It depends on what the business is trying to accomplish that decides which strategy to use. The businesses have to think about what their customer wants or needs and how their competitors are reacting to the situation. Timing is another important factor. Whatever strategy – all need creativity. An ability to design a practical strategy is crucial to reaching the business goals due to the competition that now exists. Therefore the manager must understand and use well the assets the company has as resources. Strategy means setting up the process that will best reach the goals effectively and efficiently; clearly defining the purpose of each step is vitally important. The goals that are chosen to progress through the project to reach a successful goal must be realistically set so the team members and the resources must be realistically assessed. Any limitation such as a lack of resources, high competition, or high risk in other sectors must be taken into account. The measurement of the success or failure of a strategy is performance referenced to the competition. The next step after the end of a project is to evaluate what the strategy says about the company’s core competencies and the ability to meet market needs. Note that the strategy is linked to the competition and how a company competes. Every step of strategy needs to match the process of competition so each step of the company’s process must have a strategy. (product, positioning, sourcing, communication, marketing, financing, etc.) A good strategy gives a business an important edge over other competitors.
(a) Product-market-focused strategies use actions that focus on the product and the market. So cost reduction might be the best marketing strategy for selling a larger number of the products. Niching requires finding a special target audience with a special need that only this product can fill. Or a product can have mostly the same advantages of competitor products except for something unique like style, colour or an extra useful application. This is called differentiation. Branding is the way a one product is recognized among all the others by consumers. Dell computers had successful sales when other computer companies were doing poorly. This is because Dell used two important product based strategies. (a) Their computers cost less. (b) They consistently offered new products into the market (every 3 weeks). The third strategy they used (allowing computers to be offered at a lower cost that other companies) was to make operations more efficiently.
(b) Opportunity-risk focuses strategies are strategies that balance the chance of opportunities against taking a risk. These can be very tricky and sensitive. AMP used the strategy of tying to take no risks and taking advantage of opportunities from that point of view. Their options for strategy were limited and had to be clearly defined. Dell saw the opportunity to gain a competitive edge by offering a good product at lower cost (which would give a lower profit margin unless enough pieces were sold; so enough pieces had to be sold) and by offering newly designed product support or product every 3 weeks. By offering something new every three weeks Dell was able to hook the interest of consumers; therefore customers would look forward to each new product and they would become loyal to the brand. Dell is an example where product and opportunity-risk strategies intersected successfully.
(c) Time-based (industry-and-competitor-focused) strategies require keeping in touch with the schedules of your competitors. A company must plan a strategy depending on when they put the product on the market. The time-based refers to whether a company offers the product before anyone else does, or just a little bit before another country or if there is a need pay very close attention how to innovate a product because is entering a market that has other versions of that product. An example of this type is to wait and enter a well-established market. The Australian insurance companies, AMP and National Mutual used this strategy. Another time based strategy is called ‘skimming and early withdrawal.’ This strategy requires a focuses on a lot of support for the research and development department. 3M’s product based strategy was also time-based because 3M wanted to be first to offer a product to gain competitive edge.
B. Using examples, discuss in which ways they differ from one another.
A product-market orientation for distinguishes a product from all the others that offer some of the same characteristics. So it is determined by how the product is unique from any other product in the market. This happens a lot with mobile phones. They all have the basic use for communicating but sometimes the creative colours and styles offered are enough to give a certain product the edge over others.
The opportunity-risk strategy weighs the risk against the chance for a money making opportunity. So the computer market and software applications are a good examples because the bugs may not all be worked out but the need to get the product on the market quickly may be greater than the need to make everything absolutely perfect.
The time strategy figures out how to proceed based on the timing a new product will enter the market compared to other similar products. In many examples this is a result of a decision on how much the company wants to invest in their research and development (R&D) department. Dell invested a lot in its R&D department in order to offer new products every three weeks. The idea was to get innovations on the market ahead of the crowd. Other companies wait and offer their product in an already established market niche. Some companies offer products seasonally, for example, computers at the start of the school year; cameras at the start of holiday/vacation seasons.
