Innovative Business Projects

Rajagopal

• Publisher: Business Expert Press
• Year: 2016
• Print ISBN: 9781631575297
• eBook ISBN: 9781631575303
• Topic: Betriebswirtschaft
• Subtopic: Projektmanagement

This book addresses the project management tools and techniques in reference to innovation management analyzing global-local business scenarios, project environment, and administrative perspectives. It also details the financial, risk management, new project designs, complexities in managing innovation, and developing customer-centric innovation projects. Discussions in the book also deliberate on how innovation business project can be managed systematically to enhance organizational performance.

CHAPTER 1

Thinking Out of the Box

Overview

Globalization has driven competition and new challenges among firms to sustain in the marketplace. The innovation business projects in most companies follow a boom-bust cycle. As the economy prospers, companies invest substantial resources in developing innovation projects to lead in the competitive markets, while they rethink their priorities in view of the cost-benefit ratios when the markets soars. Growing firms are engaged in developing competitive strategies and innovative differentiations in staying sustainable and competitive in the global marketplace. In order to gain competitive advantages, companies explore innovative business projects to enter the new market segments with first-mover advantages. This chapter discusses the key indicators of globalization and business environment that need to be analyzed by the companies in order to develop innovative business projects to drive competitive differentiation among various consumer segments. Creating competitive advantages for innovating companies does make a difference by pulling the entire ecosystem into a creative conversation and developing a challenging business project with innovative differentiation. Leaders, who put all the pieces together, will have a huge advantage as innovation trends, lessons from business projects, and critical success factors of innovative business in the emerging markets have been critically examined in this chapter.

Globalization and Business Environment

Globalization has become a functional dynamics of the emerging firms in the business environment today. Most firms believe that globalization is a synonym to business growth, and invest perennial resources in developing strategy for going global. It has become one of the most pertinent issues for managers of growing firms around the world. In the process of evolving global, many forces drive local enterprises to globalize by expanding their brand reach and participating in foreign markets through various modes of entry. In developed countries, domestic markets have turned mature and are demanding to seek international markets, while in some countries like Brazil, Russia, India, and China, most companies in the present competitive marketplace are found to be born global. A large number of companies in the United States has been nourished by the huge domestic market, but they typically lag behind their European and Japanese rivals in internationalization. Born global firms hold dynamic growth in the competitive marketplace and achieve substantial international sales from an early stage in their development, despite economic and technological constraints. They internationalize rapidly as the period from domestic establishment to initial foreign market entry is often three years or less. Born global firms are emerging in sizable numbers worldwide. Until recently, international business was mainly the domain of large, well-resourced multinational enterprises. The appearance of large numbers of born global firms is revolutionizing the traditional character of international business and helping to reshape the global economy (Cavusgil and Knight 2009). Companies intending to go global exhibit two apparent objectives—one is to take advantage of opportunities for growth and expansion, while the other is survival in the business amidst growing competition. However, firms that fail to pursue global opportunities will eventually lose their domestic markets and may be pushed aside by stronger and more competitive global firms. In the process of going global, firms need to adopt innovative marketing strategy to sustain against competing firms. Most firms follow a global perspective to expand their business across the destinations instead of adopting a country-by-country or region-by-region perspective in developing a marketing strategy (Rajagopal 2014).

The need for competitive differentiation through continuous innovation to attract new customers and retain the existing ones has become a major challenge for the companies to sustain in the markets across geo-demographic destinations in the world today. Businesses constantly innovate to augment the stakeholder value, and deliver competitive advantages to the customer through innovation and technology breakthroughs. The customer-centric companies are engaged in developing innovative business projects not only to increase customer value in the competitive marketplace, but also to gain sustainable market share of their products and services. Innovation-driven companies are thinking afresh about capturing more value and also encouraging the start-up ventures by proving seed capital to bring innovation to business using technology and human resources. In the splurge of globalization, dynamic companies tend to spot the innovation opportunities that provide them the first-mover advantage at low cost, and leverage customer value. The innovation, thus, commonly begins with small start-up enterprises (SUEs) and is later nurtured by large companies that establish the competitive difference in the marketplace (Michel 2014).

Along with the growth of information technology, small entrepreneurial ventures are developing rapidly in the 21st century for providing business support to the large companies within the industry. A start-up company is a low-resource and small-size enterprise, or a partnership organization designed to search for an innovative and scalable business model. These companies are generally newly created, innovative in the process of development, and are engaged in customer-centric research for target markets. The start-up companies are largely located in the emerging markets and have become internationally widespread during the dot-com bubble when a great number of Internet-based companies were founded. The start-up companies are often assumed to be solely technology-based companies aiming to go global with enormous ambition, innovation, scalability, and growth.

