 Fitzgerald M E (2001), Nokias Corporate, 27 July 2006 Foy M (2002), SME Insights, (Vol. 2, Q3, 2002), 27 July 2006 Hara S & Nakanishi K (2004), The Asia Strategies of Japanese Corporations, 27 July 2006. Hollis N (2006), Brands in China: devalued or deja vu?, 27 July 2006 HRM Digest (2004), Nokia connects HR policy with company success, Human Resource Management International Digest, Volume 12 Number 6 2004 pp. 30-32 HRMID (2006), Human Resource Management International Digest, Volume 14 Number 2 2006 pp. 29-31 Nokia (2006), Employee Commitment, 27 July 2006 Kreiser et al., (n.d.), Correlates of Entrepreneurship: The Impact of National Culture on Risk-Taking and Proactiveness in SMEs, 27 July 2006 Pfeifer S (2003), Modification of entrepreneurial behaviour by cultural factors in emerging economy, 27 July 2006 Srinivasan R (2006), India major growth market for Nokia, 27 July 2006 Strategic (2003), 3G strategy at Nokia, NTT DoCoMo and AT&T, Strategic Direction, Volume 19 Number 1 2003 pp. 13-16 Taplin R (2005). Innovation Business Partnering in the Europe and the US, 27 July 2006 Read More