A. Identify and explain the process of technology strategy formulation.
Technology development requires the knowledge and access to technical knowledge resources in order to create new technical designs that consumers need or want. Technology is highly integrated with our modern lifestyle, our society and our environments. Creativity is important when it comes to technology. Consumers need good idea and innovative technology designs and so to business organizations. The idea is the formulation of the goal for a new design. Disney has a great idea that demonstrates the integration of technology into the consumers’ life because it is something they both want and desire and it the technology is already an integral part of their daily communications processes: the idea is to help visitors negotiate better inside the Disney Parks. The method is to send them targeted updates on their cell phones in order to make their visit more enjoyable and personal.
Technology strategy formulation is based on the foundation of the R&D department and the capability to develop ‘technology bundles’ that can offer a diverse range of products. So the first important step in the strategy is to decide the goal and then carefully plan how you are going to reach the goal. The whole company needs to be part of reaching the same goal or goals. The three main factors to keep in mind are (a) acquisition, (b) management, and (c) exploitation. So the amount of the R&D budget is very important. In order to decide on the amount for a particular product or area of development the budget will have to be divided between the short-term and the long-term product development projects. Another decision will need to be made on the budget for the areas of business-related R&D and the amount that needs to be divided up to meet performance goals. These decisions can be made by developing a time line for the next year to the next twenty years (or more) in order to fit the goals of the company with realistic product innovation goals.
B. What are the differences between specific technology, a generic technology and a technology bundle? Provide examples for each.
Generic refers to a generally broad range of products being offered by a company. For example Canon not only sells many types and styles of digital cameras but it also sells copy machines and laser printers. All of these products have the same base technology at their core. Pharmaceutical companies, especially use ‘specific technology’ because they offer drugs specifically to help with a health problem such as an HIV drug or a drug to relieve stomach cramps; it is unusual to find one type of drug that will relieve a large range of illnesses. Another factor for pharmaceutical companies is side effects. The drugs are not only specific to helping alleviate a particular design; but drugs are needed to specifically address problems of patients who can use only certain combinations of drugs due to side effects. Another specificity example is that patients taking more than one medication can only take particular drugs that do not negatively interact.
The bundle technology is a lot more complex than the other two because it combines the two (specific and generic) and then expands on the strategy by using their research and development to give them many, many products. For example Honda sells automobiles, sports equipment like mountain bikes, solar cells, jet engines and jets, and equipment for lawns and gardens plus many more types of products. Camera designers have had to get on board a technology strategy formulation very quickly when digital cameras entered the market. They cannot let up the pressure necessary to design innovations and combinations of features. Copy machines and computer printers have the same competition challenges for technology innovation so they must budget enough for R&D. Ink jets and laser printing are only two of the innovations and there exist many combinations that can appeal to different consumers therefore filling special niches. Just a few examples of the variety of niches include home family use, home office use, business use, retail printing services, and others.
A. State the characteristics of a performance measurement system.
A good performance measurement system has to offer a strategy to judge whether or not the company is reaching its performance goals. The purpose is to keep the performance efficient and competitive. It is necessary to keep ‘driving the business performance.’ The trick to performance measurement is the ability to appropriately quantify entities that are not commonly measured using a number system. Once measurement is made a strategy of continuing a regular measurement regime is important because the company is measuring its own performance. Management needs to know if they are improving or failing to meet the required measurement goals. It keeps in mind both the mission statement of a company and the goals of the company as a solid basis of comparison throughout the process of performance measurement. And not only is the company measuring its own performance, the measurements can be used in other comparisons especially against the competition’s performance.
The factors of mission statement and company goals must be reflected consistently in the measurement process; they are essential to the measurement process. The measurements need to be accurate, precise, and timely. There are two types of visibility that need to be taken into account (a) process and (b) progress. The performance measurement must stay focussed on “core value-adding activities” because those are the activities that can most benefit the company. Hand-in-hand with focussing on core value adding is the need to notice where and at what point of the process improvements are needed.
The strategies used for measurements must be flexible to change. Traditional measurements may be too rigid or not be consistent enough. A non-traditional strategy works better so the measurements can be tailored to the needs of the process. The processes being measured and the strategy are complex so there exist many challenges. It is only very important to invite feedback from the employees in the company that are involved in the process involved. Open communication will not only help devise better measurement but it will also help employees understand the purpose. If employees think they are the ones who are having their performance measured this causes a lot of anxiety.
