Page 293 - DMGT401Business Environment

Business Environment

Notes and profitable. Companies that compete through innovation know that new
(or borrowed) ideas apply not only to products, but also to quality, productivity, service, financial
discipline, employee attitudes and renewal. All are critical elements in a company's competitive
ability.
In recent years, the ability of firms to innovate is creating significant differences between the
best and the rest.

Example: A study of over 200 companies entitled "Winning New Products" conducted
by the Kellogg Graduate School of Management shows that successful innovative firms were
more likely to generate growth rates of 20% or more, compared with the less successful ones.
There are mainly two options for achieving competitive advantage and forging ahead in the
race. Either to achieve product/service differentiation or cost differentiation, and if possible,
both. Each success in such differentiation is again short - lived. Hence innovation is the call of the
day to remain ahead with the differentiation.

Technology provides an edge over competitors on all the Four Ps of marketing: Product, Price,
Place, Promotion.
1. Product: According to Philip Kotler, success doesn't lie in merely satisfying the customer
but in delighting him/her. If an organization doesn't delight the customer then someone
else will do so, and the organization will lose the customer. Even under the best of
circumstances, staying competitive today is more difficult than ever before because the
conditions that determine competitive advantages change at an unparalleled speed.

Today's hot product may be tomorrow's flop; technological advances and increased
competition today rack the secure, stable market. Investment in technology can deliver
new and augmented products every time.

Example: Bajaj is classic example of this as it recently launched new models at short
intervals where each new model cannibalized its old model because if they didn't do it, someone
else would have.
The result was phenomenal as the company's sales surged rapidly. Successes such as LG,
Samsung, Hyundai and others have invested in a reasonable amount of product innovation.

2. Price: Price is a decisive factor in today's marketing warfare. We are living in an era of
value maximisation. Value can be maximized by making a value added product at a
competitive price. This can be done only through technology. Technology not only helps
in producing augmented products but also reduces manufacturing costs.
Today, every firm in India is investing in R&D to reduce its manufacturing costs. Prof.
C.K. Prahlad has said that in India, wealth lies at below the pyramid, i.e., a lower income
people.

Example: This is the reason that HLL did R&D for a whole year and developed a new
technology and launched an ice cream of international quality at 5.

Extensive R&D is also going on among hardware companies in India to launch a computer
at less than 10,000 in the country. Today national wide companies provide shampoos,
eatables, etc. at Re. 1. All this is possible because of technology. Thus it is because of
technology that even the lower income groups in India can enjoy a product of international
quality.

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