Competition in the global markets

Executive Summary

This report provides a critical evaluation of the Innovative Strategies of the organizations, which they are adopting in order to compete in Global Environment. Starting with the definition, including innovation as part of an organisation, the report moves on to discuss key methods and applications which ekes the process of innovation in an organisation. Further, the report highlights the key managerial qualities and parameters like leadership and decision making systems of the organisation which support the successful process of innovation. The report also contains a brief analysis of British Airways investigating the innovative strategies practiced in the organization that determine the level of competition, and consequently, the level of profit in an industry.

Introduction:

The organizations worldwide face a number of challenges due to the increasing intensity of competition in the global markets. However what best they can do is to find out and research the new ways of step ahead of their competitors hence upon getting the much-needed knowledge, base their theories and strategies in a much more effective and efficient manner. The internal and external environment of the organisations has undergone rapid and extensive change in last three decades. This change adaptation or innovation has been a moot issue, as the researchers want to explore all the dimensions of the phenomenon.

Innovation is the most exciting technique one must adapt in a business because it gives the chance to put all new skills to work. Exposure to innovation alters the way one looks at businesses. Innovative thinking involves a comprehensive analysis of a business in relation to its industry, its competitors, and the business environment in both the short- and the long-term. Ultimately, innovative strategy is a company’s plan to achieve its goals (Kandampully, 2002; pp. 18-26)

Innovative organization is defined by Barañano as “the integrated set of managerial and organisational elements which work together to create and reinforce the kind of milieu stimulating successful technological innovation.” (Barañano)

Organisational innovation is the process of introducing substantial changes in the structure and processes of organization. Organisation plays an important role in the successful process of Innovation and its implementation, as explained by the OECD

[O]ne key element of innovation is organisation. … Organisation is essentially a process for the gathering, management and use of information, and for the implementation of decisions based on such information. Such processes have a strong intangible dimension, but taken together they make up the learning capacity of the firm and as such are a central element in innovation capability. These are specific institutional “rules of the game” which regulate possible modes of organisation on a broad level. (OECD, 1997: 43)

In order to undertake successful innovation process it is important to keep the organistaion in tact with the change process. The culture and business values of the organization should also be changed. It is important because in many organizations the technological innovations could not fulfill the expectations of the management because the organizational practices failed to eke the successful adaptation of change.

An innovative organization must have a clear mission and predetermined performance objectives in order to save the employees from pursuing their own ends and justifying their actions by claiming of being innovative. In order to undertake the process of innovation in controlled and effective way it is important for each and every member of the organisation to have clear understanding of organisational goals. The employees can be included in the process by providing them with the independence to create and implement different techniques to achieve organisational goals. To make the most of the innovation process it is essential that the organisation must provide an explicit statement of goals.

The mission statement of an organisation provides the broader perspective of what the organisation is aiming to achieve in future on the other hand the operational goals define the ways the organisation will undertake to achieve these objectives. The operational goals set performance targets in shape of time for the organisation which can also be used as the performance evaluation technique for the organisation. Mission and goals of an organisation sets the direction of innovation.

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Innovation in isolation has no value. It’s the success of innovation in achieving he organisational goals which makes it valuable. In the same context the success of innovative organisations can only be judged by the evaluation of the success of innovation in achieving the organisational goals.

Creating an innovative organization requires a clear understanding of mission and goals so that individual innovations can be examined to see whether and how much they actually contribute to achieving the organization’s purposes. Innovative organizations are not trying to be innovative. Rather, they are trying to achieve purposes.

Successful innovations involves a number a people rather than relying on an individual. It is impossible for an individual to convert an innovative idea into a functioning innovation without the support of all the people from all the organisational hierarchies. The participation from all levels of organisation makes the innovation possible by fitting the initial idea into the operational realities and organizational environment. As mentioned by Tidd et al. (1997) that “No single element in isolation is likely to be effective, and no single tool or technique however fashionable, will create and sustain an innovative environment.” (Tidd et al., 1997: 332)

He basic unit

Hence it can be said that innovation is a team effort and it should be regarded as a basic unit of performance for most organizations (Katzenbach and Smith , 1993; 27). Teams of mechanics, not individual mechanics, repair and maintain airplanes and sanitation trucks. Teams of social workers, not individual social workers, find jobs for welfare recipients. Teams of people, not individual employees, actually produce the organization’s results.