B. Identify and discuss the difference between process based measures and outcome (results) based measures. Why it is important for an organization to address both.
The process being measured has many different activities from the start of the process and then throughout the process. The outcomes (the results) are the products at the end of the process. So they require different types of measurements. The Process-based measures are used to understand how well the process is working. The process must be effective, efficient, it must be reliable (so consistency and variability are measured) and it must demonstrate a high quality in both the process and the result of the process (output). On the other hand the results are measured by other factors, most of them much easier to measure. The outcomes-based measures include measuring whether or not the customer and the employee feel satisfaction, if the performance of the product and the financial outcomes are satisfactory and then the company can decide the other business targets such as market share that it wants to measure. Measurement must be devised and used in order to understand if goals are being reached effectively. If goals are not being meant then changes need to be made in the management capabilities to decide how to adjust the processes.
There are some good designs for integrating both process and output in order to gain good measurements of customer satisfaction. Strategic measurement and reporting technique (SMART) is a very interesting package for taking measurements and reporting the result. The measurements incorporate data from both non-financial and financial sectors. The strategy is shaped like a pyramid with the point at the top being the DEFINING the corporate vision and IDENTIFYING markets where the competition is involved. This is a very good way to demonstrate the importance of the corporate vision by putting at the apex. The corporate vision in the new layer down is divided between the market and the financial sector which have well integrated processes. The next layer down considers customer satisfaction, flexibility and productivity. For example the ability to offer customers the details they specifically want in a product design matched with the ability to offer enough pieces so they can always find what they want . . . equals customer satisfaction.
The next layer down the pyramid (4th step down) holds quality, delivery, cycle time and waste. Keeping all four of those factors in balance both in terms of cost and customer satisfaction will improve internal efficiency. The foundational last step is Operations without which you would be having to start a new company.
4. Identify the key drivers of globalisation. Discuss the implications of these for innovation.
In the global marketplace there are four main drivers: market drivers, cost drivers, government and economic drivers, and competitive drivers. The global market place is huge. A company is competing with local, national and international companies.
Market drivers include ‘homogeneous customer needs’ which means the target group of customers have the same needs and similar expectations of product quality. “Global customers” and “global channels” refer to product buyers that are all over the world so they are reached through global means of communicating about the products. This includes sending employees to the targeted market location in order to set up collaborations. “Transferable marketing” is marketing that cannot be one dimensional it has to be able to speak all the potential interested customers and can be done through print ads or on the Internet.
Cost drivers are important because the cost directly impacts the profit. “Economies of scale” means that the expansion of the production scale can give cost advantages to both the company and the customers. Companies who produce on a large sale can buy parts more cheaply and therefore sell the product more cheaply. The amount of useful “learning and experience” of a company’s team adds value. A company can use reliable vendors and maintain shorter distances from the manufacturers of parts resulting in “sourcing efficiency.” Which overlaps into “favourable logistics” so that the cost is not too high to make the product and the costs to get the product to the customers is not too high. If the research and development costs are too high it may not be reasonable for a company to pursue a certain project; that is an example of how “technology development” can drive the costs.
Economic drivers include the trade practices at the location of the customers which could be local or international (or intra national). The government is part of the economic drivers because it sets laws on trade, tariff and cross border selling. So is is important to have “integration of world markets” and “globally binding rules of law” for clear understanding of what is legal and what is illegal. Also as important are whether or not the technical standards are compatible, for example, the electrical tea pot connection for the UK is different in the US due to the way that electricity reaches the houses in certain voltages.
Competitive drivers include “globalised competitors” which are those competitors also involved in global marketing. The “interdependence of countries” is a competitive driver which could cause different types of obstacles when trying to enter a new market. Essentially because changes are happening all the time and happening very speedily the competitive drivers need to be regarded and observed very seriously.
Velti is a good example of at marketing company that use the market drivers of homogenous customer needs (mobile communications), global customers, global channels and transferable marketing. It also uses the cost drivers of economy of scale and scope (huge customer base), learning and experience (knowledge and experience in what drives sales), sourcing efficiency (over the WWW), favourable logistics (easy access), technology development costs (less because they have the foundation tech needed yet they understand the need to be flexible enough to meet unique customer needs.)
