Innovation Strategy Assignment: Research Report Investigating The Business Scenario

Question

Task:
Case Study:
Mr Johnson is the chief innovative officer (COO) of a mobile company in Sydney. A core component of his role as CIO is to predict, plan for and implement necessary changes to the product of the company.

The company was pioneer in mobile phone industry and have gained significant installed base. Its products were popular among many customers for its reasonable price, quality, and efficiency. However, over the recent years, many other companies have emerged with more innovative components incorporated in products which has attracted their customers and increased the competition in the market. In addition, the change in the CEO of the company and his decision over the years had impacted product development and sale. This company is slowly losing its position as pioneer in mobile phone industry and its market share is decreasing rapidly. This has frustrated employees of this company, especially of research and development (R&D) who had overtime developed a level of expertise and experience in developing and deploying their pioneer products in the market. Adding to frustrations, the employees have had to watch other mobile companies offering similar products become more and more successful!

Some good news is on the horizon, however. The government has decided to invest in technological innovation and a considerable sum of money is available to those companies who can demonstrate their ability to incorporate technological innovation in development of their product. This initiative is considered critical for this company as it would provide the company with much needed financial support. In addition, this is a good opportunity for the company to regain its position in the current market trend.

Knowing this, Mr Johnson and his team is very keen to secure access to some of the promised investment capital. However, he is aware that to receive any money from the federal government, he must demonstrate his company’s ability to innovate. This innovation should be linked to technological innovation and disruptive technology.

Innovation Strategy Assignment Details:
You need to complete a research report, investigating the feasibility of an innovation strategy for the example case presented above. As part of this report you will need to:

• Identify and discuss internal and external factors facing the organisation and conduct a thorough analysis of the current condition of the organisation by using three of the following different strategic analysis frameworks (Porter’s five forces is compulsory).
  • Porter’s Five Forces Model
    • Degree of existing rivalry
    • Threat of potential entrants
    • Bargaining power of suppliers
    • Bargaining powers of buyers
    • Threat of substitutes
  • Stakeholders analysis
    • Strategic stakeholder analysis
    • Normative stakeholder analysis
  • Porter’s Value Chain Model
    • Primary activities
    • Support activities
  • PESTEL (Political, Economic, Social, Technological, Environmental, Legal),
  • SWOT (Strength, Weaknesses, Opportunities and Threats)
• After assessing the company’s current position, Identify and evaluate three (3) potential innovation opportunities the organisation in the case study can explore that can help this company to re-emerge in the market.
• Critically assess and evaluate one (1) of these innovation opportunities (innovative solution) and develop a detailed plan the case study company would like to implement (detailed plan of implementation). Discuss innovative and technological components of this solution. Discuss the innovative solution that you have proposed is sustaining or disruptive innovation.
• Discuss a process to review and monitor the progress of this innovation opportunity the case study organisation would like to employ.
• Identify any potential difficulties that might be expected such as legal problems, support, R&D costs etc.

Answer

Executive summary
Mobile phones are a multi-functional instrument which distant from the usual call facilities, has quite a few functions like the internet, inbuilt cameras, and also numerous modern options. The case study examined in the innovation strategy assignment discusses about The COO of a mobile phone company in Sydney who is facing difficulties in maintaining its position in the market and due to which there is a significant decrease in the market share. The company requires having a better innovation strategy in the handsets for re gaining the market share. The company can use AI in its devices to make improvements in the offerings and therefore have a better market share and revenues. From the viewpoint of the industry, producers innovate for improving the superiority of their goods, therefore contributing to client contentment and amplified trade.

Introduction
There is a huge rise in the number of Smartphone users currently as it is broadly used like a communication tool which connects users by voice calls, social networking sites, emails and many more for entertainments. Mobile phones are a multi-functional tool which apart from the normal call facilities, has several applications like the internet, inbuilt cameras, and also several modern features. The market of the mobile phone industry has faced a growth in the current years because of technological development and advancement in the industry. Despite the massive growth in the industry, the mobile phone market is developing with threats faced by the industry (Cecere et al. 2015). Manufacturers that have high demand leverage the competitive advantage to help them to stay in their position and have a positive brand image, for exporting new revenue streams and also achieve sustainable product differentiation for driving sales. The COO of a mobile phone company in Sydney is facing difficulties in maintaining its position in the market and due to which there is a significant decrease in the market share. There are several companies that provide more innovative elements integrated into their mobile phones. the gradual decrease in the position of the company has also disrupted the functioning of the R&D department of the company as they had over a long-time developed expertise and experience in developing their products in the market. There is however a chance to the company to gain back its position through the financial support provided by the government to the companies that can show their expertise in technological innovation in the products. This investment capital can be fruitful to the company for getting financial support and also to regain the market position. However, the innovation that must be shown to the government must be connected to technological innovation and disruptive technology.

