OBJECTIVES
As a person with knowledge of innovations, the author has always brought up to his superiors the viability of strategy formation regarding the analysis of this issue and at times fails to understand the reasons or logic behind certain strategic implementations imposed on it.
By delving into this project paper, the author intends to have better insights into how innovations are thought up, formulated and then imparted down into the subsidiaries of the company or organization. The author hopes to have an in-depth understanding as to how the innovations of companies enable them to compete effectively and profitably in this era of internationalization where competition is extremely intense.
In order to reinforce the learning objectives, two key focal issues were focussed upon i.e. innovation and diversity. Innovation was discussed with regard to organizational renewal and change where it was renowned for its developmental capabilities to constantly innovate. Diversity came under strategic thinking and formation as the author considered the diverse culture, political climate, economic surroundings, social environment, technological settings, government policies and legal systems in order to better understand the issues being discussed.
EXECUTIVE BRIEF
This essay utilized Virgin Airways as the model airline companies to review their present innovations and how they dealt with critical situations. From the analysis, key trends in the innovations were then identified, how they worked and their effectiveness in dealing with critical situations was ascertained. The paper then moved on to assess these innovative strategies with regard to their suitability to critical situations, during which the internal capabilities of these innovations in relation to the strategy being followed by the airline companies was determined also. An overall analysis of the performance and effectiveness of the innovations of both companies was also conducted to assess and compare the capabilities of these innovative strategies with those of others. Gaps in the innovations and environment were then identified.
Finally, several choices of strategies to improve the innovations of Virgin Airways as effective means in critical situations were recommended and evaluated in terms of appropriateness to the issues reviewed, feasibility in carrying out the options and acceptability within the key stakeholders and decision makers. Several key implementation issues related to managing strategic change were also addressed as well.
SECTION 1
A. Innovation Defined
Innovations can be defined as the creative policies and tasks that lead to the efficient and effective functioning of the organization or company. Innovations are necessary to satisfy a firm’s customers, employees, and management. Typically, innovations focus on the careful management of the processes involved in the production and distribution of products and services (, 2001).
More often than not, small companies and organizations don’t really have the capabilities to implement innovations. Instead, these companies engage in activities that various schools of management typically associate with innovations. These activities include the development of creative products, production and distribution.
However, innovations deal with all operations done within companies and organizations. Activities such as the management of purchases, the control of inventories, logistics and evaluations are often related with innovations. A great deal of emphasis lies on the efficiency and effectiveness of processes. Therefore, innovations include the analysis and management of internal processes.
Virgin Airways will be the model business entities that will be used in this research based on its history in innovations.
B. Review of Related Literature
In lieu of the present developments in society, there have been significant visions of innovations that evolved. A majority of these learning visions are based on the idea that innovation is a social process where knowledge is denied instead of being acquired passively. The pursuit of innovation, then, transforms into an interactive process. The pursuit of innovation is being verified through the help of the participants in the process such as the management and the workforce. In this framework, high quality of innovation would mean the continued guidance and support of the active learning process of the public consumers. Obviously, this would call for an intensive and phased guiding strategy.
When in the active pursuit of innovation, the interaction of the management with the public consumers forms an integral part towards its success. Collaborative learning as a method is gradually being used by companies and organizations nowadays. Through this approach, the general public can learn from the innovations of companies and organizations through the imitation of their techniques in the socialization processes. In the process, the general public is able to obtain the chance to see their own ideas in a different aspect and therefore be able to take alternatives into consideration. The relative effectiveness of this approach is determined with the capability of the public to continuously challenge their pre-acquired knowledge by trying to adapt to the interpretations of the companies and organizations.
Aside from the public and the management, the different resources of innovations belong to a third category of factors of a learning environment. Moreover, innovations have shown signs of significant growth over the past years. Consequently, obtaining knowledge becomes more complicated. This is because the transformation of all this information into knowledge requires the public to possess the appropriate reference frameworks. But media can certainly help the public transform information into valuable knowledge.