Going global is an easy process for firms. Firms need to simulate the impact of their business in global market in reference to their resources, target markets, and operational efficiency. Most firms concentrate on product markets considering that the customers seek benefits or want to be served with the same products, services, innovation, and technology, regardless of the geo-demographic differences and cognitive behavior. There are a number of paradoxes in communicating the product-marketing strategies in global marketplace. For example, in advertising products and services in the global marketplace, paradoxical values may emerge within and between cultures. It is necessary for the firms evolving to global scale to understand that markets are people, not products. There may be global products, but there are not global people; hence, firms need to adopt the consumer-centric marketing approach in the global marketplace, rather than going rampant in employing strategies to outmaneuver or outperform the competitors in the marketplace (Svensson 2002; Rajagopal 2012).

Globalization has driven the economic philosophy of governments of many developing countries toward industrialization by allowing large multinational corporations and major financial institutions to help local companies and shape the national economy together. Various digital platforms serving to improve the business performance have widened the global reach of local business by encompassing entrepreneurs, business application developers, and small businesses, which are growing as ancillary to the large companies. Globalization, on a positive measure, has established a common thread in economic growth and instituted new-industrial revolution since the mid-20th century. The industrial revolution is driven by continuous innovation to drive competitive differentiation in business today through the movement of goods, services, finance, and people. Global flows are bonding new levels of connectedness among economies and playing an ever-larger role in determining the economic growth and companies.

Globalization and its impacts have profound implications for a broad range of issues important to the funding community. These issues range from the sustainable use of the worlds’ resources and the protection and preservation of the environment, to the need to improve living standards, safeguard human rights, promote and protect cultures, and ensure democratic and responsive global governance. Globalization of market opportunities was observed as the outgrowth of the aforementioned factors, and the scope of such marketing opportunities has increased with the continued deregulation of the significant functional sectors like financial services, leisure industry, information technology, and so on.

Most companies have adopted international expansion as a strategy by implementing the innovation projects across the geo-demographic market segments to take advantage of business opportunities. The companies prospecting to succeed in the competitive marketplace commonly set objectives as increasing revenue, bypassing hypercompetitive or saturated home market by striking innovative differentiation, and entering in an emerging or lucrative market. In the global markets, companies leverage their leadership capabilities by continuous innovation and improving their business performance against dynamic competition. However, success of business expansion in international markets is not guaranteed with conventional wisdom. The variety of factors that lead to business failures include lack of understanding of the purchasing characteristics of consumers, underestimation of the local competition, lack of innovation, supply chain issues, and poor strategic decisions, and the business analytics of expansion. However, Aldo, Carrefour, and Nordstrom were successful in the global marketplace as they understood customer preferences and focused on location advantages and customer-centric innovations (Yoder, Visich, and Rustambekov 2016).

Globalization has increased the access to the markets as the remote markets have been reduced following the political and economic changes worldwide. The market access has also been improved by the growing trade blocks at the regional level. Such accessibility to the markets is further reinforced by reducing the trade barriers through far-reaching business communication strategies, product and market development programs, and customer relations. This situation has given a boost in determining the market opportunities as narrowing the trade barriers helped in deregulating certain sectors of trade, such as financial services. The technical operating standards and protocols are being widely adapted to synchronize with the global industry standards. The resources are managed externally to a large extent as the best and low-cost materials are procured locally by the multinational companies. The benefits of global sourcing for such companies include low-cost labor, uniform quality, innovative ideas, access to local markets, economies of scale, lower taxes and duties, lower logistics costs, and more consistent supply. However, there are also some risks in global sourcing that might be political, economic, exchange, or supplier risks. In globalization, the product lifecycles are getting shorter as the new products are penetrating with higher speed in the markets due to technological development and scale of operations. In this process, many products are dropped off the product lifecycle either at the stage of introduction or growth. There are few products that sustain till the mature stage is passed. The growth of technology and its dynamic synchronization with the industry is converging fast, leading toward quick adaptations of global products. The globalization of customer requirements is resulting from the identification of world-wide customer segments of homogeneous preferences across the territorial boundaries. Business-to-consumers and business-to-business markets are powered by the consumer demands from the global companies, as they are perceived more value-oriented and of added benefits. Innovation and technology played a pivotal role in opening the global avenues for the regional firms.

As globalization marches onward, the multinational companies have shown the trend of continuous expansion to the newer geo-demographic destinations by setting alliances with the powerful local companies. The business partnering helps the multinational companies to wall against the increasingly winning competitors in the local marketplace and serving the stakeholders with the vision of “going global and acting local” with innovative and competitive differentiation. Such business expansion strategies have come true in the emerging markets, where multinational companies thrive to gain market leadership by building their brand image over the local products and services. In China and India, the instant food products, laundry detergent, and domestic appliance markets provide interesting examples of this phenomenon. The presence of multinational companies in the emerging markets has significantly affected the business of local enterprises. However, in some cases, foreign competitors have been able to resist the market gains of local competition, whether through first-mover advantages or by acquiring the leading local players and nurturing their local identity and strengths. Large companies in the local markets are able to make good returns by demonstrating the competitive differentiation by working continuously on the innovative projects and developing intangibles, such as product designs, technologies, management systems, and company cultures, partnering with local companies (Santos and Williamson 2015).