Analysis of the current condition
Porter’s Five Forces Model

• Degree of existing rivalry
  The extent of rivalry is high. Demand has grown in the present years that has resulted in an increased concentration on customer retention and innovation. Companies invest massively in R&D for maintaining market shares. Most of the brands have maintained competitive pricing strategies for retaining the market share. The completion has become stronger due to the low chance of differentiation and stagnant demand in the current years (Buganza et al. 2015).
• The threat of potential entrants
  The threat of new entries is moderate. The restrictions to entry are not high and usually, companies do not need to spend a large amount of money to enter the market. The companies that are present in the market for long massively spend in innovation and marketing for retaining the market share, therefore it is hard to have a high market share for a new player. Investment in technological innovation is also important for differentiation and market share (Buganza et al. 2015).
• Bargaining power of suppliers
  This is usually low apart from the large players. Most of the Smartphones function on the Android OS. Most of the suppliers are small players in the market and the majority of them are present in the Asian region. The factors that restrict the bargaining power of the suppliers comprise of the smaller size and less monetary strength contrasted to the Smartphone manufacturers (Trabucchi et al. 2018).
• Bargaining powers of buyers
  This has increased because of different factors. The main reason is the rising number of alternates in the market. Rising competition in the market has added to the bargaining power. Customers also have a proper awareness of the industry and have different choices. Most of the mobile phones are now affordable. Companies invest in R&D massively to make their models better from others. The factors that monitor the bargaining power are brand image, product quality and price (Trabucchi et al. 2018).
• Threat of substitutes
  This is higher as there are a large number of alternatives in the market. The top brands are apple, Samsung, Xiaomi, and many more. The number of phones having large screens is numerous. The threat of substitution rinsing from competing items also is higher as differentiation has become hard. Most of the products have similar features and mostly the same processing power (Vecchiato, 2017).

  

  Fig 1: Porter’s Five Forces Model
  (Source: self-created)

Porter’s Value Chain Model

• Primary activities
  • Inbound logistics- the company has its network component, infrastructure and backbones for offering different communication facilities and buying of mobiles. The ownership of spectrum is another inbound logistics. Spectrum is significant to the company and the industry and is reliant on for conveying information between Smartphone masts and consumers’ mobiles.
  • Operations- The operations of the company are founded on in house infrastructure. The operations are based on its monetary resources, infrastructure and people (Mayes et al. 2016).
  • Outbound logistics- the company has a customer on-line buying procedure which permits customers to buy faculties directly. The company also has its independent billing system.
  • Marketing and sales- the company has different independent branded and different retail chains that it utilises in distribution. The company invests massively in marketing while promoting the brand.
  • Services- it assists customer online ordering and monitoring of feedback. The customer services provide after-sales service (Martín-Gutiérrez et al. 2017).
• Support activities
  • Infrastructure- the mode of expansion was a mutual venture with another tech company for managing the mobile network.
  • Human resources- the company is dependent on the workers for the superiority of the services to the customers. It makes sure of having an inclusive work culture and inspires ambition, innovation and activeness. The company motivates talent, enthusiasm and commitment to the workers for creating and maintaining its success and being competitive (Filieri et al. 2017).
  • Technology and development- the company has internet portals that assist in online ordering. Constant R&D assists the firm to maintain and deliver innovation in the company.
  • Procurement- the company buys different branded sets from the suppliers. It also conducts training procedures for the procurement team to efficiently manage supplier performance.

    

    Fig 2: Porter’s Value Chain Model
    (source: i1.wp.com, 2020)

