Innovation is the principled exploitation of ideas related to knowledge of those entering the industry as well as those moving out of the industry for the purpose of hastening modernization within the company and expansion of the markets with the intention of advertisement to the outside (Chesbrough 2003). This paper will focus on the importance of innovation for firms to compete in many industries and then go further to illustrate the response by citing examples of the industries. Furthermore, the paper will discuss the characteristics of industries that exhibit short and long technology cycles plus the factors that influence the length of technological cycles in an industry.
Innovation has enhanced the effectualness and well organized plans that are efficient in manufacturing of merchandise and availing them to the market. The development of new industries has been facilitated too. This has been a success on the side of innovation since in most cases; companies that do not continuously innovate on proper ways of developing, manufacturing and distributing procedures of their goods efficiently are mostly likely to collapse due to stiff competition from their rivals (Chesbrough 2003).
Innovation is important during conventions of the future challenges of the environment. Incase of need to reduce wastes found in the environment, the amounts of carbon should be reduced. Conversely there is a need to discover innovative habits to split the connection between financial augmentation and resource exhaustion and ecological deprivation. Innovation has also at large boosted economic growth.
The increase in the relevance of innovation as an approach in competition has greatly been influenced by globalization of the market. This has led to stiff competition that has resulted in swifter and creation of quality products and services to the customers thus pressure being exerted further on competition. Information technological advancement has assisted in creating rapidity for innovation. Information technologies have assisted firms to diversify their merchandise and help to strike the competitor.
According to Chesbrough (2003), one of the characteristics of an industry that exhibits a short technological cycle is that its structure is mostly informal due to the absence of inflow of new ideas. The same ideas of the people who started the firm are still in use. The owners of these firms can not compete with others as the means to outdo the fellow competitors are unavailable. If there is stiff competition in the located place, then this business will automatically collapse.
Single products and services are offered on an entrepreneurial basis. For collective individuals, single products are offered with variations in quantity at different times. The goods are not of good quality as a result of absence in competition. In addition to that, the goods produced are only those that are required and their demand is high too,
The total outcome depends on the individual’s hard work. If quality products are manufactured, then the total outcome for the owner will be high. In addition to that, his availability to the customers will count a lot. If he avails himself to the customers all through, then the outcome will be high. Though, despite all these, these industries are characterized by low outcomes as compared to industries exhibiting long technological cycles.
Industries with long technological cycles having high standard advancement expenses are forecasted to be capable of displaying advanced altitudes of attentiveness as well as stable competition, perpendicular amalgamation, investment and exploration strength, plus lesser paces of entrance and egress than industries with a short technological cycle.
Goods and services produced by these companies are of high quality. The amount of goods produced is also constant due to high demand. Goods are also diversified into a variety of other products as a result of in cooperation of new ideas within the company from innovation. Goods are of high quality and owners of these industries are capable of competing with other firms and even beating them. These companies are very stable.
Information and communication technologies have transformed accessible businesses leading to promotion in production and intensification. They have permitted firms to avail fresh goods as well as services to the marketplaces offering new techniques towards latest information businesses. All these industries exhibit low costs of marginal production; both of them experience impacts of the network (Chesbrough 2003).
Network industries are regularly exemplified via momentous explicit speculation in communications and a need to restructure. Lessening of network industries has led to new confrontations being faced in firms. Dictatorial disputes comprise the governing access to a set of connections, general services moreover the prices for various goods. All these are universally attributed to the competition as a result of innovation.
The momentum of the customers influences technological development. In circumstances where the consumers tend to spend their capital freely in purchasing the merchandise, fellow customers will also be prompted to establish new ways concerning their expenditure. However, decline in frequencies of spending by customers is also inhabited too. Whenever the expenditure of consumers rises, one will try as hard as possible to satisfy all their needs. The manager therefore searches for some innovative ideas from colleagues and thus leads to adoption of new technological methods (Chesbrough 2003).
Innovations gained technologically closely relate to manufacture along with utilization of new products or else creation of presented goods by means of new methods. Once the manager of the organization receives and co operates new ideas that are mainly as a result of technological advancement, then the faster the technological cycles in a firm. However, the pace of technological innovation varies as it takes place at a preferably constant rate.
Varying quantities of the inventories affect the length of technological cycle advancement. Goods are mostly vast when the demand among the customers is high. However the reverse happens when the demand reduces. This decline has a negative impact on the advancement in the technological cycle of an industry. With regard to this, an individual will tend to wait until the fluctuation in the amount of goods produced is done away with before focusing on technological improvement of the industry.
Reference
Chesbrough, H. (2003). Open innovation: The new imperative for creating and profiting from technology. Harvard Business School Press, Boston.