Innovation Apple iPhone 3gs - Essay Example

Innovation – Apple iPhone 3gs] Introduction The report talks about innovation, the types of innovation, the sources of innovation and a sector in which a recent innovation has taken place and discusses the sector at length, using different models to analyze the sector. Innovation and Types of Innovation The first and the foremost question that needs to be asked is what is innovation? Innovation can be described as anything which is new and is useful to the people who are meant to use it, this could be anything from being a business process to a new product. The importance of innovation is immense because innovation is what brings about change in our society and without change the society would cease to exist because there has to be continuous improvement and people should have the urge to become better day by day. There are different levels of innovation or different degrees of innovation; the most basic kind is Incremental Innovation which is innovation by adding minor features to products that already exist, the second level of innovation is. (Bessant, 2007) Radical Innovation which is basically where development of new services takes place or a different way of delivering a service is sought out, the last but the most extreme level of innovation is Discontinuous Innovation where the product or services that are developed have a completely new technology that drives them. Just like there are different degrees of innovation there are different forms of innovation as well, Product innovation relates to the improvement of existing products and services, process innovation relates to the new processes that have been developed for use within organizations, position innovation is when an existing product is introduced to a new group of customers and last but not the least there is paradigm innovation which has to do with development of new services for new groups of users ( Bessant 2007). There are different sources of innovation as well, one major source that is now being recognized is the End User Innovation where companies or individual develop new products or modify existing ones because the ones that are available in the markets are not able to fulfill their needs and hence the fill in the required gap by themselves. The second source of innovation is the Manufacturer Innovation which is where an innovative product or service is developed in order to sell and earn a profit on the sales of the product or the service. (Bijker, 1992) Managing Innovation Innovation management is a tool that has to be used in each and every company because ideas seem to stem from everywhere customers, employees and even competitors. So in this day and age it is extremely important to manage innovation and channelize it so that it could be used to maximum effective. Many companies for the same reason have started encouraging employees to come up with new ideas and have opened up communication channels so that ideas can be freely disseminated by the employees. (Brown, 2000) Some tools to manage innovation are that the top most management must be committed to the cause of innovation, a culture of rewarding people for being innovative should be fostered so that more and more people are encouraged to innovate as this would help the company become more efficient and give it a clear competitive edge, technology should be used at it can have severe positive effects on the management of innovation, the internet and some tracking software for innovation can be used to keep up to date with the progress, the focus while innovating should be on opportunities of high value and this should be communicated throughout the organization and last but not the least, there is a need to develop innovation in all employees but most importantly in managers, thinking innovatively is a skill that can be acquired but there needs to be encouragement as well as support. (Carr, 2004) What must be kept in mind is that innovation does have its costs, for example an innovation could go wrong or it might not take off the way it should have, hence there should be an environment within the organization that is error tolerant because innovation would bring in its fair share of errors from managers and others employees alike. It should also be kept in mind that innovation brings about change and people have the natural tendency to resist change, the organization should give enough time to employees to adapt to the change, patience is a very key element for organizations to be able to manage change (Franklin, 2003). Innovation and innovative mind set is one of the key elements needed to survive in this competitive environment and this is evident in how organizations are restructuring themselves and creating new positions such as Chief Information Officer (CIO) as information is the most basic element required for innovation. Difference between Creativity and Innovation Creativity at times has been mistakenly referred to as innovation, it should be understood that creativity and innovation are two different terms and must not be used in place of each other. Innovation is primarily the use of an idea to achieve business ends which most often results in new products and services or in new ways of delivering products and services to customers where as creativity only one of the many means that businesses get their ideas to innovate and get new products and services. (Nystrom, 1979) Another difference that could be pointed out is that creativity is associated with thinking about new ideas, where as innovating is putting the creativity to use and coming up with actual products and services, this clearly shows the difference between creativity and innovation and shows that these terms cannot be used interchangeably. (Robinson, 1998) Market Analysis Source: http://www.pbleepd.com/wp-content/woo_custom/378-SAF.png In order to determine if an innovation is going to be successful in the market place any