Essay Example on Product & Process Innovation: The Essential Link to Industry Life Cycle

Introduction

An essential link between product and process innovation and the industry life cycle exists. The product and process innovations undeniably constitute the most type of innovation. Product innovation refers to the change in the product. It can broadly imply the improvement associated with the performance of a product. For instance, the new iPhone 7 is made up of dual cameras, which did not exist in the previous versions. The process innovation, on the other hand, refers to the improvement of the process involved in product production. For example, Apple Inc. has been able to improve its inbound logistics, media planning, and its entire manufacturing process. Product and process innovation lead to dominance in design, which is one driver of the industry's stability. It promotes the shakeout and reduction of competition, which forms an integral component of the industry cycle. The process innovation has been shown to help companies strengthen their positions within the industries based on the cost structures associated.

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The stability of the industry makes innovations in moving from major to incremental ones. Ideally, this is the part of the industry cycle where most profits are made. Additionally, the risks are taken by the company in the early stages of beginning to present disappear at this stage while the innovation proceeds, in this case, the direction of change moves beyond the product and innovation. Most companies focus on innovation channels, packaging innovation, financial innovation, and commercial innovation. Interestingly, this continues in a cyclic manner in the industry until the next discontinuity occurs.

Benefits of being a late mover in a fast-moving industry

In this case, the late-moving concept refers to a situation where a business adopts a wait-and-see approach to enter a new market. This is purposely done to enable the company to enter the market and establish its position with a completely new business concept. The late-moving idea has several advantages. Firstly, the company can observe some of the latest methods and technology that is adaptable and effective, instead of just taking risks. In this way, a form has the opportunity to evaluate how well an idea or concept is viewed and received by the general consumer being involving itself. In this way, therefore, companies are better placed to reduce the number of risks as well as the amount of research and development focused on assessing public perception. In other words, the late movers can learn from the encounters of the early movers.

Studies have also reported that late-moving allows companies to observe the trials implemented by the early movers and make the necessary adjustments before becoming fully involved. This strategy helps the company to minimize the possibility of reducing the investment dollars and consequently get the opportunity to introduce its improvised version of the approach available in the market. Fascinatingly, this approach can make the late-moving business portray as more innovative or cutting edge despite lacking the pioneer status.

Finally, the late-movers may also the opportunity to avoid any potential risks associated with investing the product into the market place. The advantage of making a strategic market observation regarding the manner in products and price feature enables the firm to be functionally relevant in the industry. As a result, the company may find itself investing less time and financial resources in product development. This further helps establish a prototype through market analysis and identification of the appropriate audience of the product.

Challenges faced by late movers

While it is evident that late moving as several strategic advantages, there are numerous challenges that they can also face the incumbent firms. Studies have shown that the incumbent companies may set the standards for particular products or services within an industry, thereby making it difficult for the company to compete with a subjective standard. This explanation is based on the fact that imitation is expensive, and not all firms can adapt to the standards created for given products. The last-mover is also likely to suffer from the lag that exists between the initial research and development, as well as the product introduction, which can be expensive.

It is further necessary to note that customer loyalty for the newly introduced products and services will be more significant for the first movers. The competitiveness and the market for the first movers are usually entrenched on the loyalty of their customers. As such, the criticality of customer loyalty to the first movers will prevent the second movers from capturing a substantial market share. One of the significant examples of this is Citibank. The importance of customer loyalty, in this case, demonstrated a tremendous success for Citibank and Bank of America in the South American regions.

In some places, the first movers have been reported to establish barriers, especially in the markets they serve. For instance, Citibank and the Bank of America created such barriers in South America by acquiring local banks, establishing a partnership with Visa International, and developing new banking approaches such as internet banking. These barriers prevented the late movers from making any meaningful or significant innovations that could match and meet the demands of the customers.

What is Governance?

The importance of governance in today's business world cannot be underestimated. Notably, governance plays a crucial role in the achievement of the new frontier of profitability as well as the competitive advantage. Broadly, governance refers to a system of rules, practices, and processes that a company directed and controlled. Corporate governance, therefore, involves balancing the interests of the company stakeholders who include the management, shareholders, suppliers, government, and the community. Based on the fact that corporate governance divides the framework for achieving the company's goals, it consists of every component of the management, from the action plans and internal controls to the corporate and measurement disclosure.