A. Discuss the process of how a domestic organisation can be developed into a transnational organisation.
A business can evolve and develop successfully into a transnational organisation by tracking the globalisation forces and considering them with the local responsiveness forces. There are two routes. One is to go to the global model and then increase the capability of cross boundary learning in order to become transnational. The second route is to build to a multinational status and them take advantage of increased economies of scale and increased learning in order to evolve the company into a transnational organisation.
B. What are the four different types of subsidiaries based on their local strategic importance and local competences?
The strategic leaders-type of subsidiary is almost on an even par with the centre in terms of planning and development of strategy. It has the most independence from the centre for decision-making. It is expected to be very sensitive to the environment, take the lead in designing and implementing strategies that others can follow. International banking is an example. Some national banks have been very successful at globalisation. They have added branch banks in other countries some of which are almost as independent as the Centre.
The contributor-type subsidiary is in a supportive role rather than a leadership role. It may be located in the local environment for a centre that is located in another country. In that case it is expected to help the centre understand the local environment and its company benefits. In the example banking there are also subsidiaries that do not have anywhere near the independence of the centre. A branch may only be an automatic teller machine (ATM) and a small amount of customer service offerings in other countries.
An implementer-type subsidiary is common. They are found in smaller countries or developing markets. They must use as essential tools economies of scale to build or manufacture a product. Car manufacturers like Toyota (Japan), VW (Germany), and Micorosoft (USA) are examples of when the R&D is centralized in the home country. This make create challenges when trying to target a global market due to not-invented-here, a type of nationalism when consumers per products created in their own country.
Black hole-type subsidiary is the type that seems to ‘suck up money like a black hole’ because it requires a big budget in order to keep abreast of the new trends and new innovations that can benefit a company quickly. This type of subsidiary is considered an investment toward future profits. It is expensive but if it provides good results then it is worth it.
A. Define and examine in detail the organisational process for market learning.
Market learning is essential because it is the technique of observing the market as a whole not only the niche of a certain product or one type of product. Different components of a market work together in a larger marketing structure in the real world which is why it is necessary to understand the whole picture and the changes that are taking place. Technology is changing so quickly this is necessary in order to understand when a change in strategy is required as soon as possible.
Market sensing requires being able to adopt ‘the long view’ and a ‘global view’ when considering the global market. In other words it is the opposite of analyzing only a target portion of the global market. The market sensing strategy requires a curiosity not only about what the competitor is doing but about the market as a whole. This can be fruitful in finding “latent” marketing niches, especially on the periphery of them market. Independent thinking and creativity are welcomed. Sense making require an ability to study the data and understand what information is being provided. Making sense of data and then being able to share it to appropriate staff is important. The sense making requires taking into account and evaluating meaning from the cognitive view of the organisation which is called using a “mental model.” Successful use of mental models requires analyzing the mental models already being used and identifying underlying assumptions that may or may not be correct. Reflection requires evaluating outcomes and monitoring outcomes in order to learn from the information. Because reflection is used at the end of the process, hindsight is used to breakdown the decisions and actions done in order to learn.
B. Give three examples of research methods that assist in understanding the market?
The cognitive method is very interesting because the researchers learn details of preferences by giving mainly visual surveys to people. They can ask questions that will encourage story telling or elaborating on metaphors. Or the survey may ask about how a person feels about a visual stimulation compared to a digital image. The cognitive method, a psychologically based method, has eight steps including storytelling, missed images, sorting; construct elicitation, metaphor elaboration, sensory images, the vignette and the digital image.
“Technology-led interactive research is faster and becoming popular because of the Internet and computer dynamic web pages. For example a virtual brainstorming happens “virtually” (on the web) and takes advantage of computer technology in order to come up with ideas across the globe at the same time. It is like sitting in a room face-to-face to brain storm but because it is on the web there are certain logistics that need to be planned in order to have all the participants on line at the same time. Skype and other communication with camera techniques are good to use so people can see each other and encourage each other to share ideas. Fast-polyhedral-adaptive conjoint estimation is used in “FastPace” software. The idea behind it is to use multi-media web techniques to survey customers on line. The respondents to the survey are responding to a virtual product and can manipulate the quickly adaptive web pages to give their opinions on design changes visually.
