Innovation and Technology Management - General Motors - Case Study Example

Innovation and Technology Management Contents Introduction 3 Literature Review and critical analysis: 4 Conclusion 13 Reference List 16 Introduction The project highlights about the significance of innovation in an organisation. When discussing about innovation in an organization, technology becomes one of the core components of this discussion. Technological up-gradation allows a business to expand efficiently and quickly. Successful usage of technology improves the market position of a company. In the 21st century, it is experienced that every firm requires technological innovation to sustain in the market (Nicholson and Snyder, 2009). Companies can target wider groups of customers and expand the business more with proper application of technology. Any organisation without technological up-gradation can fail to sustain in the market place for a longer period of time. The speed at which technology has been creating an impact on the present social scenario has been much faster than the speed at which a business seems to grow. This has forced companies to adapt innovative technologies and search quicker ways so that they are able to catch up with the rapidly changing markets more successfully. The new age of digital technology has had a significant effect on present times and has brought about breakthrough changes in the way of life of people. The contemporary domestic and social setting has been quite fast and dynamic in the given business scenario and seems to be growing at a phenomenal pace. The same has compelled companies to look for new ways to innovate and change their ways of doing business and search for newer products to offer to consumers so as to sustain the competition and cope up with their counterparts in this ever-changing business environment (Business Incubation, 2014). The aim of this paper is to develop insights over the innovation strategy adopted by companies like Samsung and Toyota. Besides that, information about companies like General Motors and Motorola are also provided to show their failure to innovate the business and the resultant downfall. The boundaries to innovation are equally emphasized in this paper. The information’s are provided with academic support. The paper highlights the reason behind choice of Samsung as the most appropriate company for the purpose of research and goes forth to analyse business strategy of the concern. Through a detailed market analysis using the PESTEL analysis tool, the paper establishes significant grounds for the reasons behind the particular innovation strategies followed by the above stated companies. Therefore, the project provides detailed knowledge through literature review about companies that have appropriately used the technology, those companies which failed to technologically up-grade the organisation and the shortcomings faced for the same. Literature Review and critical analysis: Success and failure of firms in technological innovation The South Korean company, Samsung has received the considerable amount of recognition over the last decade. The company is the world leader in terms of cellular technology and television production. Unlike various other electronic companies, the origin of Samsung was not related to electronics but other products. The establishment of Samsung Electronics came into being around the year 1969 (Roll, 2005). Samsung has been synonymous with innovation and rightly made its mark in the cellular and television industries. The South Korean company has brought in changes in the technology to suit the shifting demands of the consumers. The firm is growing fast to transform into a global leader in the electronic division. In the year 1993, Samsung developed the lightest mobile phone, SCH-800 (Delany, et al., 2002). It was available on CDMA networks. In the 20th century the company started developing smart phones combined with MP3 player. Samsung has a 41.6% market share in India and a worldwide market share of 29% for the smart phones (Infoworld, 2014). The smart phones of Samsung helped it to stay in the top position of the global cellular market. The android technology used by Samsung helped the company to win over the cellular industry by a large scale. Galaxy S5 experienced a huge amount of sales in the year 2013(Lee, 2005). In the same year the market share of Apple experienced a sharp decrease. The tablets of Samsung introduced in the year 2010 equally continue to have increased demand (King, 2013). The key to the growing kingdom of Samsung can be attributed to the right usage of technology, a huge marketing budget, global presence and appropriate identification of the customer needs. The South Korean company presents a dizzying collection of devices in myriad sizes and shapes suitable for all budgets (Shaughnessy, 2013a). There are constant innovations within the television industry of Samsung Group. Every year the company manages to launch cell phones and other gadgets with more technological innovations in them. Samsung’s strategy for sustainable competitive advantage has been to gain innovative edge over its competitors. The company has been extraordinary with its resource deployments and market timing. It has allocated desired resources, including finances, to the most appropriate products