Corporate governance can further be described to involve the company's performance of the board and the relationship that exists between the management and the board. For effective management, the board members and responsibilities must be spelled out. This will help the management to align the key responsibilities with the objectives of the company. It is critical to note that good governance in an organization provides firms the opportunity to succeed and undergo economic growth. Studies have shown that robust corporate governance is essential to maintaining the confidence of the investors. As such, businesses can raise capital more efficiently.

Dominant Approaches to Governance

The two approaches to governance include the rule-based approach and the principle-based approach. Ideally, both approaches are tailored to the control and direction of organizations. The rule-based approach is primarily based on the view that companies are required to comply with the established principles of corporate governance. On the other hand, the principle-based approach to corporate governance is an alternative to the rule-based method. It is primarily based on the view that a single set of rules is inappropriate for every organization. It is critical to recognize that the circumstances and situations vary from one company to another and can change over a time

It is essential to note that both approaches greatly influence both strategy formulation and evaluation. As part of the strategy formulation, the management will get the opportunity to articulate their visions more effectively, identify their stakeholders, assess their internal and external environment, and define their SWOT to generate a tremendous competitive advantage. Thus, the evaluation will become significant based on various factors, such as the ability to develop the inputs for strategic news planning, reward and appraisal, and strategic management development.

Role of stakeholders has in the selection of strategy

The stakeholders form an essential part of any company. Ideally, stakeholders refer to a group of people or organizations with vested interests in the affairs and success of a given organization. This group encompasses employees, supply chain partners, community members, as well as the agencies that depend or serve the organization. Research has suggested that each stakeholder has a unique perspective regarding things that will enable the company to succeed to the next level. For instance, the employees are a group that is tremendously aware of the organization's strengths and weaknesses. Thus, hey can be involved at a certain level of decision making. For a business to succeed, there must be a well laid down strategy. Therefore, stakeholders play a critical role in the selection of plans to enable the company to achieve. One area of the strategy selection process where stakeholders can play a crucial role in the planning stage. They can help in the assessment and evaluation of some of the recommended strategies for the overall vision of the organization. Broadly. They can help draw a clear roadmap and support the organizations' decisions and commitment towards the desired outcome. No company can indeed succeed without a clear roadmap. Thus, the involvement of the stakeholders will help the management understand the available options to achieve the desired goals through the use of specific strategies.

What is the meaning of Stuck in the Middle?

A company is ‘Stuck in the Middle’ if it is unable to provide or offer enough features to convince the customer to make purchases of the offerings. Additionally, it also applies to a company that charges high prices and thus unable to compete effectively based on the price.

When being 'Stuck in the Middle' incident can happen.

Broadly, Stuck in the Middle position occurs when an organization designed to operate at a low cost begins to add extra frills, which does not reflect the amount of the value that customers have on the product. Under these circumstances, the business can suffer the cist based on the fact that the views of the customer are not reflected or incorporated into the frills. In most cases, therefore, a differentiated product business is subjected to tremendous pressure on prices.

A firm Stuck in the Middle thus suffers from an unclear corporate culture and a different set of company arrangements and employee reward system. Michael Porter of Harvard Business School provided a discussion of the concept of stuck in the Middle. In his view, the profitability of a business relies not only on the ordinary rates of return, but also the position of the firm and its competitive advantage within the industry. In this way, the competitiveness is derived mainly in two ways: product differentiation and cost leadership. American Airlines recently filed for bankruptcy after being stuck in the Middle.

Additionally, companies such as the GM and Chrysler called for a government bailout in 2009 after being unable to make profits through cost leadership and product differentiation. On the other hand, Walmart Stores Inc. has been successful in implementing the cost leadership strategy effectively. The stores have been reported to attract a large number of buyers through their low prices offered for any product sold by the store directly to their clients.

How does the strategy clock address some of these issues?

Bowman's Strategic Clock refers to the model that explains the options for s...