Assignment 1

Use of Innovation as a Strategy to Gain Competitive Advantage

Introduction2

Literature Review and Critical Analysis3

Conclusions11

References14

Use of Innovation as a Strategy to Gain Competitive Advantage

Introduction

Organisations in this fast competing world of today are constantly faced with the challenge of having a competitive advantage. For some organisations, this would mean surviving and sustaining in the market, while some others would want to go a step ahead and stay on top of competition of others. In order to do so, enterprises have to face new conditions and situations and search for new ways of production. In other words, they are required to constantly adapt themselves and their strategies should align with the changes that emerge regularly or in other words, they are required to constantly introduce innovations.

Innovation has become a key strategy for the creation of new markets and for sustaining company growth in today's competitive environment (Neely & Hii, 1998, p. 4). The need for innovation is critical for all companies because of the rapid changes and unpredictability of the regular technological changes that are taking place (Menger, 2001, p.26). From the customer's aspect, innovation means products with better quality while for the organisation it would mean sustainable growth and development (Gerguri et.al, 2013, p. 12). Successful companies understand the importance of the development of an effective innovative strategy for the creation of innovative products and services that provide them with a competitive advantage. Companies such as Apple, Skype, Microsoft, Google, Amazon and many others are able to make an influence because of their innovative approaches which make them stand out as leaders in the products and services they provide.

On the other hand, there are also companies that have suffered because of their lack of innovation. Corporate icons such as Kodak, Polaroid, Sony and Borders Books are examples of those firms that lacked in innovation which led to their failure and bankruptcy. This lack of innovation that led these companies to their downfall was mainly because of the barriers to innovation that prevent companies to align with the current trends, and thus, result in their downfall. These companies are not attuned to the flow of their respective markets and fail to process the information they have about the market in an effective manner which leads to a variety of problems to innovation, thereby making them stagnant (Garcia Pont & Rocha e Oliveira, 2013). This inability to innovate leads to customer dissatisfaction, thereby making the customer move towards products and services that are more up-to-date and ultimately leading the company to lose their market.

There are various barriers to innovation and identifying those hidden obstacles that prevent innovation is essential for a company to make effective proactive strategies to sustain in the market. Burgelman et.al (2009) suggests that “Insights into the firm's innovative potential and into the barriers to innovation are necessary to make effective proactive strategic choices” (p.8). This means that identifying the barriers to innovation and the potential of a firm to be ready to innovate are key factors for ...