Among the findings of the innovator’s advantage are several that highlight the ways innovative companies differ from less-innovative companies in dealing with their customers. In creation of compatibility towards the difficult economy innovative companies have managed it by the by rethinking process.

In reaction to the economic and market conditions in the past years, Fifty Four percent of very innovative companies, compared with just 29 percent of non-innovative or less innovative companies, have significantly re-evaluated and altered their marketing and sales strategies.

Innovative organizations depend, by definition, upon the ideas of everyone from chief executive to frontline worker. Yet if the frontline workers believe that the differences in hierarchical status reflect not only differences in responsibilities but also differences in how their ideas are judged, they will keep these ideas to themselves. No one wants to be told that an idea is silly or to have an idea ignored. So rather than risk embarrassment, frontline workers will simply keep their mouths shut. If the leaders of an organization silence their frontline workers’ mouths, they also turn off these workers’ minds.

The Organisations has an informal hierarchy. The operational issue is how much these hierarchies affect the behavior of the individuals, particularly those on the lower rungs in the organization. Does the hierarchy intimidate people from offering suggestions? Does it prevent people from recommending solutions? If a team is to work together to solve a problem, everyone must feel free to contribute; every member of the team must feel that his or her contribution will be valued.

The members of the team also need a “shared sense of accountability” (Katzenbach and Smith 1993, 32). They will never feel that they are sharing accountability if they perceive major differences in status. To be innovative is to take responsibility for improving performance. Hierarchical organizations create not only differentials in status but also differentials in responsibility. To create an innovative organization requires making these hierarchical differences as unimportant as possible (Lawler 1988).

Innovative companies are more eager to use technology to help in improving their customer relationship management. There is 3:1 ratio between the very innovative companies and non-innovative companies who have implemented a customer relationship management system (54 percent versus 15 percent), and the more innovative companies have also used the facilities of sales system which is more than twice as likely as non-innovative companies. These systems are very valuable to the innovative companies as they undoubtedly got the true benefits by its use.

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Procurement becomes even more complicated for a global leader like British Airways (BA) with 337 aircraft in service and operations in 165 cities in 96 different countries. BA’s procurement process had become increasingly complex with global expenditures of approximately US$6.5 billion going to more than 30,000 suppliers globally. BA thought that it might be possible to better control this complex process, reduce costs and achieve greater efficiency in their purchasing processes. BA also recognized that eCommerce and electronic procurement (eProcurement) could offer the company significant benefits. BA turned to Accenture to evaluate the situation and help them improve their processes and leverage eProcurement opportunities. Accenture and BA initially identified a potential purchase cost reduction of approximately US$260 million or 5% of their annual expenditures that could be realized through the smarter procurement of goods and services across the BA network within two years.

Customer relationship management innovations have greatly improved business performance. The following illustrates how the use of technology in customer relationship management can result in improvising business performance. Accenture has identified three major techniques in the customer relationship management are that many leading organizations are using in improvising their financial performance, produce competitive benefits, and increase the demand for their products and services vigorously. As the customers grow in number, their demands are also a never ending fiasco. In this regard every company should understand the customer behaviour very well. Their likings, behaviour, buying capacity, preferred delivery channels, all this should be recorded and each customer should be treated accordingly. This all has become possible with the support of Information Technology as it has become simple to accumulate the data containing these insights, but unfortunately the data has never been used to its full potential. In fact even today many organizations are lacking the integrated view of their customers.

In most of the companies, all the customers are not created equally, some are more profit generating than others and some may cause losses to the company. Leading companies are emphasizing on aligning the sales and service resources according to customer’s statistical data that how much contribution he has provided to the company in the essence of value and profit.

Many of the marketing executives have clearly understood that today’s customers have a great recognition to varieties and have more challenging behaviour than ever before. Still today many marketing departments are following old practices of to approach and convince their targeted public. In fact, the major typical marketing companies are still lacking the advantages of technology changes that are enhancing other business tasks, such as production, sales, supply chain, inventory, accounts, education, human resource etc (Alison & David, 2005).