PESTEL

• Political
  The role of political elements in the area of businesses has grown in the 21st century. Increased regulation and governmental rules in technological firms have made it more evident. The political control and regulation in the mobile phone industry are rising. The trade war between China and the US has affected mostly all the companies (Yun et al. 2016). The companies are also affected by the growing tariffs that had resulted in increased operational costs.
• Economic
  The situation of the global market has a direct effect on the revenue and trade of smartphones. The economic condition has a direct influence on different essential factors such as poverty, the purchasing power of customers and employment (Babkin et al. 2015). If the economic condition in a market is sturdy, it will lead to superior employment and consequently advanced consumer poise which in turn leads to elevated sales of goods and services.
• Social
  Sociocultural features are the main consideration. Smartphones are at the present a part of a customer’s existence. The level of ease provided by mobile phones has made them a fundamental existence addition, and persons carry those all around. A large quantity of large-screen smartphones is currently obtainable in the market, which persons use to search social media sites and also for gaming and other types of activity like streaming videos. Social factors are of rising significance in the smartphone business, and learning them helps commerce offer more interesting models and develop sales (Truong et al. 2017).
• Technological
  Technological factors have an essential position in the expansion of the Smartphone industry. In this business, technology is not merely a chief differentiator however also the chief factor motivating growth and a significant basis of competitive benefit for companies. Several companies invest aggressively per year in R&D for growing the popularity of the current models and introduce modern ones with better features (Truong et al. 2017). Competition in the industry is increasing that has resulted in better focus in user experience and quality. Technology is a core highlight for phone manufacturers as innovation is crucial for the rise in market shares and sales.
• Environmental
  The environmental influence of businesses also has a straight outcome on their image in the culture. Therefore, businesses are currently increasing awareness of their environmental effect. Their centre on sustainability, ethical sourcing, and development, and sustainable procedures, has developed. Spending in sustainability provides numerous advantages, counting condensed operational expenses and an improved social representation. Governments throughout the globe have made firmer rules connected to the environment, and companies require concentrating on sustainability to stay biddable with these laws (Truong et al. 2017). Leading companies give a heavy centre on CSR and sustainability to build the products free from dangers for the users.
• Legal
  Government monitoring and oversight of Smartphone brands took place because of numerous factors. While the rising pressure of tech industry universally is a necessary worry for governments and also rising concerns such as customer privacy and data safety has also increased the requirements for advanced scrutiny. Centring on compliance is fundamental for functioning productively in different regions across the world. Therefore, the Smartphone companies have devoted compliance players that centre upon obeying with local rules in the regions where the trade function and also international regulations that have an authority on the company’s business (Tidd and Bessant, 2020). Some of the paradigm system that affects big and global ventures comprises of labour laws, produce superiority laws, environmental laws, and data security and solitude laws. Patent laws also have an effect on Smartphone companies.

  

  Fig 3: PESTEL analysis
  (Source: self-created)

Potential innovation opportunities
The potential innovation opportunities that the company can explore are:

• More screen
  The Smartphone Company can introduce phones that have full screens. Full screens provide benefits, such as they offer the Smartphone with an excellent screen display and dramatic visual catches. The full-screen build can also bring creative growth in the company. The designs that the company can innovate for maximising the screen space are the no-notch and water-drop notch displays. The waterdrop notch feature requires less space and can include a screen-to-body ratio of 85%. (Groß, 2015) The no-notch feature has the largest screen to body ratio and also can comprise of a “pop up camera”.
• Mobile photography
  High definition cameras are an aim that the company needs to innovate. This is because social media is becoming a widely significant part of life. People spend a lot of time on social media. They use Smartphone cameras for capturing and sharing essential life snaps and therefore there is a rising demand for the high quality of photos (Groß, 2015). The high-resolution imaging technology with 64 mp cameras can be introduced by the company, as there is a rising demand for better mobile photography.
• Artificial intelligence
  AI technology will improve the user experience and thereby enhance the Smartphone’s analysing, sensing and also interacting functionality. The company can build handsets with on-device sensors like Bluetooth, WI-Fi and GPS technology. This can help the company to provide a Smartphone that has a rich offline profile of the client and also predict the needs and thereby make recommendations that can help satisfy those (Kim et al. 2015). The company can also introduce machine-human communication by the help of which the handset can gather feedback, by constantly correcting any wrongdoings so that it can match the steps of the user. If AI is integrated into the Smartphone then it can help in enhancing the battery life, photos and also cyber security.

  

  Fig 4: innovation opportunities
  (Source: self-created)

A detailed plan of implementation

AI authorizes the development of mobile apps by making them intellectual parts of software that can forecast user behaviour and make choices. AI permits mobile apps to learn from data produced by the user. The innovative and technological components of AI are:

• The mixture of AI and IoT is influential in generating a tailored knowledge for users. In mobile development, IoT together with Artificial Intelligence can result in improved use of resources and superior competence. Together they make available a fine part of worker bandwidth (Coccia, 2018). It transports customized and more competent apps and reinforces data security methods, which is imperative as the prospect of mobile apps will forever be revolving in connected devices.
• AI can improve search engines and can introduce visual search for finding items that cannot be described. Visual search in certain cases is more precise and quicker than a text or a voice search. The mobile company can build an image recognition course and a voice recognition method.
• AI can also help the Smartphone to translate various languages in real-time irrespective of an active internet connection (Mumtaz et al. 2018). AI can offer transition tool that can allow sentences to be translated quickly without a time lag.
• With the help of AI, the phones of the company can identify the face of the user even with additional features or changes in facial appearances like glasses.

