Competitive Strategy and Competitive Advantages Essay

1- Innovation is important because it allows differentiation from competitors, manufacturing is easier and more flexible, the bar for competition is raised, and there is greater market segmentation. 2- Some advantages of technological innovation are: a wider range of products and services can be delivered to people, GDP has increased, people can communicate in every part of the world, the production of food has become more efficient, and it has yield medical treatments to improve medical conditions. The quality of life has improved. It has created new knowledge to solve practical problems. Disadvantages include: harmful pollution to surrounding communities, erosion from fishing and agricultural technologies, elimination of natural habitats, genetic modification, and antibiotic resistant strains of bacteria. 3- Many innovations projects fail to generate an economic return because it takes a long time to research and develop the innovation. Once this product comes out on the market, it has already become obsolete because a new technology is already being researched as technology is constantly changing. Also, clear strategies are not developed by a firm and poor management of the innovation occurs. Chpt 2 – Sources of Innovation 1(a) Advantages of individuals as innovators: deep understanding of their unmet needs and the incentive to find ways to fulfill them, users have no initial intention to profit from their inventions, new industries can be created. A disadvantage include lack of entrepreneurial traits. 1(b) Advantages of firms as innovators include alliances with stakeholders, absorptive capacity is built via the firm’s in-house R&D. A disadvantage is when firms collaborate with complementors, the firms produce a range of goods and the line between the firm and the complementors becomes blurred. 1(c) Advantages of universities: staff is encouraged to engage in research that may lead to innovations. If an invention is commercialized, the income is shared with the individual inventor. The disadvantage to this is the university has the sole discretion to commercialize the invention and not the inventor. 1(d) Advantages of government institutions as innovators include: the government grants innovative small businesses funding, it develops science parks and incubators. The disadvantage to this is, since the government support so much R&D and funds firms, the government spends less money on R&D as the years passes. 1(e) Non profit organizations perform their own research and development activities and also fund the development efforts of others. 2- Traits include: unconventional thinking, analytic skills, articulation of ideas, self- efficacy, tolerance for ambiguity, and a willingness to to overcome obstacles and take reasonable risks. These traits do not necessarily lead to successful inventions because the inventor may know too little or too much about the field. Also, at times the inventor may not have enough support to think creatively. 3- Firms can look at where individuals have worked before and what they have invented/created. Their past background can indicate they have potential to be more creative. 4- If a firm’s culture, structure, routines, etc supports creativity, then it can perhaps encourage creativity in individuals. These things can inspire an individual to be creative because they are being supported by their employer. Google supports creativity; the firm allows employees to have their own creative workspaces and also gives them the employees great independence. This inspires creativity. 5- Collaborative research develops relationships and networks where people can share information, resources, and ideas to develop something that is innovative. Results can be achieved better this way rather than individually. Chpt 3- Types and Patterns of Innovation 1- Some reasons are: R&D costs can be very high, the innovation can probably take years to develop, technology performance can decrease fast depending on how much effort was put into it, the new technology is threatened by discontinuous technologies, the market for the technology is not large enough, people are unwilling to adopt to the new technology, the technology does not fit in with the firm’s current abilities, and products and services relating to the new technology may be unreliable and/or expensive. 2- Well developed firms are likely to adopt to new technologies instead of developing them because new technologies does not have a dominant design. Established firms are very familiar with the dominant design and do not experiment with new technologies. Instead, the established firms focuses on new knowledge/understanding of existing technologies. It tries to improve products and make production more efficient. New entrants are eager to experiment with new technologies because they are introducing something new into the market; they can perhaps build on that to develop market share. 3- The invention of a laptop with Internet is a radical innovation. It is portable, users can access internet on the go without wires, and work can be done from anywhere. The laptop is competence enhancing as it has built the way for other technologies (e.g. tablets). 4- S-Curve technology improvement: in the early stages, the technology is not understood and effort is put into understanding the technology, when the understanding of the technology is better, improvements are accelerated. The technology begins to gain legitimacy, more improvements are made and the performance begins to increase rapidly. When the limits if the technology is reached, diminishing returns is seen. S-Curve technology diffusion: the adoption of a new technology is slow initially because people are unfamiliar with it. As the technology is better understood, it is utilized by the mass market. When the market has become saturated, the rate if new adoptions declines. 5- Customers are slow to adopt new technologies if there is no trend or demand in the market; technology changes everyday, thus improvements are faster and customers may or may no know about technological trends. If a firm develops a technology beyond the current state of the market need, it has a high competitive advantage, considered innovative ( the firm can build on this) and profit can be made. However, if there is no demand for this technology and the firm cannot penetrate the market, the firm’s costs can become very high and it will lose profit. 6- Short technology cycles: IT, software, social networking, engineering, food, music Long technology cycles: medical, auto, energy, finance, Factors: customer needs, demand, competition, markets, R&D, government, laws Chpt 4- Standards Battles and Design Dominance 1- Sources: learning effects- the more a technology is used, the better it is understood and the more efficient and effective it becomes. Performance is increased and costs are reduced because of these factors. Network externalities- the value/benefit of a good increases because other users in large numbers utilize this particular good. 2- Industries with increasing returns to adoption: Internet software/services, e-commerce, banking, security systems, social networking 3- Increase R&D research, patents, market the properly, hire the best and the brightest from all over the world, increase the industry standard and absorptive capacity, develop more complementary technologies. 4- Network externalities and the stand alone functionality 5- Consumers: yes; they can rely on one firm for the technology because the standard is high and the product is good Competitor: no; they do not have the market share, customers, or profit Complementors: yes; more profit and customers