The use of Technology in planning is imperative as it is a strategic tool and has to be powerfully incorporated with the overall business plan. There are various key business challenges faced by the company such as increase in production, reduce costing, enhance business opportunities, regularizing the processes, streamlining collaboration between workers and wherever required, a technology or Internet-based solution these challenges should be provided (Linda & Hughes). Furthermore, if a company has an ideal technology plan it will have a strong base for growth through the internet. This includes e-commerce, a new and modern way of doing business that will provide another innovative way of business activities such as sales, distribution and marketing (Butler, 1993). Thus the requirement of a technology plan is immense.

In today’s world where internet economy is booming, the internet economy is making technology planning a critical business tool. For all the obvious benefits of technology plans, few small and growing businesses have them. However, today numerous emerging business drivers are forcing companies of all sizes, in all industries, to prepare for integrating the Internet into nearly every aspect of their daily operations due to the growing competition, increasing cost pressures and collaboration of businesses with partners.

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Finding and keeping good employees is becoming a strategic advantage. In a tight labour market, a strong technology foundation provides tools for finding and keeping the best employees, a key competitive advantage. And, growing through technology can be more cost efficient than increasing staff.

Increasing customer expectations is another factor as he wants to get all the facilities such as shopping, buying, banking, entertainment, news, sports etc., any time, day or night, on demand. The business should have a well equipped setup to accommodate this new standard for continuous accessibility and instant response.

The improvement in productivity has been very effective and most economists attribute this largely to technological advances. Though to enable the employees to communicate and collaborate more efficiently and to streamline all the processes the technology must be deployed very intelligently.

New business models are allowing the customers to take charge as they are able to decide what information they receive, when and where to travel, even how much to pay. Technology planning can position the business to leverage this development to develop lasting customer relationships.

We may conclude that technology innovation and implementation is such an advantage and choosing an appropriate hardware and software that can impeccably insert users or sustain new technologies and further applications should be a major part of the company’s long term planning.

Innovative organization creation is a task of innovation itself which has been successfully undertaken by the management of British Airways

Creating an innovative public agency is, itself, a task of innovation. Each innovative organization will be different. It will be pursuing different purposes. Or it will be pursuing them in a different organizational context, within a different political environment, or within different legal constraints. There is no recipe for replicating an innovation. Similarly, there is no recipe for replicating the innovative organizations mentioned here.

Moreover, there may be many different ways to convert a moribund organization into an innovative one. There may well be another set of hints (that includes the hint about creating mission and goals) that may, in some contexts, prove equally effective. Leadership is not like physics. In physics, the acceleration of an object is always equal to the force on it divided by its mass. You cannot get different answers in physics; you always get precisely the same one.

References

Ahuja K. (2005) Strategic Management. Kalyani Publishers. Calcutta.Pp 425-775

Johnson, G, Scholes, K. and Whittington, R. (2008), Exploring Corporate Strategy Enhanced media edition, Harlow: Prentice Hall

Barr, Pamela S. (2000). When Firms Change Direction. Oxford University Press

Barañano, Anna, M., (The Non-Technological Side Of Technological Innovation: State-Of-The-Art And Further Empirical Research

Buhalis, D., (2004).eAirlines: strategic and tactical use of ICTs in the airline industry Information & Management, Volume 41, Issue 7, September 2004, Pages 805-825

Foss, Nicolai J. (2005). Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources. Oxford University Press

Case Study:Accenture And British Airways, Global Reach, Global Challenges, retrieved as on 3/11/2009 from http://www.accenture.com/NR/rdonlyres/A527609A-0C78-460B-A447-6D97DCCCCD51/0/british_airways.pdf

Gary D. Kissler, (2001). E-leadership, Organizational Dynamics, Volume 30, Issue 2, November 2001, pp. 121-133

GovLeaders.org, (1997). Creating an Innovative Organization:
Ten Hints for Involving Frontline Workers, retrieved as on 3/12/2009 from http://govleaders.org/behn_innovation3.htm

Dimitrios Buhalis and Maria Cristina Licata, (2002). The future eTourism intermediaries, Tourism Management, Volume 23, Issue 3, June 2002, Pages 207-220

Kandampully, J., (2002). Innovation as the core competency of a service organisation: the role of technology, knowledge and networks, European Journal of Innovation Management, Vol. 5, (1), pp. 18-26

Tidd, J.; Bessant, J. & Pavitt, K. (1997) Managing innovation: Integrating technological, market and organisational change. Chichester: John Wiley and Sons


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