The impact of innovation on companies Essay

Firms and concerns exist and conflict to last merely as living existences within the states or parts they operate, and merely as living existences experience the demand to alter or make alteration due to their continuously changing environment, so to make concern organisations. In order to stand the trial of clip and obtain a higher competitory advantage, a concern must go on to stay relevant to its clients, it must continuously happen ways to supply the relevant merchandise or service for the of all time altering consumer base and at the same clip keep an optimal net income border. This signifier of unreal or better yet commercial development, can be said to be the nucleus ground behind the usage of engineering in the concern universe, this is the thrust for industrial invention. In 1950 Joseph Alois Schumpeter, stated that ;

“ The cardinal urge that sets and keeps the capitalist engine in gesture comes from the new consumers ‘ goods, the new methods of production or transit, the new markets, the new signifiers of industrial organisation that capitalist endeavor creates. “ ( p83 )

We will write a custom essay sample on
The impact of innovation on companies Essay
or any similar topic only for you
Order now

As concerns grow and expand beyond their topographic point of beginning, they tend to get more rivals in any industry they operate and in bend have to happen ways to efficaciously stretch their nucleus competences in order to vie with their new challengers or develop new competences, most of the clip with the usage of engineering. The procedure of invention is a extremely complex series of stairss which is slightly disorderly, hard to mensurate and requires a high degree of proficient cognition ( Kline and Rosenberg, 1986 ) and this clearly depicts at that place legion dangers involved in the invention procedure.

Besides one may inquire, how will altering a merchandise or service or the method of its production give a company a higher competitory advantage ( Utterback and Suarez, 1991 ) when compared to its opposite numbers who have chosen to keep the status-quo, besides why would any company want to alter a expression that has worked for them over a long period of clip. The construct of invention has long been studied by legion bookmans with a of batch diaries and articles written on it, but this paper will try to understand what invention means to a concern runing on a planetary forepart by offering instance surveies on three of the most advanced companies in the universe and in that light happen out how their invention has impacted their operations and activities, and whether it has increased their competitory advantage in comparing with their less advanced rivals.

What is Innovation?
Since the morning of clip big companies or houses have existed for two major grounds, endurance in the long tally ( Utterback and Suarez, 1991 ) and net income maximization in the short tally through obtaining a high market portion of their consumers. With the increasing effects of globalization partnered with the continuously shriveling economic distance and the rapid technological alterations happening ( Lall, 2001 ) , companies now find themselves viing on a planetary graduated table.

The increased graduated table of competition has created the demand for companies to germinate in their activities and increasingly turn beyond the status-quo and this is where the demand for engineering arises. In laic adult male footings, invention in concern can said to be a positive alteration in the methods of production or the creative activity of a whole new merchandise. Mulgan and Albury ( 2003 ) define invention as the successful creative activity and execution of new procedures, merchandises, services and methods of bringing which consequence in important betterments in outcomes efficiency, effectivity or quality ( p3 ) . The OECD define invention as:

Dwelling of all those scientific, proficient, commercial and fiscal stairss necessary for the successful development and selling of new or improved manufactured merchandises, the commercial usage of new or improved procedures or equipment or the debut of a new attack to a societal service ( 1981, 15-16 ) .

Nord and Tucker define an invention as a pattern or engineering which is being utilized for the first clip by a house or administration, irrespective of whether it has been implemented by other houses ( 1987, cited in Klein and Sorra, 1996 ) . In the words of Kline and Rosenberg, who coined the term “ commercial invention ” in order to clearly admit that the construct is been seen from a concern angle ( 1986 ) ;

“ The procedure of invention must be viewed as a series of alterations in a complete system non merely of hardware, but of the complete market environment, production installations and cognition, and the societal contexts of the invention organisation ” ( p275 ) .