The proposed solution of using AI in smartphone application is a sustaining innovation. It does not generate new values by disrupting the current ones but improves the existing items. The innovation develops the current market and values by including modern technologies and better features.

The process to review and monitors the progress
Innovation is a procedure that is best directed with a long-phrase viewpoint, not unavoidably calculated in long time growth such as in months or years but fairly in the achievement of targeted objectives (Latif et al. 2017). This need extricating the innovation procedure into three stages, recognition of objectives and examination actions, short term deliverables and lastly near-term growth.

The first phase, recognition of objectives and examination actions, describes the route of action and sets up the motivational encouragement for the total innovation procedure. locating an idea for the innovation aim and offering chances to discover diverse explanations allows leader buy-in to the objective. After the objective has been recognized, the stages that require to be attained for victory can be prioritized, allocated to stage 2 or stage 3, and carried out consequently. It is significant to understand that stage 2 and stage 3 are not stationary and must be regularly evaluated and updated (Gupta and Sebastian, 2018). As objectives in stage 2 are finished, a few of those in stage 3 shift into stage 2 to give the foundation for a new position of assessable results and products. It is the authority’s accountability to review act to objectives in each stage and to decide when an aim has been concluded or stirred into a diverse stage.

By opening the implementation phase into 2 parts, the innovation course is located to give way an incessant stream of near-term achievement, which preserves innovator incentive. also, if alterations to the original plan need to be applied, they can be prepared in an appropriate way and at a moderately low price. Measuring the performance of innovation by the use of a number of cautiously selected methods will assist in centring and eventually augment the arrival on the innovation activities (Gupta and Sebastian,2018).

Potential difficulties
The legal issues that the company can face are:

• Disclosure- the company can get in trouble for it being able to disclose the offers and different terms. The company can face legal issues for not disclosing the terms mentioned in the phones and therefore the customers can pay more money.
• Permission issues- consent is an area that is of importance as there are several mobile payments and the company needs to ensure how the mobile transaction is made or if is authorised to do so (Sarker et al. 2020). The use of AI can help in improving the transaction process, but also increase the chances of sending text messages or engaging in transactions without taking permission.
• Patent issue- the patent infringement challenge is a probable challenge that can be faced by the company. The company can make a model similar to other companies that have a patent for the model and therefore can involve in legal issue (Kim et al. 2015).

The R&D difficulties that the company can face are:

• Screen dimension and device compatibility are the difficulties that the Smartphone Company require to address. For providing users with the very best understanding, the device must seem perfect on any gadget and be well-matched with the vast number of models that are currently available (Groß, 2015). Selecting the correct operating system is crucial too and the company require to comprehensively research the several frameworks for getting it precise in the first time.
• Allocating the new phone can be an issue for the company as they will have restricted control over it. There can also be an issue to receive the approval of different carriers. The company require to make sure that the app can work flawlessly in various software devices and hardware configurations that can be an issue as it will be a new model (Tidd, and Bessant, 2020).

Conclusion
Smartphones unite the feasibilities of mobile phones and individual computers and have at the present turned out to be an element of customers’ daily lives. Furthermore, the technology is being incessantly and quickly enhanced as producers innovate for maintaining their competitive edge. From the viewpoint of the industry, producers innovate for improving the superiority of their goods, therefore contributing to client contentment and amplified trade. Innovation and competitiveness are entangled and consequently many companies centre on creating an innovation plan to preserve a competitive gain as a sturdy innovation tradition concludes in many new notes, services, or goods being freed to the marketplace. Though, factual innovation is demanding and is impacted by numerous factors, comprising the commercial surroundings or cultural philosophy that remain within the company and which direct companies’ principles, information, thoughts, and creativity.

Recommendations
The company can use AI in the smartphones for rapid processing of data, for identifying different sights and faces, for night camera pictures, for the safety of consumers and much more. The company can use the Face ID feature in its models for automatically recognise the face and therefore unlocking the device (Babkin et al. 2015). The company can use virtual assistant through which the customers can make calls, send messages or answer questions and so on.

Reference list
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