Innovations play an important role in the company success. They allow remaining the competitive edge in the market and maintaining profitability. The innovation process assumes several stages each of which is characterized by its peculiarities and specific features.
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The aim of this essay is to map the innovation process at Etihad Airways which is the national air carrier of the United Arab Emirates.
The Innovation Process at Etihad Airways
Searching is the first stage in the innovation process. It assumes the search of relevant information about the competitive environment and the determination of the threats and opportunities. According to the WTM Euromonitor report, “global air online value sales are expected to reach US$382 billion by 2016, driven by Western Europe and North America” (“The WTM Euromonitor Report” p. 2).
The expected growth in the sector indicates to the importance of the online tickets sales by the airways. It is a signal of the growth opportunities in the industry.
However, the rapid expansion of the low-cost airlines can be viewed as the potential threat to the other companies in the industry. The results revealed in the WTM Euromonitor report show that the low-cost carriers are increasing their market shares (“The WTM Euromonitor Report” p. 2).
Selecting is the second stage in the process. The information gathered at the previous stage is the basis for the determination of the most important areas for improvement. The decision should be based on the strategic goals of the company.
According to James Hogan, CEO of the company, the corporate strategy of Etihad Airways can be described by two important points: the vast differentiation with 138 nationalities working for the airline and 475 destinations the passengers are offered to fly to as well as the economy of scale (Schaal n.p.).
Both the differentiation and the scale are achieved due to the investments in four other airlines, namely Airberlin (29%), Air Seychelles (40%), Aer Lingus (appr. 3%), and Virgin Australia (10%) (Schaal n.p.). Taking into account the corporate strategy and the information gathered, it is reasonable for the company to develop its online tickets sales accelerating the speed of the customers servicing and reducing the cost of sales.
“Hogan noted that emerging technologies will be vital in attracting and retaining passengers, and he vowed that Etihad will have Wi-Fi connectivity throughout its fleet by August 2014” (Schaal n.p.). That is why the emphasis in the innovation process should be put on the Internet technologies.
At the stage of implementation, the innovative features of the new service should be clearly identified. First of all, the knowledge based should be acquired by the company through strategic alliance or investment in the low-cost airline. The stake in the LLC will contribute to the reduction of the cost at the consolidated level and to the increase of a customer base.
The acquisition of the competitor is one of the ways of gaining the competitive advantages. Secondly, the margins of the project should be calculated under different scenarios providing the clear relation between the expected risk and reward. The diffusion of the innovation should be forecasted at this point.
Although it is hard to forecast it precisely, one of the suggested ways is to model the s-shaped trend by means of using the Bass model (Sönke p.14). A subjective judgment should be applied here anyway (Sönke p.14). Thirdly, a new service, for instance the new online service, should be managed carefully during the initial adoption.
This means the determination of its weaknesses which can be improved. Finally, the adoption needs to be analyzed and certain measures should be calculated to make it sustain in the market. The profound analysis of the stage of the innovation in its life cycle is crucial at this point. It allows determining the areas of improvement and possibility of reinnovation as well as the amounts of the necessary investments.
Learning is the final stage in the process. It is the stage when the results of the innovation implementation should be analyzed. The factual margins should be compared to the expected ones in order to calculate the overall efficiency of the project.
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Having the results supported by the exact figures, the company can find out which knowledge or technologies it lacks. Besides, at this stage, new models for diffusion of innovations forecasting can be acquired. Finally, the company can reconsider its approach to the innovation process as a whole, if it finds it weak.
Mapping the innovation process requires the understanding of the industry peculiarities. Etihad Airways is the airline carrier which operates in the highly competitive environment. The threats and opportunities of the environment should be determined at the initial stage. The innovation process of the company should be accomplished in the frameworks of its corporate strategy.
The analysis of the competitive environment allowed selecting the areas of development in the company services. After that, the undertaken project can be implemented. Finally, the company should estimate the efficiency of the innovation and evaluate its strength and weaknesses.
Albers, Sönke n.d., Forecasting the Diffusion of an Innovation Prior to Launch. PDF file. Web.
Schaal, Denis. “Etihad CEO Believes There’s Lots of Equity in the Airline’s Strategy.” Skift 20 June 2013. Skift.com. Web.
The WTM Euromonitor Report. Global Airlines: Key Threats and Opportunities Facing Global Airlines. Web.