Large houses have ever found themselves at the head of technological discoveries and the diffusion of a freshly acquired cognition ( Patel and Pavitt, 1992 ; Cantwell 1994 ; Nonaka and Takeuchi, 1995 ; Roberts 1995 a and B cited in Gerybadze and Reger, 1997 ) . Most concerns create and run a research and development sections, which are charged with the undertaking of researching the possibilities of making and using new engineering in their operations in order to either make a new merchandise or a new method of production. Innovation is non merely the creative activity of a new merchandise or a alteration in the production procedure, put in the words of Kline and Rosenberg ( 1986 ) ;

“ There is no individual, simple dimensionality of invention. There are, instead, many kinds of dimensions covering a assortment of activities. We might believe of invention as a new merchandise but it may besides be ; an betterment in instruments or methods of making invention, the permutation of a cheaper stuff, the re-organization of production, internal maps or distribution agreements taking to increased efficiency, better support for a given merchandise or lower cost ” ( p279 ) .

Invention may besides be development of accomplishment by a peculiar house, through uninterrupted acquisition and modus operandi job work outing activities ( Loasby, 1998 ) which will finally go a benefit to that concern. None the less, the most recognized signifiers of technological alteration in the concern universe are merchandise invention and procedure invention ( Dicken, 2007 ) . Product invention occurs every bit shortly as company starts making new trade goods, for many organisations making a new merchandise is a cardinal way by which they adapt or sometimes transform themselves in their changing environment ( Woomack, Jones and Roos, 1990 ; Doherty, 1992 ; Brown and Eisenhardt, 1995 ; cited in Eisenhardt and Tabrizi, 1995 ) , Dicken ( 2007 ) , believes that one time a concern environment becomes extremely competitory, the steady creative activity of new merchandises will help in keeping a house ‘s net income border and in the long tally possibly its endurance ( p93 ) . Process invention on the other manus involves developing new, efficient and cheaper agencies of production while still keeping the needed degree of quality.

The demand for concerns to undergo a uninterrupted procedure of invention can non be stressed adequate and due to intense competition, along with fast altering markets and engineerings, houses now tend to be more cognizant of this fact ( Harvard Business Review, 1998 ) . As concerns grow within certain parts, gather together and organize bunchs, there will be given to be an exchange of information among houses runing in different Fieldss of the same industry or the similar Fieldss, these concerns invest in research and development now, non merely to make new thoughts but to go efficient in the usage of the free fluxing information in their environment ( Cohen & A ; Levinthal, 1989 ) .

Investing in advanced activities will lift as a consequence of the complex and changing procedures involved for successful invention ( Kline & A ; Rosenberg, 1986 ) , the procedure of analyzing an industry ‘s environment while researching on new engineering and efficient ways of its use can turn out to be a really boring procedure. There has ever been some kind uncertainness in invention due to the hazard involved of either making a new merchandise or using a new signifier of engineering in the production procedure, but following the infinite sum of elaborate research performed on different companies runing in different parts of the universe by Michael Porter and Class new wave der LInde, it was revealed that the companies which were internationally competitory were non those with cheaper input or big graduated table, but those which were capable of uninterrupted betterment and invention ( 1995 ) .

Impact of Innovation on Companies Operating Globally: A Study of Apple Computer Inc. and Wal-Mart Stores Inc.
The increasing usage of engineering by concerns can be clearly observed in today ‘s with companies who are n’t even engineering based developing ways to use new thoughts in their activities or production procedure.

Before the economic downswing, American companies dominated most industries with the most advanced houses but with the economic system ‘s slow and gradual return, we can happen that American companies are no longer the “ be all and stop all in invention ” ( Businessweek, 2010 ) .

*Wal-Mart was does non fall under the 10 companies but is included for the interest of this paper

Table 1: Datas from Businessweek ; 50 Most Advanced Companies, 2010.
The tabular array above shows the 10 most advanced houses for the twelvemonth 2010 along with a 4year analysis of their gross, stock and their operating border, but the interest of this paper I am traveling to concentrate on Apple, Wal-Mart and Sony, so effort to happen out the impact of their invention on the industry they operate in every bit good as themselves over clip.

Case Study on Apple Computer Inc.
“ Invention distinguishes between a leader and a follower ” Steve Jobs, Apple Computer Inc. CEO.

