Introduction:
Innovation has become a must in many businesses considering the current economic climate and the variety of needs of customers. With stagnating economic climate and the amount of competition in each market businesses have been in hard ground. The growing competition for businesses has made it much harder to for businesses to have a good margin for their profits.
Innovation comes in different forms and relates not just new products but new systems and processes followed to attract or differentiate their products and services with their competitors. One such could be Coca-Cola’s Share a coke campaign which was highly influential in creating a new base for their customers and gave them huge publicity. Hence innovation does not mean just the products but every other
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function that is involved in it. “In the business sector, it is significant for small and large associations run the same. In huge corporate ventures, innovation and the capability to put resources into innovative work (R&D) are composed and organized. This helps them make development pipelines and keep up aggressive intent. However, while more small associations develop through enterprise and development, the capacity to manage them accepts vital importance.” 4P’s of Innovation to the Holden: The 4P’s of Innovation include • Product • Process • Position • Paradigm. The organization that we are looking at is Holden. Holden is a well known car manufacturing company and is known as heritage of Australia. • Product - Holden is a car manufacturing firm in Australia and has been seen as one of the oldest pioneers in the market. Holden’s products are seen as highly reliable and trustable in terms of their products and services they offer. • Process – Holden follows a process of manufacturing that is highly safe and maintains high standards of products for cars. Their process allows to detect flaws in the spares of the car when the production goes on which is considered as a step towards maintaining high standards. • Position – Holden maintains a high positioning and is often knows as the Australian car due to its longevity in the country. The Holden firm has a premium positioning and is favored by Australian customers for its reliability. • Paradigm – The current trend for the firm has been bad considering the strong Australian dollar that has affected their sales and their profits. Hence they are trying to attract foreign buyers. 4P picture: Discussion: The present portfolio of the company is bad considering the trend that the strong Australian dollar and the lack of demand for Holden cars in the domestic as well as the International market has led them to think of closure of the company in the coming years. Product Innovation – Holden has failed to attract customers with any product or services innovation and this has led to their market failure . Strength: • Brand recognition • History of car manufacturing Weakness: • Lack of innovative products or process • Lesser cooperation levels in planning among departments.
Gaps In Holden company:
Holden has not focused on export as a component of its strategy, unlike Toyota, and the high Australian dollar did not make the Holden grow. Mitsubishi and Ford had demonstrated that auto manufacturing in Australia was not productive, which created pressure on Holden and Toyota and others in the supply chain.
“Holden has additionally had issues with its product, with reviews issued for Holden Cruzes for a defective fuel hose in 2011 and brake issues in 2012. “
Holden failed to cooperate and act on times where there was a high need for innovation and proactive actions to export cars abroad, since developing countries remained optimistic to buy Australian cars.
Strategy and mission:
Holden needs to attain temporary loans and subsidies from the government and private lenders in order to make sure that they will sustain in the market and manage the market crunch they possess.
Holden could research and manufacture electric cars and export them to countries like India, Brazil and China where there is a huge need to use electric cars due to fuel deficit and pollution
issues. “Of unique investment and significance to South Australia - and Elizabeth specifically - is [Holden]'s dedication to put, by 2010, green engineering into its most mainstream Commodore model. “ Holden has to make sure they export green cars since the need for them is less in Australia.
By focusing on strategic innovation and being agile and adaptable, businesses can succeed in today’s dynamic market environments.
Thesis: Even though there is a lot of skepticism towards Chinese car companies making a foothold in the American car market, with the right marketing and not rushing into the market, there is a good chance that the Chinese car companies will follow the Japanese car companies and carve a spot in the American market.
Why Toyota and other stakeholders in automotive industry fear that Holden’s quit can affect local supplier network heavily?
Throughout its history, Buick has had a series of regional strategies. Like the case explains, for decades Buick made cars for the U.S market and then exported them to countries such as Japan and Great Britain with the idea that what worked in the United States would apply successfully in a global market. In addition, Buick has taken cars designed by General Motors, such as the Opel Astra and Holden, meant for the European and Australian market, and labeled them as Buicks.
Although most innovations succeed, others fail and there are a lot of factors that can be attributed to that failure. These factors can be firm related, project related, product related or even market related (Van Der Panne, 2003). Firm related factors may be due to the firm’s culture and principles where the firm was not willing to change the way they do things and the firm’s strategy to the innovation.