at a time when there is need for innovation and scope for making a phenomenal market entry (Infoworld, 2014). PESTEL framework of Samsung Political The level of political intervention with Samsung is tremendous as it is deemed to be the backbone of electronics and telecommunication industry. Each minute change in technology is monitored and charged by the government. Economic Macro market factors such as foreign exchange rates, interest rates, growth of society and Gross Domestic Product (GDP) changes of different economies, have a direct impact on cash flows of the South Korean company, which in turn affects strategic decisions. Socio-cultural Consumers’ purchasing power and the standard of living of people in a market determine the product offering and the marketing strategy of Samsung. The financial inflow of the company in a particular market is critical to the success of the company. Technological The technological trend in the market reflects the level of competition present in the industry and also determines the amount of progression required for Samsung. It is of primary importance to be aware of the latest trends in technological changes for sustaining oneself. Samsung upgrades the technology through most modern innovations. Samsung smart phones contain the latest technology which supported the company to take over the cellular market rapidly. Environmental The environmental laws have become strict. Additionally, there are numerous environmental compliances that must be adhered to in order to ensure sustained growth for the company. Currently, energy conservation, carbon footprint and recycled use of materials are the most popular environmental issues in Samsung. For instance the smart phone, E200 ECO is made from recycled corn shells and has a built in solar panel. Legal Legal trends help to determine the kinds of strategies that can be adopted by a company. These trends also determine the legal hindrances and company growth strategies. Lawsuits that have been filed against Samsung by Apple are an example of the drastic manner in which lack of legal environment awareness can affect a business. The Japanese automotive company, Toyota has successfully retained the peak position in the automobile industry (Toyota Motor Corporation, 2014). Whether it is automobile specification, environmental concerns or manufacturing process, Toyota always tries to increase the fuel efficiency, safety, sustainability and performance of the vehicles (Porter, 2002). The models and designs of the cars are made as per the changing tastes of the consumers. The vehicles ranges from sports to family oriented car concepts. The automobiles are made environmental friendly so that no harm is made to the society. Toyota was the first company to introduce Kanban, Kaizen and Total Quality Management within the organisation. Besides that, Toyota also produces in mass and sells hybrid cars in 170 countries (Mohr, Sengupta and Slater, 2010). Therefore, Toyota strategically made rapid technological innovations to fulfil the demands of the customer and sustain in the market. Strengths- The strengths of Toyota are a strong management team who believes in constant innovation. Technological innovation has helped the corporation to excel in the business and maintain the competitiveness. Every year the company launches a number of new models of car to suit the changing expectation of the consumers. The innovative culture of the company is the primary strength of Toyota (Toyota Motor Corporation, 2014). Weakness- The cars produced by Toyota are not very low priced. Although there are certain exceptions to this but most of the vehicles are not cheap. The sales volume of the company fell behind Ford and General Motors in the last year for the same reason. Opportunities- The quality of automobiles manufactured in Toyota is commendable. The Robot cars developed for the elderly people of Japan is also praiseworthy (Morris, Kuratko and Covin, 2010). The Japanese automobile company spends enough funds in the Research and Development. With further technological up-gradation and innovation Toyota can add more to the goodwill of the company. Threats- Ford and General Motors are presenting cars of better quality. Therefore it is increasingly important for Toyota to maintain the quality of all the cars produced by the company. In the recent past the quality of cars suffered a bit. Similarly, there are several companies that failed drastically due to lack of technological innovation within the business. The examples for the same are General Motors and Motorola. General Motors Company have been criticised in regards to their lack of strategic management of technology and innovation. General Motors Company is a multinational organisation of America that designs, produces, markets and distributes vehicles and sells financial services. After 101 years the company collapsed into the hands of the government (General Motors, 2014). The incidence was a result of years of poor management and lack of technological innovation. As compared to the toughest competitor, Toyota Motors Company, the vehicles produced by General Motors lacked innovation and competitiveness. The company equally failed to adapt to the changes in the customer needs (General Motors, 2014). The price of the vehicles was also high and as a result General