Apple Computer Inc. is located in Silicon Valley and is a quintessential venture-capital-financed high-technology house ( Nonaka & A ; Kenney, 1991 ) . As at 1977, the clip of Apple ‘s construct, the Personal computer industry was dominated by the IBM Personal computer and Microsoft ‘s Windows Operating system. Apple was characterised by its idiosyncratic and go-alone scheme and was celebrated for non leting its engineering to be utilized by other Personal computer shapers ( West, 2002 ) . Apple placed itself steadfastly in the Personal computer industry and showed its capacity for invention by the 1984 release of the Macintosh Apple, which was the first of all time mass-market Personal computer with a in writing user interface ( GUI ) ( West, 2005 ) , at this clip, what differentiated Apple from all other competition was the fact that they created their ain package along with the hardware that ran it every bit good. Apple Godheads Steve Jobs and Stephen Wozniak did non believe the Personal computer should merely be a work tool, but should be fun as good and it was this thought that led to the first successful usage of the mouse to interact with the Personal computer ( Markides, 1997 ) .

In 1994 Apple was forced into licencing its merchandises out to other companies due to high beads in gross and this in bend led to a loss in their market portion as these companies produced similar merchandises at cheaper monetary values ( West, 2002 ) . Although being a extremely advanced company, Apple faced legion issues in the Personal computer industry where it suffered a high degree of losingss and finally had to alleviate its so CEO John Sculley of his place and re-empoy Steve Jobs as CEO in July 1997 ( West, 2005 ) . Apple Inc. went through a monolithic makeover with the return of one of its initiation male parents who came in with a series of extremely advanced and profitable merchandises, and finally diversifying into other markets and changing Apple ‘s major merchandise in the procedure.

“ With the release of the iMac on August 15, 1998 Apple was able to set to rest some its past failures. These failures included the first Apple Portable, which was bulky and awkward and the Newton, Apple ‘s first effort to come in the PDA market. In 2001, after several old ages of development, Apple released Mac OS X, an operating system that targeted both consumers and professionals. Mac OS X was a complete redesign from Mac OS 9 and was able to tackle the power of UNIX while offering a streamlined user experience with a simplified GUI ( Graphical User Interface ) . The iMac line of personal computing machines paired with Mac OS X returned Apple to profitableness and the release of the iPod portable digital sound participant subsequently that twelvemonth was the frost on the bar. The phenomenal success of the iPod set the phase for future merchandises, including the best-selling nomadic device in history, the Apple iPhone, the MacBook line of portable computing machines, and the Apple iPad which was released on January 27th 2010. ” ( Dougherty, 2010 )

Apple has experienced success in most recent merchandise releases coupled with monolithic growing in gross revenues and gross as shown in 2007 when the gross revenues of their Mac scope shot up by 37 % ( Piero, 2010 ) , while commanding merely 7.4 % of the American market portion as at the 4th one-fourth of 2009 ( Foreman, 2010 ) . With the uninterrupted release of new and exciting merchandises along with their entry and unusual laterality of the nomadic phone industry and their actual creative activity of the tablet Personal computer market with the release of their iPad device, it is apparent that Apple is a company that has achieved high quality through rapid and changeless invention and will go on to earn a repute that is far out of proportion to its size or market portion ( West and Mace, 2007 ) .

Case Study on Wal-Mart Stores Inc.*
Wal-Mart Stores Inc. is the encephalon kid of Sam Walton which was made a world in 1962 when the price reduction retail merchant was opened. Sam Walton operated merely in little towns which allowed them run their operations on a little graduated table, in relation to their bigger and better resourced rivals. The enlargement of Wal-Mart was a slow and gradual yet efficient procedure, the company grew at a gait which Sam Walton could easy pull off and be actively present in most activities. Wal-Mart operated as low cost scheme which was difficult to keep due to the deficiency of a suited working relationships with providers and distribution concatenation, providers saw Wal-Mart as a minor participant in the retail industry and treated them as such. In order to minimise costs Wal-Mart utilised perpendicular integrating by constructing their ain warehouses and obtaining their ain trucks for transit, with this and the usage of their Everyday Low Price Strategy ( EDLP ) which saved them a big sum of financess that would hold been spent on advertisement, Wal-Mart was on its manner to obtaining market leading.