organization needs to carry out a market analysis, there are several ways to carry out a market analysis but for the purpose of this report, the PESTEL analysis would be used because it is one of the most comprehensive analysis that can be made. PESTEL is an acronym for Political Environment, Economic Environment, Socio-Cultural Environment, Technological Environment, Environmental Factors and Legal and Regulatory Environment. (Robinson, 1998) This is basically used to assess the global as well as the local environment and whether or not if it would be feasible to introduce the product into the market at this point in time or not. Political Environment The political environment of the United States is a very stable one, it is one of the most developed nations in the world and has a very stable history in politics, political parties may differ in their political parties namely the republicans and the democrats may differ in opinion on different policy matters but this does not cause any political unrest and hence there is stability within the political environment. (Robinson, 1998) Another factor that needs to be considered before launching a product is how far away or how near are the next elections because governments tend to make a lot of changes when elections are nearing and this could have adverse affects on the launch of the product. Taxes and other regulations are also imposed by the government and hence in the sector of mobile communications and manufacturing taxes can have a drastic affect. Governments also design and implement foreign policy and this could have considerable affect on any organization for example if today the relationship between the US and China are to go sour it would have a very negative impact on most of the companies that have plants or that have partnered with Chinese companies to produce their goods. The political environment needs to be studied very closely before any decision to launch an innovative product is taken and decisions have to be based on the information that is gathered from a keen study of this environment. (Kelley, 2001) Economic Environment The United States being one of the most developed countries in the world has a very strong economy and a very strong economic system. Inflation is in control and has hardly ever gone above the targeted inflation level in recent history; it has a high rate of employment and high quality of life. Labor costs are relatively higher than other countries but most of the labor is very competent and above the average worker in terms of output per worker or productivity levels. When launching a product it is very important to have a look at the environmental factors because if the economy is in the state of recession and a new product is being launched it might prove to be a costly decision because in recessions people do not wish to spend more rather they would save because the uncertainty levels are very high during recessions. If apple had launched its i-phone when the recession had hit the United States it is very unlikely that the i-phone would have been as successful as it is today. Economic factors are also very important from the production point of view, if interest rates are very high then it might not be appropriate to launch a product because the setting up of a facility might require loans from banks and other financial institutions and hence would increase the production costs and lower the feasibility for the product to be commercially viable. These are some very important factors and it is imperative that they are taken into consideration before launching a product. (Gryskiewicz, 1993) Socio-Cultural Environment The socio cultural environment refers to the life style, values and the culture that exists within the local environment, the United States is very proud of its values and culture which promote freedom. The socio cultural factors also include lifestyles, literacy levels, income levels and other such factors. These factors are very important for any product because it helps in identifying the target market for a brand and helps position the brand accordingly, if this analysis is not carried out a company would not be able to identify its consumers and that would deal a blow to its marketing efforts. This analysis is very important for innovation itself as well because many a time studying the culture and the lifestyle of the people are a source of a great idea that leads to innovative products. (Grudin, 1990) Technological Factors Technological factors are very important for innovation to take place, when one is in a technologically advanced society he or she has a clear idea what technologies are in place and what more can be done but it is very important to study technological factors because one new technology is the basis of an innovative product, for example the Apple I-phone. Research and development are an integral part of the innovation process and it is imperative for any company to survive in today’s day and age and for companies that exist within the consumer durables sector it is probably one of the most important things because customers’ desire change and change can only be provided through research and development. Rate of obsolescence of new technology would have to be kept in mind because if the rate of obsolescence is very high then it might not make sense to invest huge amounts of money into a technology which might not be patented and which might be very easily copied by competitors. (Sloane, 2006) Environmental Factors Environmental factors also play an important part because innovation could also be based on these factors if there is a concern in the society about these factors for example a new product that causes 80% less pollution or a new recycling technology that makes it very feasible to recycle, these are all sources of innovation if and only if there is any concern for them within the society. (Kelley, 2001) Legal Environment The legal and regulatory