Competitive Differentiation

Companies have always bargained for competitive advantage in manufacturing and marketing of new innovative products, launching them with big infrastructure support, developing cost-effective strategies and combining it with competitive advantages, improving products and services efficiency, and managing customer-centric business operations to augment the stakeholders’ value. One of the pertinent questions that drives the companies to ponder over is not “what more to make” but “how can the things be differentiated” to offer competitive advantage to the consumers. Such situation in the market has spurred because companies have poured identical and marginally differentiated products in the market that have strayed the consumer decisions and caused involuntary cannibalization of products within the product lines of a company. Thus, companies should establish clear and sustainable differentiation in their products and services, and work on innovative business projects to gain distinctive benefits in the competitive marketplace. The gravity of designing, developing, and carrying on innovative business projects demands to rethink of the conventional strategy principles from the perspective of the sources and locus of competitive advantage and cumulative advantage over the long term against the competitors in the marketplace. However, the market dynamics in the market today is driven by shifts in customers’ purchase criteria rather than by improvements in products or technology (Dawar 2013).

Competition among firms in marketplace was regarded as a challenge toward developing and disseminating innovations among consumers in the 20th century, while it has become a way of doing business for firms in the 21st century. Firms emerge amidst competition, survive with the competing firms, and extinct or merge with stronger firms in the lifecycle. However, somewhat paradoxically, firms in a homogeneous marketplace survive with undifferentiated marketing strategies like selling identical products at the same price (Stigler 1957). International competition and the increasing globalization of business have driven global interest in the forms of governance for innovation-led production and differentiated marketing strategies. Potential firms evolve in the market competition through innovative manufacturing and marketing strategies, and developing a lean organization design. Competing firms embed their innovation insights in social networks to co-create value in business for sustainable growth.

Most consumer products manufacturing and marketing companies like Procter & Gamble (P&G) have driven its phenomenal growth over the past generation by innovating from within, successfully implementing many innovation projects and hiring the best talent across the destinations. Prior to globalization movement in the mid-20th century, most companies were smaller in their size of operation and were less competitive due to low involvement in innovative business projects. However, since 2000, a large number of companies have redefined their business growth objectives by spending greater amounts in innovation projects even for small returns as long as the innovative business project could set the percepts of competitive differentiation among consumers. Consumer products companies like P&G have replaced their conventional “invent within company” approach with an open “connect and develop” innovative business model to sustain market competition. By identifying innovation-led business projects and building on required capabilities and competencies to carry them on, P&G realized it could create better competitive differentiation and cheaper products faster by developing products faster and at relatively lower prices. Among most successful connect-and-develop products of P&G that made significant difference in the market are Olay Regenerist, Swiffer Dusters, the Crest Spin Brush, and the Mr. Clean Magic Eraser. Companies that are actively engaged in the innovation-led business models actively integrate suppliers, local manufacturers, and start-up entrepreneurs to work with new technologies, packages, and products that could create competitive differentiation in the marketplace. However, the low-resource companies are still adhering to conventional market infrastructure and are confined within the geo-demographic limits to carry out their innovation business insights (Hustin and Sakkab 2006).

A market within a competition scenario can be described at any specific point in time in terms of the direct and indirect connection among the market players (Cooke 1982). The market can, thus, be seen as a structure that is reconfigured as a result of strategic actions to outmaneuver and outperform competitors, and in this process, firms tend to switching suppliers, establishing new customer relationships, mergers and acquisitions, the formation or dissolution of strategic alliances, and forcing the entry or exit of sellers and buyers. Such strategic actions are major examples of firms reconfiguring the competitive strategy in an imperfect marketplace. The competition scenarios in the global marketplace through which firms pass in their lifecycle is as described as follows (Rajagopal 2014):

• Cocooning
• Open niche
• Expansion-industry competition
• Struggle for existence
• Survival of the fittest
• Consolidation
• Portfolio development
• Creating a posture
• Achieving sustainability in business

Small firms begin their business in a niche and try to achieve perfection in business by serving the consumer segment within the geodemographic limits. Most firms initially monopolize their market with their innovative products in a niche and cocoon their marketi...

Table of contents

• Cover
• Title
• Copyright
• Preface
• Acknowledgments
• Chapter 1. Thinking Out of the Box
• Chapter 2. Analyzing Business Scenario
• Chapter 3. Setting Up Innovative Business Projects
• Chapter 4. Project Environment
• Chapter 5. Administering Business Projects
• Index
• Adpage