The 70 ‘s proverb a alteration in Wal-Mart ‘s corporate nature as the company went public, in order to spread out beyond its 30 shops and raised about $ 5million in the procedure. In less than 25 old ages, Wal-Mart had risen to go the largest American corporation in footings of gross revenues. With over $ 374 billion in gross, Wal-Mart had overshadowed all competition in its place market and is proposed to hit half a trillion dollars in gross within the following decennary ( Upbin, 2004 cited in Hesterly, n.d ) . Wal-Marts success can be attributed to its low cost scheme and its intense usage of engineering in its operations. Technology investings in sophisticated stock list, direction systems, province of the art distribution Centres, and other facets of logistics were n’t seen as really of import countries of the retail industry. Wal-Mart had pioneered the usage of engineering in the retail industry and still possesses important advantage over its rivals. The usage Electronic Data Interchange ( EDI ) to shorten distribution rhythm, by supplying a direct transportation of gross revenues information straight from the discount houses register to the providers ‘ computing machines. Wal-Mart was the leader in hammering EDI links with providers with its Retail Link System which provided stock list information for over 3000 shops to about 3000 sellers ( Standard and Poor, 1998 cited in Hesterly, n.d ) . In 2003, Wal-Mart one time once more showed its repentance for technological enterprise with its push for the usage Radio Frequency Identification ( RFID ) by all providers, in order to track stock list more exactly than the traditional methods, although the usage of the RFID was non widely accepted it was shown to salvage Wal-Mart up to $ 8 billion in costs. At the bosom of Wal-Marts success remains its distribution and logistics system which had been born out of the demand to serve so many shops in little towns while keeping low costs, as a consequence of this, Wal-Mart created and utilized their ain distribution Centres which used a cross-docking technique. In cross-docking, goods were delivered to distribution Centres and frequently merely loaded from one dock to another or even from one truck to another without sitting in stock list, the cross-docking technique reduced Wal-Mart ‘s cost of gross revenues by 3 % in comparing to rivals who no affair how much they attempted could non absolutely retroflex the technique.

Wal-Mart, though operating in a service oriented industry laid their accent on invention and uninterrupted betterment, and this can be traced back to the old yearss when there were either no computing machines or they were non low-cost, so Sam Walton would maintain a leger of steps on several variables for each shop, the outgrowth and efficient use of information engineering enabled Wal-Mart to widen its accent on information and measuring and transform this into success and huge planetary growing.

*Case created by Dr. William Hesterley for the intent of a category treatment
Case Study on Sony Electronics Inc.
Sony Electronics Inc. is a well-known electronic company formed in 1946 in the post-world war two epoch by Masaru Ibuka and Akio Morita under the so name Tokyo Telecommunications Engineering Corporation ( Kenan, n.d ) .

From the beginning, Sony ‘s original direction policies revolved around merchandise invention and the company strived to do consumer electronics which were compact in size and extremely portable ( Vila and Mitchell, 2007 ) . After their 1950 release of Japan ‘s first tape recording equipment ( Kenan, n.d ) Masaru Ibuka travelled to the United States in order to market this innovation, which was Sony ‘s first major merchandise ( Chaudhuri, 2007 ) and comparative success. Sony finally became known for their advanced and consumer friendly merchandises, in 1955 after they obtained the license for the transistor for Western Electronics ( Chaudhari, 2007 ) and went on to make Japan ‘s first transistor wireless the TR-55 and a batch of other extremely advanced merchandises including the universe ‘s first direct-view portable telecasting set, the TV8-301 in 1960, along with the universe ‘s tiniest all transistor telecasting set in 1962, the universe ‘s first blu-ray phonograph record participant in 2003, and in 2005 they were credited with constructing the universe ‘s smallest picture camera which besides shot in high definition ( Kenan, n.d ) , but the merchandise that made Sony a family name and reckonable force in their industry was the Walkman.