Innovations are critical in helping the management of a company in analyzing their present status in order to cut costs, increase profits, spot market trends faster, and communicate more effectively with customers. However, in order to achieve these goals, the innovations need to be relevant, accurate, complete and timely. Innovations play a crucial role in the proper functioning of information systems and technologies. Through the efficient innovations, the effective sharing of information is thus made possible. This in turn contributes to the improvement of the overall operating efficiency of the company coupled with an increase in productivity.
For many years innovations were the domain of companies and organizations, especially since they these innovations were able to guarantee that any changes to the organization would be completed. This worked well for most companies, and they could all even run on top of a database with a single client-server.
However, in recent years innovations have also become more difficult to maintain. As the number of innovations grew in response to various technologies and services, a single innovation proved to be very inefficient. Also, most innovations consist of a whole suite of programs operating together, as opposed to a strict model where the single innovation could handle the transaction processing. Nevertheless, innovations will significantly bolster the business operations of companies and organizations when successfully implemented.
C. The Innovations of Virgin Airways
Virgin Airways aims for sustainable growth as a broad market leader in the airline industry as well as for segment leadership. In both cases, the services of Virgin Airways will play a crucial part. The company is able to establish its broad leadership usually by acquiring other strong airline companies and their services, which are then combined into a new, larger company (. 1989). Offering training to its employees, improving the company operations, and the introduction of new technologies then reinforces the positions of the various services of Virgin Airways. This practically results in economies of scale that is able to create a distribution network for both the local and international terminals of the company. If a market is already in the control of other airline companies, Virgin Airways devotes its attention towards the development of a premium segment with its various airline services (, 1995).
The mission of Virgin Airways is to secure the growth of the business in a sustainable manner, while at the same time constantly improving the company’s profitability. The strategy to achieve this involves four elements:
Virgin Airways has four main objectives:
A) Remain one of the top companies in the airline industry. Being on top of its industry enables Virgin Airways to command the respect and confidence of its clients. Thus, the company is able to expand its operations through the acquisition of other airline companies.
B) Gain more profit than other international airline companies. The raw materials that are being laid down in the airline services used by Virgin Airways are able to meet high quality standards. As a result, the company is able to earn more profit as against other airline companies (, 2002).
C) Build the best airline portfolio, with Virgin Airways as the international brand of flagship; and
D) Maintaining its independence. Being an independent company allows Virgin Airways to continue its tradition of excellence in both its products and services by setting new trends and standards.
In order to achieve these objectives, Virgin Airways implements a strategy of promoting a combination of local and international airline services, but maintaining Virgin Airways as the flagship brand. The company also aims for broader positions as well as either the top or secondary positions in any airline market. Any of these positions would be enough for Virgin Airways to deliver a high level in terms of production, marketing and distribution. Moreover, these positions create a platform from which the company can promote their premium airline services and other specialties. And with a continued focus on the structures of the costs, the above mentioned objectives should undoubtedly be reached (, 2002).
D. Impacts of Innovations on Virgin Airways
Competencies
- Virgin Airways has airline services that boast of a very powerful retail. This includes a reputation for value of money, convenience and a wide variety of airline services.
- Virgin Airways has grown significantly over the years, and has experienced global expansion.
- Virgin Airways’ main competence lies on the use of information technology (IT) to fully support its international logistics system. Therefore, the company can see how their individual airline services perform within the United Kingdom, or even at other countries at a glance. IT also supports the company’s efficient procurement (, 1997).
- Virgin Airways is able to deliver good customer care, as the limited amount of work would mean plenty of time to devote to customers.
- Virgin Airways’ lead consultants have established a strong reputation within the market.
- Virgin Airways can afford to change direction quickly if its management finds that the company’s innovations are not effective.
- Virgin Airways has little deficits and overheads. Therefore the company can offer good value to customers on a consistent basis.