Motors failed to increase the consumer demand towards the products. PEST analysis of General Motors- Political- The industry around General Motors is affected by government regulations since 1960s. Almost all the regulations came from the increasing concern for the consumers, environment and safer automobiles (Hendry, 2000). Economic- The automobile industry always has a huge impact on the economy of every country. As per various studies this industry makes the major use of aluminium, chips, copper, iron, lead, vinyl, copper and rubber. There are also several studies that indicate that for each autoworker there are five other jobs created in other industries. Sociocultural- The present society is judged by the cars people drives. Although society does not admit this but the truth is known to the manufacturers and they target the market going by these thoughts. Manufacturers are thus designing cars as per the needs of the consumer and their purchasing power. Technology- The internet affects almost every industry in the world and has impacted the automobile industry. A recent study conducted on 27000 new vehicle buyers by J.D. Power and Association showed that almost 60% of the buyers referred to the internet before purchasing a car and 88% visited the auto website before taking a test drive (Hendry, 2000). The B2B (Business to Business) marketplaces have provided the automobile industry several opportunities in the form of lower cost and more efficiency because of the internet. Therefore, the industry around general motors is growing fast. The company failed to perform as per the industry standards and ceased to exist on its own. Motorola is a multinational telecommunication company which is based in the United States. The most famous business segments of Motorola were enterprise mobility solutions, network mobility and mobile devices. The mobile company successfully sold the Razr handsets during the period of 200 5 (Infoworld, 2014). Eventually, Motorola failed to produce new models with technological innovations. The company could not compete with Apple and Blackberry as fresh handsets were not introduced by Motorola as per the market need (Shaughnessy, 2013b). Nevertheless, leadership of Motorola disappeared and it struggled in the bottom tier of an extremely competitive market (Infoworld, 2014). At present Google owns the majority of the Motorola Mobility patent portfolio. SWOT analysis of Motorola Strengths- Motorola was the top supplier of wireless cell phones, broadband communication system. The mobile phone company had demonstrated technology from self and other video platforms. The company failed to utilise the strengths and the brand name of the company was big until it ceased to exist in the market in the recent past. Weakness- The products of the company gradually turned out to be of low quality and defective. The supply chain management of the company became weak and the employees selected were less educated and trained. The financial condition also degraded and finally leads to the downfall of the company. Opportunities- Motorola was the top handset makers of Asia. The market share of Motorola was big enough until the company failed to sustain the competition provided by other competitors present in the market. Threats- The dominant presence of competitors such as Apple, Samsung and Nokia lead to the huge decline in sales of the company. The company failed to launch new products in the market and gradually the sales declined. Barriers to innovation There are several barriers to innovation faced by organisations. These can be highlighted as follows: External Barriers-: Market related barriers- The competitors present in a market segment always try to protect their monopoly powers and maintain supernormal profit in the long run. When Samsung entered the electronic market, it faced several hindrances in entering the market. There was tough competition from top competitors like Apple, Nokia and Motorola. The company emerged in the peak position of the handset market through the rapid technological innovations (Infoworld, 2014). Government policies- The stringent policies framed by the government also hinders the technological innovation made by companies. The government of every country forbids any innovation that harms the environment and makes use of the scarce resources. Besides that, there are a number of other trade barriers that companies witness from their respective governments. Internal Barriers- People- The internal barriers to innovation are experienced by companies when there is lack of innovative people within the organisation. The management and the employees working in an organisation should be talented and innovative. The managerial incapability of renowned organisations like Motorola has lead to their downfall. The management of Motorola failed to maintain the right levels of innovation and allocate the funds efficiently. Structure- The structure of an organisation should also be appropriate to promote the process of innovation. A sound organisational structure always allows smooth flow of the process of innovation. Enterprises that do not make technological innovations more often as per the need changing needs of the consumers fails to survive in the long run. It is therefore vital for enterprises to invest in the research and development