innovation imperative economics of scale

8/12/2019 Innovation Imperative Economics of Scale

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*his product launch is clearly aimed at changing the mind)set of

prospect customers that 1yundai products has improved greatly

and is better of than its /apanese competition.

iv. &aradigm innovation '

a. 6ow -ost 7light as in Air Asia and 7ire 7ly ) cheap and

economical flight fares with everyone can fly tag)line.

b. Double dec3er e$press buses ' comfortable for long haul

5ourneys. 0ew in +alaysia but normal in developed countries.

c. 8antry toll collection system providing for fast and save method

of collection.

9. $he low%cost airline approach has massively chan!ed the way people

choose and use air%travel & and has 'een 'oth a source of !rowth

for new players and live%threatenin! challen!e for some existin!

players. (hat types or innovation have 'een involved in this?

Answer:

In this particular case, it involves all the four #"% types of innovation:)

a. &roductervice innovation ' this is the way the product is offered to its

potential customers.

b. &rocess innovation ) this involves the process or handling of passengers

from tic3et boo3ings, chec3 ' in, embar3ation and disembar3ation, the air)

ports terminals #6--*% together with cabin services etc.

c. &osition Innovation ' the advertising and promotional activities

d. &aradigm innovation ' it changes the mindset of travelers that air travel is

reserved for the rich. It is cheap and in some cases cheaper than land or

sea transportation when it allows for daily commute compared to staying

overnight.

CHAPTER 1 The Innovation Imperative

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Assignment and Case Study Questions

1. )ector Innovation *atterns & +hildren $oy ,anufacturin!

Major Changes in the industry Major New Technologies

Main market demands

and how technology

affects them

How to become a

market leader

ig influence of *; and films '

increasing tie)ins


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*he industry has evolved along with the biggest single influencing

media that is electronics. 7rom *; to computer consoles to

wal3man and +&> to handphones with its multiple functions.

*he handphones is becoming a mini computer with all the multi)

media capabilities built)in.

?hat new technologies have emerged

+ulti)media, interactive and miniaturi4ation technology

Interactive technology allows communication with modern toys

thereby ma3ing them appear alive!. +ulti)media capabilities

together with miniaturi4ation technology provide for unthin3able

possibilities as before.

?hat are the main mar3et demands ' #price, quality, design,

customi4ations, speed of response etc%

*rice ) prices have gone down drastically with each advance in the

technology.

+ustomi-ationis provided for with the advent of programmable

chips. 8reater customi4ation is allowed with micro)computer

technology.

Quality and Design improves e$ponentially during the last decade.peed of response is very competitive with each ma3e establishing

its own service centres and online connectivities.

*he most important observation is that all ma3es are almost at par

in terms of product technology, quality and user)friendliness. *he

superior or inferior quality associated with each ma3e or brand is

fast diminishing, whereby every ma3e showed no clear advantage

in terms of quality.

1owever the deciding factor is the ability to provide product

innovation fast using available technology and understanding the

mar3et trends.

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If a new entrant came into the industry what would he or she have to offer

to become a mar3et leader

*he most important factor to become mar3et leader is product

innovation. *he new player has to capitali4e on the four dimensions of

innovation:)

&roductservices

) using latest technology a new player must be able to

offer innovative product eg latest state)of)the art

mobile phone with hologram pro5ection, interactive

multi)player game or even programmable remote

controller.

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CHAPTER 1 The Innovation Imperative

-ase tudy Questions

1. ookin! at the case study try and identify which of the chan!es are architectural and which are component.

(hat are the implications for different players in terms of the likely threat to them and the ways in which they

could respond?

Likely threat Likely opportunity Why

Architectural

nno!ation

Component nno!ation

&layer 9 ' -opy

right holder

Illegal distribution and

sharing of artistic materials.

6oss of sales and therefore

cannot pay out royalty

Affiliation with computer

companies to produce

new low)price web)based

products

eg i*unes

'@eviews and

-ommentary

6ooses authority andpatronage

8eneral consensus.@educes bureaucracy and

favoritism

@eal time consensus madeavailable

2n)line internetforums

ser groupswebsites

&layer > ' +usic

Industry

ncontrolled ;iral

mar3eting! and &&

transaction

-heap and fast spreading

advertising across the internet

Incur less advertising costs

2pen -hannel for all to

participate.

-hain reaction spreading of

information

Internet e$change -omputer

oftware Application

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An established

record company

A newcomer

wanting to offer

entertainment on

the web

A music publishing

company

#responsible for

copyrights on sheet

music, etc.%

7reelance song

writer

Is the change

competence)

enhancing

0o Ees 0o Ees

?hy +ay loose his

business due to

high capital outlay

but cannot secure

sales off the shelves

*he web offer an

open channel for

business round

the cloc3 and

across the globe.

0eed to affiliate

with subscription)

base service

provider to create

revenue

Difficult to curb

illegal distribution

and piracy

1ave a wider client

base. 0ot binded

by legal contracts

Is the change

competence)

destroying

Ees 0o Ees 0o

?hy +ay not be viable to

e$ist anymore

*he web offers

unlimitedopportunities.

6imited by own

creativity only

urvival is at ris3 2pportunity to

e$pand worldwide

?hat might you do

about this to secure

and improve your

position

;enture into e)

business.

&rovide for internet

base music

distribution. /oint

venture with internet

service provider

-apitalise on viral

mar3eting

tudy into e)

distribution of

musical digital

formats. &rovide

consultation and

solicitation.

Develop world

music for the world

listeners

>. +an you map the different kinds of innovation in the case study? (hich

were incremental and which radical/discontinuous?

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& shifts in what people want and are prepared to pay for? r is it a mixture

of 'oth? (hat lessons mi!ht that offer to someone wantin! to enter the

industry as a new player? 2nd what mi!ht an esta'lish player do to

preserve their position?

Answer:

*he revolution in the music industry is a result of mi$ture of the

development of new technologies as well as changes on the demand

side. 0ew technologies brings about changes in the delivery methods

#process innovation%. 1owever, the shift in demand is a direct result of

free distribution and sharing of music pieces.

*he introduction of low)priced internet downloads has provide some

incentives for persons involved in the musical industry. *his presents

a benefit to the general public whereby the cost of purchasing a

musical piece is greatly reduced. *he internet has opened up the

possibility of participating in music business to many and at the same

time lowering the entry barriers into the music industry. *herefore therevolution in the music industry brings about opportunities and

possibilities to everyone.

6essons for the new player:

i. must have talent

ii. innovative mar3eting

iii. go global through internet

iv. use creativity to innovate in terms of product or services,

innovative processes, innovative introduction or lauching of

products and strive for paradigm innovation or creating a new

trend.

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6essons to to the establish player:

i. must have creativity

ii. innovative mar3eting

iii. continuous improvement in quality music materials and quality

recordings

iv. search for new talents and business related technology

v. provide for motivational and improvement courses to staffs

vi. establish 5oint)ventures with I* service provider

vii. engage competent consultants to provide guidance

viii. establish research team or unit within the establishment.

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innovation imperative economics of scale

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