E. Profits / Competitive Advantages
Because of Virgin Airways’ successful implementation of its innovations, the following profits and benefits were achieved over the years:
· Financial Stability
Financial stability is crucial especially in the pursuit of research and development activities. In the airline industry, it is important to remain updated with the latest technological developments to be able to stay competitive in the market.
· Excellent Service Performance and Price
The designing of the best airline services comes as a result of well-funded research and development activities. The strong performance of airline services in the market could also be linked to their cost-effectiveness. However, Virgin Airways has to be aware of the positioning in terms of process so as to maintain satisfactory profits margin and remain competitive in the market.
· Effective Distribution of Airline Services High airline service awareness among the buyers has created the need for aggressive marketing, and access to strong distribution channels is critical for the introduction of new airline services (, 2001).
Because of Virgin Airways’ successful implementation of its innovations, the following profits and benefits were achieved over the years:
· Economies of Scale and Scope in manufacturing and research and development arising from its numerous facilities situated in the United Kingdom and other countries worldwide.
· Unique Quality Airline Technology
Virgin Airways’ commitment to research & development activities has always been one of its top strategies to remain competitive in the market.
· Differentiated Airline Services Through the production and marketing of differentiated airline services originating from their research and development activities, Virgin Airways is able to create its own firm-specific advantages. The continuous pursuit of research and development processes enables Virgin Airways to produce a steady stream of originally differentiated products which makes it difficult for competitors to find substitutes. Because of this differentiated approach, Virgin Airways is able to market their airline services worldwide, which enables them in turn to maximize the returns on research and development expenditures (, 2002).
SECTION 2:
A. Overview of Palm, Inc.
In general, Palm, Inc. is dynamic and complex organization because of its proven best quality services and being dedicated in serving the world with its management values that has kept them to be one of the best and most renowned in the computer industry business in relation to Palm, Inc.‘s climb in terms of market leadership which is the outcome of a consistent focus on delivering the best possible customer experience by means of standard based products and services in engaging the global market per se.
The external environment of a company consists of outside conditions that affect a firm’s performance. An analysis of this external environment allows a firm to identify key conditions that are beyond its direct control and those elements on which it can have an affect. Analyzing these areas of the external environment help Palm, Inc. identify the opportunities and threats in the computer industry. There are a lot of factors affecting Palm, Inc.’s business from the external environment. Palm, Inc. has tight competency with other big computer sellers like Compaq and HP. Thus, social factors also affect the business environment of Palm, Inc. Computer companies have to acknowledge that in various cultures, people are still unsure about credit card sales because of the huge expense of computers. Companies, then have to invest in door-to-door or face-to-face operations to gain consumers’ faith and consumers trust in the company and its product.
B. How the Literature fits the Organization (Palm, Inc.)
The literature fits the selected organization because of the simple fact that Palm, Inc. has used these innovations in order to propel them towards a high level of success. Palm, Inc. truly introduces original innovations that have been always supported by their loyal clients over the years.
The innovations of Palm, Inc. focus more on the management and access of information rather the creation of irrelevant services. For this reason, Palm, Inc. has developed a unique set of guiding principles – simplicity, cost-efficiency and effectiveness. Total commitment to these principles makes the services of Palm, Inc. very user-friendly to its customers (. 2001).
Palm, Inc. was able to achieve a broad market leadership through various acquisition deals over the years. The company also exerts efforts to communicate with their customers in every local culture about their airline services and their impressions. And this is no easy thing because their regular clients and customers have different tastes in terms of airline service preferences. This critical information gathered by Palm, Inc. paves the way for them to make the right decision regarding the appropriate innovations to pursue.
C. Evidences of Innovations in Palm, Inc.
1) Environmental / Internal Innovations
Beginning in 1995, Palm, Inc. started including smart-phones and handheld computers into the list of their services. These were equipped with a Personal Information Management (PIM) software and other note-taking applications (. 2001). A range of additional features including high resolution colored screens and wireless capabilities ensured that there’s a mobile product designed to meet the needs of clients anywhere in the world.