The Walkman was produced in 1979 and was a monolithic hit with consumers, the merchandise was non the first of its sort, with tape recording equipments already bing long before its arrival – but it was an progress in selling, produced non for journalist professionals but for the norm and common user as a the first portable music participant ( Hormby, 2006 ) paving the manner for Apple ‘s iPod and Microsoft ‘s Zune. The Walkman created a cultural impact instantly going a extremely sought after trade good by everyone irrespective of age or state ( Du Gay, Hall, Janes, Mackay and Negus, 1997 ) , in the words of Akio Morita ;

“ This is the merchandise that will fulfill those immature people who want to listen to music all twenty-four hours. They would take it everyplace and wo n’t hold to care about record map. If we put a playback-only earphone stereo like this on the market it ‘ll be a hit ” February 1979, Sony Headquarters ( Bellis, n.d ) .

Beyond the civilization specifying epoch of the Walkman series, Sony continued to demo its ability to convey dream into worlds with the release of its Sony Discman or CD Walkman series, which utilized the already turning compact disc format. The Discman besides included some series with wireless and response ( Hassan, 2010 ) . In recent old ages Sony has diversified into the nomadic phone industry with its joint venture with Ericsson and besides the gambling industry with its widely popular console the Playstation, which saw an addition in gross revenues in 2010 ( Mokey, 2010 ) . From a company started with less than 1500 dollars ( Kenan, n.d ) , Sony as at 2006 boasted of a world-wide gross revenues figure of 63.9 billion dollars ( Cahaudhuri, 2007 ) and has now been at the head of technological discoveries for the past 64years while still staying a extremely profitable and dependable trade name name in the consumer electronics industry and with their background based on changeless merchandise invention and a uninterrupted hunt for new engineering, Sony Electronics Inc. will stay a extremely regarded company for more old ages to come.

There have been legion diaries that have attempted to pull out the relationship between invention and the public presentation of a house or concern ( eg. Feeny and Rogers, 2001 ; Loof and Heshmati, 2001 ) and it can besides be seen from these diaries that advanced houses are among the most efficient in their industries and can besides come in into other with small to no issues. A direct linkage can be seen between a house ‘s public presentation and its degree of utilised engineering, Geroski ( 1994, p130 ) sums up that invention can act upon a house ‘s public presentation in two ways:

The first is of the impression that the creative activity of new merchandises or procedures of production will beef up a house ‘s competitory place in relation to its challengers. But the net incomes and growing will be ephemeral and merely last every bit long as the innovating house can support its place against challengers. The 2nd position argues that the procedure of invention alters a house basically by heightening its internal capablenesss, doing it more flexible and adaptable to market force per unit areas than non-innovating houses ( cited in Neely and Hii, 1998 ) .

Invention is the cardinal to competitory advantage in a extremely disruptive environment, and has direct effects to a house ‘s ability to vie due to the value it creates by developing new merchandises or new methods of production ( Neely & A ; Hii, 1998 ) and there is an obvious relationship between the strength of competition and advanced activities ( Bonanno and Haworth, 1998 ) .

Looking at Wal-Mart Stores Inc. , Apple Computer Inc. , and Sony Electronics Inc. , all companies occupy or at one clip occupied the market leader place in a specific industry or more and are besides recognised as extremely advanced houses, these similarities are far from happenstances, both Wal-Mart and Apple rank in at Numberss 1 and 56 severally in the Fortune 500 list and were two of the most profitable companies of the twelvemonth ( Fortune, 2010 ) , besides looking at the Table.1 it can clearly be seen that the companies listed are either the market leaders in their industries or highly strong and quickly turning rivals.

Invention from all this can be said to hold a positive impact on the productiveness and efficiency of concerns, be it a fabrication or service supplying house. All houses should be involved in advanced activities despite the hazards involved and the high costs of puting in engineering I can state that the houses that will come out on top in the race to be planetary leader in their several industries are those that embrace engineering and its utilize it expeditiously in their activities.


Hi there, would you like to get such a paper? How about receiving a customized one? Check it out