1.3.8

Innovation

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Innovation

Businesses are under pressure to innovate. Innovation can be approached in two ways: product innovation and process innovation.

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Innovation

  • Innovation is the development of a new idea which leads to the production of a new product or service which can be sold.
    • For example, Dyson developed the world’s first bag-less vacuum because of its innovative approach to business.
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Pressures for innovation

  • Social changes may increase the demand for innovative and advanced products to replace current products.
  • Competition may increase a business’ focus on innovation as competitors seek to develop new products and services which will attract customers.
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Product innovation

  • Product innovation involves the development of new products which will be offered for sale to customers.
    • For example, the development of new camera technology which improves the iPhone is an example of product innovation.
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Process innovation

  • Process innovation involves improving the process of manufacturing or offering a product or service for sale to customers to add value, decrease costs or improve efficiency.
    • For example, the development of a new factory production line which improves the production of cars is process innovation.
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Advantages of innovation

  • Innovation allows businesses to improve the products in its portfolio which can increase market share, sales revenue, and profit.
  • Innovation allows a business to improve its processes which can increase efficiency and therefore competitiveness.
  • Innovation allows businesses to develop a unique selling point which can improve competitiveness and customer loyalty.

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1Exploring Business

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3Business Finance

4International Business

5Principles of Management

6Business Decision Making

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