Ethnographic is a type of market learning that is used for detailed understanding of customer behaviour. Surveys are taken verbally and observations are made of the participants. This can be done in a controlled environment where both the interviewee and interviewer are seated and specific questions are asked while the interview is recorded. On the other hand the interviews may be spontaneously carried out in a supermarket, for example, to get feedback from customers in the shopping environment. There are many other strategies but all of them need to be used carefully to make sure the results are correctly assessed.
Interviews, surveys and observation are similar in the way the first two steps they use to “probe” the market for a better understanding. All three of them start by creating ideas. They develop the questions, the survey or the boundaries for the observations. All three are involved with the market launch. Observation methods are more involved though in the process of understanding the target market. The first two steps are (a) idea generation and (b) concept development. Then the observation strategy is used again during the end of the (c) product development and testing phase, (d) throughout the market testing phase (in order to observe consumers’ reactions) and during the initial stages of the (e) market launch.
A. Explain why there has been a shift towards network models of innovation over time.
Customers began to expect speed and they expected special details in products to demonstrate the customers’ individuality. Marketing became more complex so information technology operations managers were hired to help maintain flow of information over the web and the internal network. The needs became bigger – more resources, more capabilities, more linkage with other outside companies. In the 1950s innovation process became the first generation of the technological push (pushing for better, higher quality, faster, more efficient technology) that has grown over the decades. The 1960s, the Second General, experienced a market pull (customers), the 1980, Third generation was a combination of the technology push reacting to the market pull and vice versa. Then the 1990s saw big changes. The fourth generation was characterized by parallel processing; the fifth generation by E-integration (e-mail, networking, etc.) and the Sixth generation is where we are now in an evolving network innovation period of time. With the network innovations all the complexities, the tech push, the market pull, the parallel processing and e-integration, can be designed into an efficient way to do business as network innovations become more sophisticated.
B. What are the merits of the solutions based approach to innovation?
The benefits to a company to use solutions-based innovation include giving the customer a product that will help them solve a problem or carry out a task. That way the product is useful to a customer, if a customer likes the product the company may have that customer for life. For example software applications are solution based and can develop customer loyalty so with every up-date the customer buys the product with the up-date because they know the product and trust it. Since problems are more complex the solutions which are built out of integrated components will be more help – so that together the hardware, the software plus customer service can be integrated to meet all the customers’ needs. Depending on which component is selling best or more popular depends on how the business designs the marketing strategy and how components are leveraged (to make the most profit).
A. Outline an example of a supply chain model.
I. Supplier of Raw Material
II. At a subcontractor to make component partially or making parts
III. Manufacturer finishes building the product (end product)
IV. Distributor (the best way for product to reach the consumer)
Good communication is essential when using the generic supply chain model because materials and information are flowing both ways throughout the process. Since the merchant interfaces with the consumer they are very important in the chain. The supplier has to negotiate prices with them, encourage the consumer to buy the product, and place more orders with the supplier. Information technology is an excellent way to design and institute innovation. Innovations can be made in developing more efficient routing, keep inventory costs down and make sure suppliers pay for the best supplies at the most reasonable cost. Innovation is important during the whole process of the supply chain. Each person working along the supply chain should be invited to share feedback and ideas for improvements. When a concept is developed into a plan, innovations are most welcome in order to make the plan practical, efficient and affordable.
B. How do the supply chain and innovation work together to bring a new product to market?
A supply chain needs to be able to respond quickly to change and it needs flexibility. The best supply chains work the most efficiently and the fastest. Innovation is necessary to continually refine the components of the supply chain to make the process efficient and fast. Innovation can make a supplier more responsive to the needs of the other entities along the supply chain. Each stop on the way from the supplier to the consumer has different needs and innovation can devise ways to take advantage of the similarities while at the same time fulfilling unique needs. Innovation is integral to the jobs of “important supply chain enablers” who can bring a supplier early into the design development and also find ways for making the most of “external product extensions.” Innovative ways of thinking and designing can mean a significant competitive edge will be built.