On the part of Palm, Inc., segmentation is a key factor especially in markets where a broad leadership position has yet to be fully developed (, 1994). In these markets Palm, Inc. strives for strong positions especially in the import and specialty segments.
Good examples here include Palm, Inc.’s leading position in the mobile computing industry in the US as well as the recently established markets within the capital city of Washington. In both examples, Palm, Inc. shows its desire to establish autonomous growth through expansion through the distribution networks as well as growth through acquisitions.
2) Nature of Innovation
The innovations of Palm, Inc. are focused mainly on driving the growth of its services and improving the company’s financial performance. These innovations have also helped secure significant acquisitions and partnerships. And more importantly, these innovations have led to the release of the potentials of the company’s employees, thus building a quality performance- based culture.
The innovations of Palm, Inc. are practically reinforced by the local employees themselves. These moves certainly allow the company to improve even more without the costs of introducing new technologies. These efforts have resulted in increased financial gains for the company and have allowed the establishment of distribution networks for its services.
On the other hand, Palm, Inc.’s innovations in the mobile computing industry changed for the better at the start of the new millennium and began pursuing airline service differentiation. True enough, the differentiated products and services of Palm, Inc. were able to satisfy the needs of customers through a sustainable competitive advantage. This allowed to desensitize the prices of their services and instead focused on the values that generated not only a comparatively higher price but also a better margin (. 1997).
D. Problems Encountered
The aftermath of the implementation of innovations in Palm, Inc. led to a resistance to change among the employees. Because of the adjustments to the newly implemented innovations that the Palm employees would have to endure, it was not surprising that at first they felt negative about it. However, as time went by the workforce and the innovations got to jive with each other. Along with this was the changing of leadership type from autocratic to a democratic type. This way, the participation of all key stakeholders especially the workers was more encouraged. If they felt something was right or wrong regarding the innovations, or if they wanted to tell something important to the management, they were now be free do so without any worries. Also, a democratic leadership approach allowed the management to have a feedback regarding the innovations being implemented. They immediately knew if there was any tension going on between or among the stakeholders involved. Thus, immediate action were planned and implemented by the management to keep matters from getting worse.
SECTION THREE
RECOMMENDATIONS
A tie-up or merger with various local mobile computing companies offers tremendous benefits in terms of access to the company’s innovative strategies, infrastructure and even its resources. However, Palm, Inc. must not lose sight of their core competencies while pursuing these tie-ups. Otherwise, the image of both companies might be put in jeopardy.
Meanwhile, the collaboration of Palm, Inc. with their major competitors can be seen as a ridiculous move at first. However, upon close examination, this move could pave the way for both companies to increase even more their market shares and revenues and improve their innovations (, 1993). The bottom line is both sides would be able significantly gain financially and strategically in such an alliance. Their strengths in airline service development combined with the financial capabilities and innovations of their competitors can transform them suddenly into an unbeatable force to reckon with. One possible setback, however, is the differences in the cultures of the mobile computing companies involved. Another possible setback could be whether any of Palm, Inc.’s competitors has the need to form alliances.
In terms of appropriateness, all three options are able to directly address the current issues mentioned. However, the question remains whether Palm, Inc. could be able to implement any of these options, and whether these options can be acceptable to the key stakeholders. Any merger or alliances may also involve the sharing of expertise. Palm, Inc. has traditionally relied on the inside-out approach. It is important to note that any merger transactions would have many implications on the company’s values and culture as well as the resources (, 1997). The key stakeholders definitely would be concerned with such options and need to be convinced of the positive aspects. Somehow, Palm, Inc. will be able to overcome this barrier in managing strategic changes in the process of implementing any of the above mentioned strategic options.
REFERENCES
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