Strategic Management- innovation!

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Strategic Management- innovation!

  1. 1. ROLE OF R&D and INNOVATION IN FUNCTIONAL STRATEGy<br />
  2. 2. Research & Development<br />
  3. 3. What is Research & Development?<br />Creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of knowledge to devise new applications.<br />Example : Black and White TV<br /> Color TV<br /> Plasma / LCD TV<br /> LED TV <br />
  4. 4.
  5. 5. TRANSFORMATION OF MUSIC STORAGE OVER THE YEARS …<br />
  6. 6. Importance of R&D<br />Strategic variable by which firms conquer market shares<br />Competitive edge in international trade<br />Investment in knowledge leading to economic growth<br />Crucial factor in the survival of a company<br />
  7. 7. Helps to Cope with:<br />Changes in Competition<br />Changes in technology<br />Changes in consumer preferences<br />
  8. 8. Internal and external R&D<br />Whether R&D should be carried out by an organization internally or should external expertise be consulted depends upon the rate of changes in:<br />Technology<br />Market scenarios<br />
  9. 9. Adopting R&D:<br />Internal R&D should be undertaken when rate of technical progress is low and market growth is moderate<br />Reason-<br />If successful will result in monopoly.<br />The new product developed has greater probability of remaining in the market for a longer period without becoming obsolete.<br />External R&D should be undertaken when technology is changing slowly but market is growing rapidly<br />Reason-<br />When technology is evolving slowly the firm doesn’t have resources to react to rapidly changing markets ,hence seeking the help of external expertise is more feasible.<br />
  10. 10. How is it carried out?<br />To pursue R&D most organizations have created special R&D cells.<br />Working of cells-<br />Work pattern is all year around<br />Portion of the overall turnover is allocated to these cells<br /><ul><li>Keep up to date with the technological advancements</li></li></ul><li>Advises the company on upgrading and modernization projects<br />Work towards improving the efficiency of the manufacturing process<br />The cells Carry out –<br /><ul><li>Extensive Market research
  11. 11. customer feedback
  12. 12. competition analysis</li></li></ul><li>When is R&D carried out?<br />Constant re-inventing is essential to survive<br />nature of activities is determined by the current and the forecasted market scenarios.<br />Eg:before decline stage of the product life cycle<br />research takes into account at least five to ten years into the future<br /><ul><li> Development of the final product takes one to five years</li></li></ul><li>Positives of R&D:<br /><ul><li>Increases the longevity of a product </li></ul>Example- various software versions.<br /><ul><li>Competitive Advantage</li></ul>Example-Introduction of healthier Fiber Rich digestive Marie Biscuits vs. Normal Marie Biscuits<br /><ul><li>Capitalize on the available opportunities</li></ul>Example-Pharmaceutical companies entering the Hospital business<br />
  13. 13. Positives of R&D:<br /><ul><li>Robust Brand Image in the minds of the consumers</li></ul>Example-<br />Launch of washing machine friendly detergents once the Washing Machine became an affordable appliance<br /><ul><li>Meets long term goals of the company
  14. 14. Helps in Expansion and Modernization</li></li></ul><li>Negatives of R&D:<br /><ul><li>Expensive
  15. 15. Confidence level of investors in the company is affected.
  16. 16. Making an existing technology obsolete result into heavy losses
  17. 17. Results of R&D are not assured</li></li></ul><li>BOOSTING R&D<br />Following steps can be adopted by:<br />THE GOVERNMENT:<br />Giving out loans and other credit facilities<br />Encouraging private investment<br />Encourage small and medium high-tech companies to go overseas<br />Specialized bodies to boost research and development<br />2.THE COMPANIES:<br />Know your business<br />Research<br />Reverse marketing<br />
  18. 18. INNOVATION<br />
  19. 19.
  20. 20. WHAT IS INNOVATION?<br /><ul><li>Innovation can be defined as the result of some amount of time and effort into researching (R) an idea, plus some larger amount of time and effort into developing (D) this idea, plus some very large amount of time and effort into commercializing (C) this idea into a market place with customers.
  21. 21. Innovation=R+D+C</li></li></ul><li>Process that operates at the front of innovation & feeds all development activities …<br />
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  23. 23.
  24. 24. What is the need for Innovation?<br />Innovation is essential in order to cope with-<br /><ul><li> Advancing technology
  25. 25. Changing environment
  26. 26. Changing industrial structures and strategies
  27. 27. Evolving society
  28. 28. Evolving customer desires
  29. 29. Changing Competition</li></li></ul><li>Types of Innovation:<br />Product innovation <br />The introduction of a good or service that is new orsignificantly improved with respect to its characteristics or intended uses<br />2) Process innovation<br />Implementation of a new or significantly improvedproduction or delivery method. <br />
  30. 30. 3) Marketing innovation<br />Implementation of a new marketing method involving significant changes<br /> packaging<br /> product placement, <br /> productpromotion <br /> pricing<br />4) organizational innovation<br />The implementation of a new organizational methodin the firm’s :<br />business practices<br /> workplace <br />organization <br /> external relations.<br />
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  32. 32. Case Study: Apple IPods<br />
  33. 33. Limited features<br />Dependency on tapes or CDs<br />Bulky<br />NO in built memory <br />In 2000, digital music players were –<br /><ul><li> Big and clunky OR small and useless
  34. 34. Had terrible user interfaces. </li></li></ul><li>Apple saw the opportunity and announced the release of the iPod, their first portable music player<br />Original Release Date: October 23, 2001<br />Capacity: 5 - 10 GB<br />Connection:Firewire<br />Compatibility: Mac<br />Battery Life: 10 hours<br />i-pod classic 1st generation<br />
  35. 35.
  36. 36. R&D was extensively carried out to overcome short comings of the I-pod<br />The outcome was:<br />Technological innovation<br />Reduction in production costs<br />Better features<br />Satisfied customers<br />
  37. 37. THE APPLE IPOD TREE<br />
  38. 38. I pod today…<br />Original Release Date: September 10, 2008<br />Capacity: 120 GB<br />Connection: USB<br />Compatibility: Windows XP/Vista Mac OS X<br />Battery Life: 36 Hours<br />i-pod classic 6th generation<br />
  39. 39. Innovative Sizes<br />
  40. 40. Innovative colors<br />
  41. 41. Innovative features<br />I pod touch<br />Touch screen feature<br />Original Release Date: September 10, 2009<br />Capacity:8, 16, 32 or 64GB<br />
  42. 42. Innovative combinations<br />The Nike + iPod Sport Kit<br />
  43. 43. CONCLUSION:<br />The “Success Mantra” behind the I-pod:<br />Constant R&D<br />Constant innovation <br />Reinventing based upon consumer needs<br />
  44. 44.
  45. 45. CONCLUSION :<br />

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