Due to market research and marketing analysis about what consumer needs or wants, company has to develop new product and services or improve them with the creation of new idea, design or technology to satisfy consumer. Also to compete with other competitors to be first to introduce one new product, industry needs to constant innovation. For example in 2010, because of low barriers to entry to New Zealand banking market, the banking industry’s initiative to innovate their products and services such as make easier for customers to switch banks and competitive interest rates and it leads to high customer satisfaction ratings and increase in profits.
—— Competition in an industry is always affected by rivals racing to be first to introduce one new product or product enhancement after another
Product innovation is the development of new products, changes in design of established products, or use of new materials or components in the manufacture of established products.
Thus product innovation can be divided into two categories of innovation: development of new products, and improvement of existing products.
New product development describes the complete process of bringing a new product or service to market. There are two parallel paths involved in the process: one involves the idea generation, product design and detail engineering the other involves market research and marketing analysis.
Improvement of existing products includes, but is not limited to, improvements in functional characteristics, technical abilities, or ease of use.
2. Marketing innovation
Introduce of new ways to marketing products like costing, packaging and promotion, can attract buyer’s interest, and increase industry demand and product differentiation which can lead company to change the competitive positions of rival firms.
For example, companies like Dell; they use one-to-one marketing strategy for customers to customize their products based on what they need to satisfy them more. It shows that marketing innovation can sustain business growth without introducing new products.
the introduction and implementation of new marketing methods, like costing, packaging and promotion etc.///////Introduce of new ways to market products, can spark a burst of buyer interest, widen industry demand, increase product differentiation, and lower unit costs-any or all of which can alter the competitive positions of rival firms and force strategy revisions.
Innovation is very important to sustain business growth and innovation new products should be strong enough to enter into market place
3. Technological change and manufacturing process innovation
Development in technology manufacturing process can make industry to produce high quality product at lower cost which can lead to higher industry profitability. As the increase in technological changes, lots of companies automate their manufacturing processes which can leads to increase production and reduce expenses. However, it also has disadvantage such as loss of many factory job so CEO has to consider carefully about implementing this strategy to not to have conflicts between labor forces.
Advances in technology can dramatically alter an industry’s landscape, making it possible to produce new and better products at lower cost and opening up whole new industry frontiers.
4. Changes in who buys the product and how they use it
change in buyer demographics and how consumer use the products can change how customers make purchasing decisions, where customers purchase the product and how customer consider value. And it can cause more competition between other competitors.
Shifts in buyer demographics and the ways products are used can alter how customers perceive value, how customers make purchasing decisions, and where customers purchase the product.
4. Increasing globalization
Even though globalization has benefits to developing country, it also brings negative effect such as eliminates jobs, lower wages, and exploits workers on standards of living in some country. Therefore some countries are now trying to restrict globalization. Due to globalization, lots of global company like Apple or Samsung tries to manufacture their product in low-wage country to export and import at a very low cost. It can be benefit to developing country. However, it will decrease manufacturing jobs in developed countries. Moreover, because of low-wage in developing country, wages for employee in developed country is underestimated. Even though, the standard cost of living is higher than what they earn. Lastly, there were some serious social issue about Nike that they treated workers in low-wage country very badly, people were working in terrible environment with very low-wage. According to this, global company only thinking about utilize labor force because of low wage without contribute toward productivity in developing country.
Question 3 b)
Some people view the increasing globalization as a threat to many local markets and see it as it makes poor people become poorer and wealthy people become wealthier because profit is unevenly distributed.
But Increasing globalization can be beneficial and may develop many country’s economy, politics, culture and environment. It also made the world easy to exchange information all over the world which makes global company to exchange faster or use knowledge efficiently to cope with rapid changes in global market.
Because of globalization, global companies like Apple, Samsung or Nike are trying to manufacture their product in low-wage country to export and import at a very low cost. And to do that, they have to build their facilities, training staff and develop good relationship in country which can offer solutions for unemployment and trade problems. It also brings new production methods and management techniques. Moreover it also spreads out new types of technology faster. The company has to adopt new technology to increase their quality of products and sales. Due to globalization, new technology spreads out the world faster which makes company to satisfy their customer expectations efficiently.
It is beneficial and may develop many countries economy, politics, culture and environment. And it could also bring happiness to customer by satisfying their needs.
But some people view the increasing globalization as a threat to many local markets
They see it as it makes poor people become poorer and wealthy people become wealthier.
But if people understand globalization in a different way, it might help and develop the economy of many countries.
Growth of modern electronic communication, made the world easy to transmit information all over the world
Globalization offers solutions for trade problems and unemployment in many countries
It also spreads out knowledge, new types of technology and cheaper economic polices
It also brings new production methods and management techniques.
Products can be exported and imported at a very low cost.
It can be perceived either as a problem or an opportunity.
Nike has spent the last four years building facilities, training staff, and developing relationships in China
Question 4 1) Value Chain Analysis
Value Chain Analysis is tools for managers to check that company is utilizing their resources effectively and efficiently to produce benefits for the company or wasting their resources unnecessarily during operations. By analyzing primary activities and support activities of company’s operations can figure out their competitive advantage. Moreover, it helps to find ways to give satisfaction to customers.
Primary activities for Dell
Dell stores the component for computers until they need for them on production and assembly line. So suppliers are located close to the factory plants to reduce costs. Dell relies mostly on their suppliers and they are using just in time deliveries with their suppliers with good relationship. Also they let suppliers to deliver items like monitors and speakers directly to the customers to reduce inventory costs.