To being with the barriers of entry which including strong currency and higher labor have the most significant impacts on auto making industry. In 2013, Holden would cut 12% of its workforce and has announced a three-year pay freeze agreement to the reminding workers to keep operates the manufacturing plant in South Australia (Thurlow, R. 2013). Moreover, a strong currency not only lead to less competitive on nation exportation but also increases the amount of cheaper imports from emerging market like China and Thailand caused by globalization. For instant, China which enjoys plenty of human power which strengthen its competitive of export products (Curran, E. 2013). Australian manufacturers, therefore, have lower competitive power against imported goods and services. Although the total number of car sales increased, the sale of Australian-made vehicles has significant (20%) fall as Thurlow, R. & Glynn, J. 2013, stated. It seems barriers of entry blocked the auto making industry hardly.
Despite of these good things, Ford Motor faced a loss due to some wrong decisions taken by the management regarding their business strategy. The decision of centralizing the management made them think narrowly which results in too much Americanization and ignorance of local market in the rest of the world. This caused losing global market for them.
In conclusion, innovation and the need for it will never diminish no matter how big or small. For me, my company, and my country innovation is the key to our success and our very existence. With that being said, you better not have a great idea and have no one to sell it to. The customer will always be first, second, and third for that matter, if we are to succeed.
The company Tesla Motors Inc could be said to have been born in 2003, those whom founded and invested into the organisation are known for their innovative minds, in previous companies. Elton Musk is the founder of PayPal, Sergey Brin and Larry Page the founders of Google, they are among a handful of investors. The primary aim of the company was not just to make the traditional motor vehicle which has become a normality in the last century but to go beyond that. Instead the establishing group of Silicon Valley engineers aimed to develop electric vehicles (Musk, 2006). On the surface Tulsa Motors strategy when explained by the co-founder Elton Musk, is quite simple one would think when he said ‘The starting point is a high performance sports car, but the long term vision is to build cars of all kinds, including low cost family vehicles” (Hamilton,2006)
Ford’s production plants rely on very high-tech computers and automated assembly. It takes a significant financial investment and time to reconfigure a production plant after a vehicle model is setup for assembly. Ford has made this mistake in the past and surprisingly hasn’t learned the valuable lesson as evidence from the hybrid revolution their missing out on today. Between 1927 and 1928, Ford set in motion their “1928 Plan” of establishing worldwide operations. Unfortunately, the strategic plan didn’t account for economic factors in Europe driving the demand for smaller vehicles. Henry Ford established plants in Europe for the larger North American model A. Their market share in 1929 was 5.7% in England and 7.2% in France (Dassbach, 1988). Economic changes can wreak havoc on a corporation’s bottom line and profitability as well as their brand.
To explain the barriers of entry, let us take the example of America's best-selling SUV in 2014 which was the Honda CR-V, for the third consecutive year followed by Ford Escape. These two companies with their immense economies of scale are posing a high barrier to entry for their share of the market. Honda CRV is able to offer the better fuel economy and safety rating without incurring a loss and maintaining the majority of the market share. This makes it difficult for firms like Volkswagen who are leaders in Europe to enter this market.
Innovation strategy consists of financial goals and growth areas related to new products or services. The innovation strategy determines the strategies, which determine the aspects of methods and approach roads for a better and improved innovative potential of a company. In the literature, the general opinion is shaped by innovation quality and innovation strategy of the firm have a positive effect on innovation performance.16
O'Connor et al. (2008) point out that the lack of consensous about the innovation concept itself tends to generate confusion between work teams. This problem is also associated to the slowness and failure to achieve an innovation capability by the organizations. Nelson e Winter (1982) defends that any modification in a product or process without previous experience can be understood as an innovation. For Bessant e Tidd (2009), the theory around innovation process (i.e. Cooper’s stage-gates) were developed based on technological innovations, particularly from the industrial sector. This article adopts the concept proposed by the Innovation Report (DTI, 2003) which define innovation as a successful exploration of new ideas, involving new technologies or applications and its importance to product and service generation, new production process, more efficient or cleaner business models.
The high dollar and the substantially higher labour costs of automotive manufacturing in Australian compared to other countries such as China and Thailand have led to it not being viable for Toyota to continue to manufacture in Australia. Toyota’s decision to cease manufacturing in Australia will have consequences for numerous groups. However, according to Shareholder theory, as advocated by Milton Friedman, a narrow focus of profit maximisation is taken, in that the responsibility of Toyota is to generate profits for its shareholders (within the constraint of the law). The relentless pressure on vehicle producers worldwide to reduce manufacturing costs (“Pro...
It’s never easy to compete against old players in any walk of life. New entrant faces considerable odds in the beginning and only this battle. Innovation is the best ally of an entrepreneur in this battle. It helps him to gain competitive advantage in his business either due to cost advantage or due to differentiation of product. Innovations in marketing and distribution help him gain the market share quickly.