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Business Innovation and Success

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Businesses are currently operating in an environment where their ability to compete relies on their capability to innovate. Indeed, Abdul Ghani, Jayabalan, and Sugumar (2002) have argued that the much celebrated information era is over. The global business atmosphere is now in a creative epoch, in which the rate of innovation is an only guarantee for a sustainable competitive advantage. However, business organizations are production hubs, and not innovative ones. Businesses are established to maximize profits and fulfill the customerís needs. As a result, it is hard for organizations to explore innovations. Developing groundbreaking ideas has more benefits than just maximizing profits. Studies indicate that at least 80% of businesses think that business innovations have a positive effect on both a business and a society. In an extremely competitive global business environment, businesses must integrate an additional element into their competitive strategy, which is innovation. In this regard, this paper as reaction paper writing discusses the essentiality innovation in ensuring business success in relation to two sectors: a retail sector and technological one. The study provides some examples of successful innovative firms and their groundbreaking efforts.

Innovation and Modern Business
Scientists have defined the term innovation as a new idea, process or device that can distinguish an individual or business from the ordinary environment. In other words, innovations enable business organizations to stand tall, above the shoulders of other businesses. It can be achieved through the creation of processes that are more effective, products, services, ideas, and, most importantly, technology. As a result, it breaks into the society or market. Economists have consistently argued that sectors and industries must consistently transform their economic structure internally. It implies that innovation strategies of any organization should focus on better and effective products and processes.

In business and economics, innovation is a facilitator of business success. With dramatic improvements in communications and transportation over the past few years, the concepts of the old universe of a comparative advantage and factor endowments are outdated for the present global market. Such concepts focused on the unique inputs of an area as a key success factor. On the contrary, innovation, as the key success factor, is customer-centered. It aims at delivering high quality products and services. Consumers of the 21st century are very critical and expect high quality at the cheapest prices. Through innovations, firms can meet the expectations of the 21st century customerís base. The old concepts seem to fail terribly in dealing with modern clients. This explains why innovative firms are successful. The next sections of the paper discuss innovation in relation to two retail and manufacturing sectors.
Innovation in Retail Sector
Retailing is an extremely competitive and dynamic sector of the economy. In this sector, consumers are the final arbiters of organizationsí capability to forecast and detect market trends, distribute as well as procure services and products that represent the consumer value. Retailing companies have to struggle with each in order to align themselves to the ever-changing consumer needs and expectations of value. No retail company is too huge to fail in this initiative. In addition, amongst the drivers acting on the retail sector, there are those working to further improve consumer power. Therefore, the capability to innovate successfully in order to create customer-centered differentiation being crucial to the general success of the retail sector and significantly decisive in the survival of respective companies.

Nevertheless, the external discernment by several ones of the retail sector is that companies of all sizes are poor innovators in comparison with other economic sectors, such as technology, pharmacy or engineering. A recent study by the European Union Research and Development (EU R&D) scoreboard, investigating the innovation performance of 1000 European firms between 2002 and 2011, has categorized general retailers as having the innovation intensity ranging between medium and medium-low. The study has indicated that only 27 retail companies in the top 1000 companies were ranked by the industrial R&D spend in 2011.

The absurdity emerges partly because retail firms seem to innovate differently. Governments, policymakers and academics have recently stressed on the significance of innovation in a service sector. It has resulted in re-focusing the policy and research attention on non-technological aspects of innovation. Nevertheless, while retailers are in fact service businesses, the majority of them have essentially become hybrid innovators. The sector shares a characteristically different approach and mixture of characteristics with regard to innovation. Generally, retail firms are capable to participate in innovation behaviors, which are characteristics of both service and production sectors.

Examples of Successful Innovative Retail Firms
Some of the innovative retail corporations include IKEA and Asda. For instance, IKEA is not successful only because it has great products. It has pioneered a new business model characterized with its low cost and high design value; the new customer experience is characterized with plug and play home design. It has developed a new process in which customers assemble the product. On the other hand, Asda, Wal-Martís subsidiary in the UK, was not successful not only because of economies of scale. As Wal-Martís subsidiary, Asda uses a high-tech information technology, which has been critical, it grows. Asda has a computerized point of sale (POS) system able to identify every unit sold. Through the high-tech information technology, it is capable to lower operational costs, which translate to low prices in the retail sector. In general, the high-tech information system has distinguished Asda from its competitors enabling it to edge out the competition in the retail industry.

Innovation in the Manufacturing Sector
The manufacturing sector is varied and comprises of an extensive number of different industries, activities, and technologies. Besides some established industries in these sectors, including aerospace, food, drink, electronics, automotive, and pharmaceuticals, new industries are being developed, especially around new emerging technologies. Some of the groundbreaking technologies in this sector include nanotech, low-carbon, and biotechnology. In the UK, the manufacturing sector ďwas the third largest one in the UK economy, after business services and the wholesale/retailĒ sectors in terms of share of the UK GDP.

Studies have indicated that the global manufacturing industry has been on a dwindling trend over the recent years. The dwindling has become particularly acute at the onset of the financial crisis. The manufacturing sector faces serious challenges. The most obvious challenge is the demand coupled with the ongoing international economic slump. The latter one has decreased both businessesí and consumersí purchasing power. Despite this being the control of a manufacturer, there is another challenge that the manufacturer has to address, i.e. international competition. Inevitably, manufacturing firms are never going to be the cheapest place of producing goods. As a result, individual manufacturers globally should be figuring out how they can ensure they can compete regardless of being comparatively expensive.

The solution is that the global manufacturing sector has some real capabilities, which manufacturers need to capitalize on. The sector has some wealth of technical knowledge and skills, which can spur innovations. Innovation is a key in this sector. By enhancing the technical abilities of employees and establishing R&D strategies, manufacturing organizations can utilize innovations to attain a unique competitive position. It involves using manufacturing and R&D processes to provide consumers with new commodities.

Some manufacturers have moved far ahead and deployed innovation in enhancing manufacturing processes in order to minimize waste and increase profitability. For instance, ensuring that products have some physical consistency so that a single production line can make as many components as possible allows manufacturers to be competitive at large production volumes. Innovation has an important part to play. It promotes the productivity growth via the development of services that are more valuable and products, the development of new technologies, and business models that improve efficiency at the firm level.

Examples of Successful Innovative Manufacturing Organizations
Car manufacturers, including Ford, Nissan and Toyota, have succeeded partly because of innovations. It is evidenced by the recent success of these manufacturers to attract new consumer markets. Toyota has manufactured the hybrid Toyota Auris in the UK, which was the first hybrid engine to be manufactured outside Japan. Nissan invested in the manufacturer of the mass-market electric car. Ford has invested in a new low carbon engine. These innovations have catapulted these manufacturers to the future. Consumers expect to drive electric or low-carbon cars in the near future. In other words, such innovations guarantee success in the future for these companies.

Modern customers need many details and expect high quality goods, which can only be achieved through innovation. Innovation is a key driver in the success of business in the 21st century. The concepts of the old world of the comparative advantage and factor endowments are obsolete in the present global market. Such concepts have focused on the unique inputs of an area as the key success factor, whereas innovation is customer-centered. Some of the innovative retail firms include IKEA and Asda. Innovative manufacturing organizations include Nissan, Toyota, and Ford. Despite affirming that the concepts of the comparative advantage and factor endowment cannot guarantee success, this paper recommends that the future research should focus on improving and redefining these concepts to fit in the modern world. The only limitation of this study is that it has focused on two economic sectors. Therefore, the results might be representative of the entire economy. As such, future studies should integrate other economic sectors to increase the accuracy of findings.
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