Innovation Flashcards
What is innovation
Forming new ideas in regards to improvements in either the products or processes within a business
What is product innovation
Making new goods/services or improving existing ones.
What the customer sees from a business
What is process innovation
Putting in place new or improved production and delivery methods.
What the employees of the business sees
What are the reasonings for innovation
Allowing businesses to:
- stay ahead of competition
- expand their markets
- increase their market share
- prevent strategic drift in dynamic markets (Technology)
What are the benefits of innovation
- initial ability to charge high prices for their products/services before competitors (first mover advantage)
- improves firms reputation - people will naturally be interested in product launches where they are capable of successful innovation
- can help add value to existing products/services
- take advantage of economies of scope
Drawbacks of innovation
- very costly and time consuming
- potential for wasted resources by creating products too quickly and of goods customers do not want
- businesses may not be able to produce large scale goods whilst keeping the costs low (not gaining from economies of scale)
- risks of poor quality and ruining reputation
How does innovation affect finance department
- Increased need for research and development
- R&D is very expensive
- need to raise working capital through selling assets, retaining profits, debt factoring etc.
How does innovation affect the operations department
production innovation:
- need to purchase new machinery
- organisation of training
- KAIZAN
How does innovation affect the marketing department?
Increased need for market research resulting in higher costs and overall risks
Requires changes to the marketing mix (People, process, physical environment, place, price, product, promotion.
How does innovation affect HR
- may affect staffing needs (more skilled specialist staff? )
- Need for the right culture (scared employees?)
- need to find ways of encouraging employees (rewarding those who are trying the innovative ideas)
What are the 6 stages of new product development
- Idea= brainstorming, employee suggestions R&D meetings
- Analysis and screening= is there a market? is there profit to be made? do we have the right resources?
- Development= working prototype
- Value analysis= how to price the product in accordance to the resources put into it
- Test marketing= selling the products to limited areas of the market and receiving customer feedback
- Launch= having the right amount of stock to distribute the product across the market.
What is KAIZAN?
encouraging employees to improve the way they work and the processes they use all the time
small changes which add up to innovation
What does KAIZAN require
- freedom for employees to make decision making
- encouraging workers to make decisions which improve the business
- creative employees
What are the benefits of KAIZAN?
- drives the business towards innovation
- allows an insider insight as employees are involved in the everyday running of the business
- not a lot of time or money spent on research and development
- more efficient (lack of large risk)
What are the drawbacks of KAIZAN
- probably won’t lead to innovative products as employees aren’t encouraged to think about the needs and wants of the consumer
- workers focused on improving their own job rather than looking at the whole picture
- DOESNT work well when there is a need for large innovative decisions to be made
