Strategy, Operations, and Global Competitiveness

Generating New Product Ideas

Research and Development (R & D) primarily responsible for developing ne
w product ideas.
Research is divided into two types: pure and applied.
Pure research is working with basic technology to develop new knowledge.
Applied research is attempting to develop new knowledge along particular
lines.
R & D Con’t
Development is the attempt to utilize the findings of research.
The development end of R & D is more on the application side and often c
onsists of modifications or extensions to existing outputs.
Currently the development effort is much larger than the research effort
.
Alternatives to Research
Imitation of a proven idea (second-to-market strategy).
Purchase of someone else’s idea.
Outright purchase is becoming extremely popular where bring a new produc
t to market can cost huge sums.
In addition to product research there is also process research (i.e. how
to produce research).
Disruptive Technologies
An example of a disruptive technology currently playing out is the impac
t that the Web is having on graduate business education.
e-mail
Computers in the classroom
Using the Web at work to shop
Commercialization
Refers to the process of moving an idea from concept to market.
Shorter life cycles.
Increasingly competitive marketplace.
Globalization.
Vision and Mission Statements
Vision statements used to express organization’s values and aspirations.
Mission statements express organization’s purpose or reason for existenc
e.
Core Competencies
Collective knowledge and skills an organization has that distinguish it
from the competition.
Typically center on an organization’s ability to integrate a variety of
specific technologies and skills in the development of new products and services
.
Building blocks of core capabilities.
First-to-Market Strategy
Products available before competition
Strong applied research capability needed
Can set high price to skim market or set lower price to gain market shar
e
Second-to-Market Strategy
Quick imitation of first-to-market companies
Less emphasis on applied research and more emphasis on development
 Learn from first-to-market’s mistakes
Cost Minimization or Late-to-Market Strategy
Wait until market becomes standardized and large volumes demanded
Compete on basis of costs instead of product features
Research efforts focus on process development versus product development
Market Segmentation
Serving niche markets
Applied engineering skills and flexible manufacturing processes needed
Developing a Balanced Scorecard
Top management translates mission and strategy into specific customer an
d financial objectives.
Measures for internal business processes developed on basis of customer
and financial objectives.
Investments in employee training and information technology linked to cu
stomer, financial, and internal business process objectives.
Common Areas of Focus
Innovation
Customization
Product/service flexibility
Volume flexibility
Performance
Quality
Product/service reliability
Delivery reliability
Response
After-sale service
Price

Order Qualifiers and Winners

Order qualifiers are characteristics that are the ante to enter the mark
et
Order winners are characteristics that win the customer’s purchase
Mass Customization
Seek to produce low-cost, high-quality outputs in high variety.
Not all products lend themselves to being customized (Ex. Sugar, gas, el
ectricity, and flour).
Is applicable to products characterized by short life cycles, rapidly ad
vancing technology, or changing customer requirements.
Four Mass Customization Strategies
Collaborative customizers
Adaptive customizers
Cosmetic customizers
Transparent customizers
Dependability and Speed
The competitive advantages of faster, dependable response to new markets
or to the individual customer s needs have only recently been noted in the busi
ness media.
Americans spend more time and money on marketing, whereas the Japanese s
pend five times more than the Americans on developing more efficient production
methods.
Cost and Productivity
Operational activities play a major role in determining the cost of a pr
oduct or service, particularly during the up-front design for the output.
It is worth noting that cost to the producer and price to the customer a
re two very different factors.
It is always to the producers’ advantage to keep their absolute costs as
low as possible.