Innovation (Quick Revision)

Question 1

Define: Innovation

Answer 1

Innovation is when new product or process ideas are successfully launched in a market.

Question 2

How can a firm protect a new product idea? Explain.

Answer 2

Patent;

The firm registers this and then others cannot produce the product without its permission.

Question 3

Would you expect the demand for a innovative product to be price elastic or price inelastic? Explain.

Answer 3

Price inelastic;

There may not be many alternatives.

Question 4

State two benefits of innovating.

Answer 4

• May develop a unique selling point

* May be first into a market and therefore able to charge more

Question 5

State four ways in which a firm might encourage innovation.

Answer 5

• Provide enough funding
• Do not punish failure
• Encourage employees to come forward with ideas
• Include innovation in the firm’s objectives

Question 6

What is the Examiner’s note for Innovation?

Answer 6

Innovation enables firms to stay ahead of the competition, but it can be costly and take a long time.

Question 7

What is the Evaluation point for Innovation?

Answer 7

The importance of innovation depends on how rapid the rate of change is in the industry, and on the degree of competition.