environment has to be very strong for innovation to take place, there should be a respect for intellectual property and there should also be laws to grant the right of ownership for new ideas and products to individuals, only in such an environment would innovation exist. There should also be strong implementation of the laws that are prevalent in the society and there should be proper access to law enforcing agencies and the judicial system as well. The legal and regulatory environment plays a very vital role over all in the economy as well, because if there is lack of justice there would also be other social problems within the society which would also tend to hinder innovation and creativity. (Pratt, 2009) Analysis of Mobile Communication Industry Mobile phones in the recent past have seen considerable innovation through the use of additions to their features such as cameras and music players but Apple gave it a completely new angle with the invention of the Apple I-Phone, it was a phone that had a touch interface and had a sensor motion in it which meant that the screen would adjust itself to which ever angle the phone was tilted, it had a higher memory and certain other features in it which made it stand out from the crowd. The pricing was premium as well which meant that it was targeted at the higher end of the market, this has helped Apple gain considerable brand loyalty in the mobile phone industry as well where till previously it was non-existent. Other competitors such as Nokia and Sony Ericsson are still struggling to cope up with the I-Phone, though they have come up with their own versions of touch phones, they have not been up to the mark and the I-Phone is considered to be the top of the mind product as long as touch screen cell phones are concerned. (Spivey, 2009) Apple is the market leader in touch phone market and touch phones are going to be the future and normal cell phones with the keypads might be a technology of the past very soon, mobile phone manufacturers have realized this and have moved very quickly into touch phone manufacturing, Samsung has even come out with its low priced touch screen and is making its mark there. Likely Drivers for Innovation in the Mobile Communications Industry The likely drivers for innovation in the mobile communications industry are first and foremost the customers of the mobile communications industry because these are the people that tell the companies what they want and that is where companies invest their research and development funds but firms must realize that they have to be proactive themselves as well they just cannot rely on the customers to provide them with a creative idea, they must actively look at customer lifestyles and cultures that are developing to use to innovate. (McFedries, 2008) Technology is going to be another driver for the mobile communications industry, because of new and emerging technology cell phone manufacturers have been able to add features to mobile phones that were previously not thought of such as the Wi-Fi features and mobile cameras, this has only been possible because newer technology has enabled smaller sized chips to perform the same functions that were initially carried out by larger chips. (Chen, 2007) The new trends that are developing are going to be a likely driver as well, for example initially there was little or no culture of text messaging using a cell phone but the youth has been able to turn that around and now the majority of communication is done using text messages the world over, mobile communications industry has to have a very keen eye to spot developing trends and then capitalize on them. (Blokdijk, 2008) Mobile service providers are going to be another likely source of innovation because many features that a cell phone carries are dependent on the mobile service providers. If mobile service providers increase the features that they support cell phone manufacturers would be able to add more and more features to their phones. (Mark, 2008) Competition is another likely source for innovation, the mobile phone industry is saturated almost everywhere in the world now and to compete and gain larger market shares it is imperative that mobile phone manufacturers innovate in order to survive the cut throat competition that is now global. (Pogue, 2008) Innovation is going to be the most important thing for all the players in this industry to survive because if they do not their brand loyalty would decrease considerably. Porters Five Forces Model Source: http://www.vectorstudy.com/management_theories/img/porters_five_forces.png Porters five forces model aims to analyze industries at a micro level and is used as a strategy model for studying industries the world over. The five forces that porter has identified are Competitive Rivalry within an Industry- with reference to this there is severe rivalry within the industry as all firms try and gain a larger market share globally, in this respect the I-Phone 3gs lacks because Apple is yet to be established in the international arena, however the markets that it has already touched it has completely changed and revolutionized those. The second force is threat of substitute products- in this regards Apples I-Phone, as mentioned above is relatively safe because the technology that it uses is hard to emulate, substitute products here might be the internet and computers that are getting smaller day by day through the use of micro chip technology and free VOIP based software’s such as Skype are adding to the threat. (Baig, 2009) Threat of new entrants is the next force and this is a very potent force for this sector because before Apple entered this market there were only 4-5 mobile producers and now Apple has been able to revolutionize this market, and there is still potential in this market because the global market size is increasing day in and day out. Bargaining power of the customers is quite low in this industry because of its oligopolistic