Innovation

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 Hong Kong as the model company 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 Hong Kong 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 (Amsden, 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 Hong Kong 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 Hong Kong: An Example

Virgin Airways Hong Kong 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 Hong Kong 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 (Bartlett et al. 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 Hong Kong. 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 Hong Kong devotes its attention towards the development of a premium segment with its various airline services (Hobday, 1995).

The mission of Virgin Airways Hong Kong 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:

1. Striving in order to reach a leading position in attractive markets
2. Focusing on securing a competitive share of the airline market segments.
3. Working in order to improve the company’s efficiency and cut costs in operations.
4. Continuous growth through selective acquisitions for as long as they are able to create shareholder value.

Virgin Airways Hong Kong has four main objectives:

A) Remain one of the top companies in the airline industry. Being on top of its industry enables Virgin Airways Hong Kong 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 Hong Kong are able to meet high quality standards. As a result, the company is able to earn more profit as against other airline companies (Cyhn, 2002).

C) Build the best airline portfolio, with Virgin Airways Hong Kong as the international brand of flagship; and

D) Maintaining its independence. Being an independent company allows Virgin Airways Hong Kong 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 Hong Kong implements a strategy of promoting a combination of local and international airline services, but maintaining Virgin Airways Hong Kong 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 Hong Kong 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 (Hill, 2002).

D. Impacts of Innovations on Virgin Airways Hong Kong

Competencies

• Virgin Airways Hong Kong 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 Hong Kong has grown significantly over the years, and has experienced global expansion.
• Virgin Airways Hong Kong’s 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 (Christensen, 1997).
• Virgin Airways Hong Kong is able to deliver good customer care, as the limited amount of work would mean plenty of time to devote to customers.
• Virgin Airways Hong Kong’s lead consultants have established a strong reputation within the market.
• Virgin Airways Hong Kong can afford to change direction quickly if its management finds that the company’s innovations are not effective.
• Virgin Airways Hong Kong 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 Hong Kong’s 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 (Best, 2001).

Because of Virgin Airways Hong Kong’s 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 Hong Kong’s 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 Hong Kong is able to create its own firm-specific advantages. The continuous pursuit of research and development processes enables Virgin Airways Hong Kong 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 Hong Kong is able to market their airline services worldwide, which enables them in turn to maximize the returns on research and development expenditures (Baumol, 2002).

REFERENCES

Amsden, A. 2001. The Rise of “The Rest”: Challenges to the West from Late-Industrializing Economies. New York: Oxford University Press.

Arora, A., Fosfuri, A. and Gambardella, A. 2001. Markets for Technology: The Economics of Innovation and Corporate Strategy. Cambridge, MA: The MIT Press.

Bartlett, C.A. and Ghoshal, S. 1989. Managing Across Borders: The Transnational Solution. Boston: Harvard Business School Press.

Baumol, W. 2002. The Free-Market Innovation Machine: Analyzing the Growth Miracle of Capitalism. Princeton, NJ: Princeton University Press.

Bjorkman, I. and Forsgren, M. 1997. The Nature of the International Firm. Copenhagen Business School Press.

Best, M. 2001. The New Competitive Advantage: The Renewal of American Industry. New York: Oxford University Press.

Christensen, C. 1997. The Innovator's Dilemma: When New technologies Cause Great Companies to Fail. Cambridge, MA: Harvard Business School Press.

Cyhn, J.W. 2002. Technology Transfer and International production: The Development of the Electronic Industry in Korea. Cheltenham, UK: Edward Elgar.

Doz, Y., Santos, J. and Williamson, P. 2001. From Global to Metanational: How Companies Win in the Knowledge Economy. Boston, MA: Harvard Business School Press.

Dunning, J. 1993. Multinational Enterprises and the Global Economy. Addison-Wesley.

Grönroos, C. 1994, From Marketing Mix to Relationship Marketing: Towards a Paradigm Shift in Marketing, Management Decision, 32 (2),

Hobday, M. 1995. Innovation in East Asia. St Martins Press.

Kim, L.S. 1997. Imitation to Innovation: The Dynamics of Korea's Technological Learning. Harvard Business School Press.

www.virginairways.com Retrieved August 3, 2007