Here goods are received from a company’s suppliers. They are stored until they are needed on the production/assembly line. Goods are moved around the organization. Dell relies mostly on its highly reliable supplier, where Dell streamlines its operation and relies on its computer monitor supplier to ship directly to the customer. As long as its supplier retains its leadership position, Dell would collaborate with it to achieve mutual success.
1. All those activities concerned with receiving and strong externally sourced materials
2. Just in time ordering
3. Close to suppliers
The offer customization option for customers to satisfy exactly what they need and all the goods are manufactured with (build-to-order) system to reduce expenditure on stock and cost. This manufacturing process is their main competitive advantage to grow business.
This is where goods are manufactured or assembled. Every Dell system is built to order. Customers get exactly what they want. Dell uses knowledge gained from direct customer contact before and after the sale to provide award-winning reliability and tailored customer service.
1. The manufacture of products and services- the way in which resources inputs are converted to outputs
3. Customizations options
Dell delivers the finished good to their customers directly which can makes them to communicate easily with customers and build good relationship. This direct model gives them benefits such as finding out sales trends and understands what customer need or what customer don’t want.
When Dell introduced the direct model, its competitors were selling computers to end consumers via distributors. Dell, on the other hand, sells directly to consumers and is continuously communicating with them and benefiting, especially in two areas, seeing sales trends and learning about unmet customer needs. The company also relies on customers’ knowledge of what they want to purchase and when they want to complete the transaction to drive the direct business model. Dell leverages this source of customer knowledge by making it as easy as possible for a customer to place a customized order electronically.
1. All those activities associated with getting finished goods and services buyers
2. Close to customers
3. The monitor example
4. Room for improvement
5. Evening delivery
Marketing and sales
Dell offers online-sales or telesales directly with customer and without any retailers. Advantage of direct model is that the company can continuously in contact with its customers which helps them to get an idea of how to innovate their sales and marketing strategy and they also can reduce cost on researching market trends.
Dells direct to customer model solve the problem for additional capital for marketing and sales. By selling directly to consumer it eliminated retailers along the way. One advantage of this kind of system is that the firm is continuously in contact with its customers and they are benefiting in two areas concerning sales and marketing, seeing sales trends and learning about unmet costumer demands.
1. Essentially an information activity- informing buyers and customers about products and services
2. China/ credit card/ shop essential
3. What about people who don’t computers
4. Improve a lifestyle brand
Dell provides installation services by Dell experts as well as 24/7 online support for large businesses and institutions as well as for small businesses and home PC users. Asset recovery and recycling services in an environmentally friendly manner are offered. PC support services in case of malfunctions and protection services against accidental damage are provided.
Dell spent dollars training well-educated business segment managers provide state-of-the art advice to customers. The company also initiated a collaborative customer-solution teams that collaborate with customers to fulfill any unmet customer needs. Because of the nature of work of Dell’s employees they are continually being inspired to stay abreast of technology threats and opportunities that may alter the competitive landscape in the future.
1. All those activities associated with maintain product performance after the product has been sold
2. Service a poor
3. People don’t lick offshore support, usually stressed when they call and this adds to their stress
4. If something goes wrong the pc has to return in the past
Supporting activities for Dell
It is on this activity that Dell is weak because Dell do not enjoy protected by trademark or patent or copyright technology. The technology being used in the industry is shared by all industry players.
1. Sourcing and negotiating with materials suppliers
2. Lowering the bargaining power of Intel and Microsoft
Human resource management
Dell’s mission statement is “to be the most successful computer company in the world at delivering the best customer experience in markets we serve”. Dell employees, direct salespeople, help-desk operators, engineers, and the like all have to be knowledgeable and customer focused to ensure Dell’s continued competitiveness.
1. Those activities concerned with recruiting, developing, motivating and rewarding the work force of a business
2. Potential for spinning it off as a separate business unit
3. Hosted payroll
Technology is an important source of competitive advantage. And here is one strength of Dell for the firm enjoys better access to technology. Dell introduces the latest relevant technology much more quickly than companies with slow-moving indirect distribution channels.
1. Activities concerned with managing information processing and the development and protection of knowledge in a business
2. Lagging behind in technology research and development
Dell revolutionized the traditional value chain of computer manufacturing industry by introducing the direct to customer model. Dell also employed a global business consultancy, to help it develop a set of metrics to judge business-unit performance. By doing so, daily decision making were more efficient. The chief financial objective that steered managerial evaluation at Dell was return on invested capital (ROIC). Which leads to no inventory build-up, Dell turns over inventory every six days on average, keeping related costs low.
1. Concerned with a wide range of support systems and functions such as finance, planning, quality control and general senior management
2. Reacting to problems by change in senior management
Operation to meet adding value, improve quality, add efficiency and increase profit
Receiving and distributing raw material
Converting raw material into a finished product
Identifying customers and distributing the product
Supplier relationship process
Sharing data with suppliers
Long time relationship with suppliers
Sending latest news about new products or services by email to build good relationship with customers.
Question 4 2)
• In today’s competitive marketplace, all firms are seeking ways to improve their overall performance. One such method of improvement, recently adopted by many firms, is benchmarking. Benchmarking is a technique used to evaluate internal business processes. In this analysis, managers determine the firm’s critical processes and outputs, baseline those processes, then compare the performance of each process against a standard within the industry. Dell offers similar products, serves different customers, and use different strategies to achieve their goals. Dell can learn from the competition. The most effective way to learn about the industry is by benchmarking world-best practices. This practice has been successful for Dell in the past and should be a continuing evolution of benchmarking annually.