market structure but prices however are determined by the value that customers put on some features, such as sets with WI-FI would be relatively expensive than those that do not have their feature because the perceived value of a mobile set is increased manifolds by the addition of this technology. Bargaining power of the suppliers is the fifth and the last force and this could have considerable effect, because most companies do not manufacture all their chips by themselves there is a chance that suppliers have high bargaining power specially if the supplier owns a patent for the chips that are to be used in the manufacturing of the cell phones, this is one potential threat to the major players in this industry. SWOT Analysis Source: http://www.careerberg.com/blog/wp-content/uploads/2009/10/swot_new_1.jpg.gif The SWOT analysis is used to determine the strengths, weaknesses, opportunities and threats to a sector or to a company, whichever is the task at hand. The strengths for the mobile communications industry are that more and more people are becoming the target market as more and more features are being added to cell phones each and every day, 10 years ago cell phones were a luxury now they are a necessity to survive, this is a immense success and strength of the sector. There is still potential to innovate in cell phone technology such as adding voice based commands and multi-purpose features such as cell phones acting as remote controls for your televisions and other accessories. More dynamic lifestyles of people are only going to increase the demand for cell phones in the future and mobile phones have become a status symbol as well with phones costing a fortune. (Kelby, 2009) The weaknesses within the mobile communications industry are not many except that cell phone technology is perceived as injurious to health and people are beginning to be more and more concerned about this, what can be done to counter this is that campaigns could be run by all major players on how to prevent mobile phone based injuries. The opportunities within this industry are immense and in the coming years we would see a lot of break-through technology and mobile phones would take over all communication devices, even television would be seen on mobile phones and this has already started to take place provided your mobile service provider supports the feature, where as some Chinese mobile manufacturers have built in antennas to cell phones that are able to catch terrestrial based television networks. The increasing population that is using cell phones is an opportunity in itself as well, the opportunity to tap into a larger market, the more affordable cell phones become the larger market they would be able to tap in and the rapid steps that mobile communications technology is making, cell phones with advance features would also be available at affordable prices very soon. (Hart-Davis, 2009) Threats are very limited for this industry and the only threat as mentioned above is that the internet and computer manufacturers can bring a revolution through the use of free VOIP based services such as Skype and other software’s there by eliminating the need of cell phones on the go. Diffusion of Innovation in the Mobile Communication Industry Diffusion of innovation refers to the spread of technology by the pioneer to others within an industry, this diffusion has taken place in the mobile communications industry and that is why more and more cell phone manufacturers are coming up with their version of touch phones, some of the prime examples of this diffusion are Samsung and Nokia. Nokia came out with its X6 and Samsung came out with Genoa, both of them being touch screens and the future trend is going to be touch screen phones only. (Miser, 2008) Current Innovation The current innovation is the Apple I-phone 3gs which is a touch screen based phone and has wi-fi, music features, advanced internet browsing and a lot of other features that make it stand out from the crowd, the manufacturer is Apple computers and it is the market leader in this category of mobile phones. Critical Evaluation on the Current Innovation What makes I-Phone 3gs and Apple so successful and a market leader in their category is that they are dynamic and they are looking to innovate and they are listening to what their consumers want from them, for example the previous I-phone the I-Phone 3g did not have a feature to forward the text messages that were received but the new I-Phone 3gs does have that feature, the new I-Phone 3gs is much more faster and the applications can be accessed much more faster, these were some of the major problems that customers had faced with the previous version. (Spivey, 2009) But where Apple lacks is that it does not have enough expertise and diversification within this market and it would take them time to understand the dynamics of this market but up till now they have done a very decent job. Conclusion Innovation is now no longer a choice, it has become a necessity to a certain degree, those who lack in this would be left behind and would lose out on a great deal. The sources to innovation are great many but each must be keenly observed and looked at from a critical perspective for it to yield results. The Apple I-Phone 3gs was indeed a break-through product and it has yielded its results but Apple cannot afford to bask in its glory for too long because those who become complacent will be toppled, it has to continuously look at ways to innovate and make its products better in order for it to survive in the market, I-Phone 3gs is just the beginning. REFERENCES Books: 1. Bessant, J and Tidd, J (2007) Innovation and Entrepreneurship, Wiley 2. Bijker, W and Law, J (eds) (1992) Shaping Technology/Building Society: studies in sociotechnical change, MIT Press 3. Brown, JS and Duguid, P (2000) The Social Life of Information, Harvard Business School Press 4. 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