innovation Flashcards
(36 cards)
what is innovation
innovation comes in the form of a new idea and putting it into action. this could be in the form of a new product or a new process.
product innovation
making new goods/services or improving existing ones
e.g. car manufactures are constantly innovating new features to put on their latest models.
process innovation
putting in place new or improved production and delivery methods.
e.g. in 2007 amazon prime was launched in the uk
why do businesses want to innovate
businesses are always looking for ways to innovate as it can help them to stay ahead of competition, expand their markets and increase their market share.
where do new ideas come from
new ideas can come from anywhere in the business, but many businesses have a research and development department that drives innovation.
benefits of innovation
- can initially charge higher prices for innovative products and services before their competitors bring similar products to market.
- can be good for a firms reputation - if they’ve been the first to launch exciting new products in the past, people will naturally be interested in their future products.
drawbacks of innovation
- can be a very costly and time consuming process as the businesses risks running out of money if the invest too much in R&D and dont get products to market quickly enough.
- can end up wasting resources by developing something customers dont want.
- risk ruining their reputation if the innovative product is poor quality.
innovation affects functional areas of the business
- finance
R&D for innovative products is expensive, the finance department might need to raise extra working capital to pay for it.
innovation affects functional areas of the business
- operations
might mean that the operations department has to set some of its bedget aside to spend on expensive new machinery. also need to organise training for employees to get them up to speed with the new methods.
innovation affects functional areas of the business
- marketing
the amount of market research a company does is increased when researching a new idea - the risks and costs are high, so they need to be sure customers want/need the product. (may use a different pricing strategy like price skimming)
innovation affects functional areas of the business
- HR
- can mean there’s a change in staffing needs - if a company starts heavily focusing on R&D they might need more skilled staff.
- HR also needs to make sure the business has the right culture for innovation to thrive.
- in a culture where staff are scared of
consequences from failing innovation wont thrive - HR needs to find a way of encouraging employees to take risks.
new product development (NPD) has six stages to create and launch a innovative product.
1) idea
- business comes up with new ideas, explores and develops existing ideas/modifies competitors’ ideas.
- new idea could come from brainstorming, employee suggestions or from R&D department meeting.
-also discovered through market research finding out what consumers want, or from customers submitting requests to a firm.
- can sometimes also use already patented ideas (for a fee)
(NPD) has six stages to create and launch a innovative product.
2) analysis and screening
- the business wants to see if the product can be sold at a profit.
- all aspects of the idea are investigated, if there’s a potential market, whether the technology and resources exist to develop it, whether a competitor has an existing patent.
- at this stage a prototype may be made to see what the product will be like.
(NPD) has six stages to create and launch a innovative product.
3) development
- the R&D department develop a working prototype.
- test it scientifically and tweak the design to make the functional design and aesthetic design as good as possible
(NPD) has six stages to create and launch a innovative product.
4) value analysis
- tries to make the product good value for money.
- means balancing the function, features and appearance of a product with the cost of making, warehousing and distributing it.
- the goal is to make a product that is good value for both business and consumer
(NPD) has six stages to create and launch a innovative product.
5) test marketing
sometimes sells the new product in a limited geographical area and then analyses consumer feedback on the product, price and packaging. this allows modifications to be made before a wider launch.
(NPD) has six stages to create and launch a innovative product.
6) Launch
a successful launch requires enough stock of the product to be distributed across the market. also needs an effective promotional campaign to inform retailers and consumers about the product and persuade them to buy it.
a patent is a way of registering and protecting a new invention
-can get patents for your product and the method of producing it - no one else can copy it without a licence from you (and paying a fee)
- patents allow businesses to maintain the unique features of their product as long as their patent lasts. do not have to worry about competitors copying
the more general the patent is the better
if a patent is very specific then it is very easy for competitors to tweak the innovation and get around the protection that a patent offers
trademarks protect logos, slogans etc
- it can be difficult to register some slogans as a trademark, especially those that dont include the companies name
- mcdonalds were able to trademark the slogan ‘im lovin’ it ‘ because of its distinctiveness
- they might have been less successful if they had tried the phrase ‘i love it’
mdonalds golden arches logo (trademark)
- the intellectual property of mcdonalds international property company Ltd and it cant be used by any other company.
- they promote a certain brand image - if the logo was used by other companies it could damage their reputation.
- could also lose profits if consumers went to another company by mistake because it had the same logo
copyright gives protection to written work and music
- its illegal to reproduce other peoples work without their permission
-authors, musicians or their publishers receive royalties (payment) everytime their work is published or played on the radio
what is automatically protected under uk copyright laws
any original writing, music, video, images and photos
what is kaizen
- the kaizen approach to innovation is by encouraging employees to improve the way they work and the processes they use all the time.
- over a long period of time these small kaizen changes can add up and lead to innovation