which can provide the business unique opportunities to flourish. General Motors failed to function efficiently in the market due to lack of investments in the research and development (Mohr, Sengupta and Slater, 2010). As a resultant factor the American company failed to sustain in the market and was later taken over by the government. Strategy- Effective organisational strategy is necessary for achieving success in a business. The right strategy in the business can help organisations to make profit and sustain in the market. The business strategy utilised by Samsung can be cited as an example. Mass customization of Samsung products is neither possible nor feasible. Hence, in order to address the same, the company has adopted the lifestyle based market segmentation strategy. The products of Samsung are segmented on the basis of local trends, market conditions, perceptions and technological attainment (Michell, 2010). This was observed in Samsung’s attempt of launching global standard products with a localisation strategy. Therefore, the firms which effectively used an innovative strategy were able to flourish more in the business. Conclusion To retain competitiveness in the global market, organizations exceedingly needs to incorporate more innovation in the products and services. Companies need to innovate rapidly and cost-effectively. The need for innovation in the business has grown over the last few decades. CEOs of top companies are focused on growth and technology is expected to be the primary source of innovation for them. An increasing number of CEOs considers that utilisation of technology for gaining differentiation as well as efficiency in the products and services simultaneously can help their business to grow. A recent survey conducted by top companies displayed that almost 80 percent of CEOs believes that innovation drives efficiency and leads to competitive advantage for an organisation. Therefore they felt that technology is one way of arresting both the qualities of innovation and efficiency simultaneously. There are a number of survey reports which states that almost 70 % of CEOs are widely investing in Information Technology to become well-organized and reduce cost, while 54 % are funnelling funds towards the growth initiative that can control the emerging technologies such as social media and mobile devices. It can also be concluded that innovation has been the most crucial factor for success of Samsung, Toyota or any other industry. Every organization can maintain existing market share through invention of new products, thereby attaining sustainable competitive advantage. Samsung has been quite expressive in saying that it supports innovation, but strategies undertaken acclaim that the company could not have had a more specific agenda. Samsung’s strategy for innovation focuses on localization of its globalised innovations, speed of research and development initiatives, extensive marketing and distribution channels, product development that is demand-centric and design focused and quick diversification strategy to manage competition. Toyota has also innovated new technology in the business. The company made vehicles that are suited to the demands of the people. Every year tries to invent new technology laden cars for a target, market. The cars are of unique designs, fuel efficient, styled to perfection and environmental friendly. Toyota has successfully launched a number of cars that saw a commendable amount of sales. The management of the company promotes research and development to the core for enhancing the quality of innovative products offered to the customers. The funds of the company are thus utilised for the promotion of research and development. Therefore, the market position of Toyota is a result of the technological innovations. The companies like General motors and Motorola failed to innovative and hence could not sustain in the market. General Motors was unsuccessful to survive in the market because of the lack of innovation in their business. The company could not perform at par with the top competitors such as Toyota and Volkswagen Group. The designs and technological up-gradation were not sufficiently done. The management of the company were futile to invest in the research and development of new vehicles. Consumer’s demands of different market segments were not given enough attention by the CEOs of the company. The company naturally ceased to exist on its own and was later taken over by the government. Motorola is another example of failure that is cite in the paper. The company was at the peak of the handset market but failed gradually due to the lack of innovation. After the introduction and rapid sales of the Razr model of handset, Motorola did not come to with any new innovation. This acted against the growth and survival of the company. The management team and the employees were not efficient and motivated enough to make the necessary innovations in the business. All these resulted in the failure of the companies. Therefore it is necessary for every company to innovative as per the need of the present market and consumers. Appropriate amount of investment in innovation can help a company sustain in the long run. Failure to innovate can lead to the downfall of an organisation. 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