Application Of Disruptive Innovation Theory Marketing Assignment (Essay Sample)

DISRUPTIVE INNOVATION
NAME:
INSTUTION:
DATE:
Part One
EXECUTIVE SUMMARY
Innovation plays an important role in creating and establishing, revenue, market share, profit, growth, and development at organizational and industrial levels (Fuah, 2013). Innovation methods and strategy are considered by the business enterprises to be key factors to be considered in deciding when what and where innovation should be implemented. Therefore, incumbent companies should listen to their clients' needs in order to invest in the production of goods and services which will generate the targeted profit margin. However, the approach only concentrates on the use of traditional economic models ignoring the emergence and introduction of disruptive forces, hence causing the failure of the incumbent companies in the long run. The main focus of this report is to describe how to manage new products and challenges facing small growing profitable businesses in relation to the disruptive innovation theory.
INTRODUCTION
Disruptive innovation theory is supposed to contribute to the success of the company but may also play a major in its failure. Disruptive innovation highlights the failure of the incumbent firms when they are faced with various changes in the market. The market and technology experience changes, the incumbent companies are always ahead of their industries in radical and incremental innovations that address wants of their existing consumers. However, the same firms fail to address their clients' needs when new technologies evolve in the market. The changes in technological environment provide different goods and services that are not valuable to the clients of the incumbent firms. The main features of disruptive products are to be simpler, cheaper, ease of use and smaller (Adner and Zemsky, 2006). The main reason for the failure of well- established firms revolves around the three elements; the faster growth in technological progress than what the market needs, the difference in the methods pursued by incumbent companies in sustaining innovation and disruptive innovation and the cost structure used by the established firms which target rapid growth opportunities and attractive profit margins (Fuah, 2013)
HOW DISRUPTIVE INFLUENCE THE PERFORMANCE AND GROWTH OF BUSINESS ORGANIZATIONS.
The innovation dilemma outlined distinct categories. That is, disruptive and sustaining based on various conditions of innovation. The sustaining situation involves creating better goods and services that can be sold by the companies and other business institutions for more prices attractive to the clients but there are also some incumbent factors that prevail in the market.
In disruptive situations, the companies need to commercialize the production of goods and services to be simpler and convenient .the products should be offered at low prices in order to appeal to the unattractive or new clients who are likely to defeat the incumbent in the market(Afuah,2013).
According to Adner and Snow, sustaining innovation normally targets clients with high demand for advanced goods and better provision of services as compared to what was previously provided in the market (2010). This is achieved through incremental improvements and breakthrough over the existing competition. However, the well-established competitors strive and eventually win the war of sustaining technology.
Disruptive innovations introduce goods and service that are not better than currently available goods and services in the world economy. These products are said to be more convenient, simpler, less expensive and more appealing to the less –demanding or new clients (Adner and Zemsky, 2006).
Once the disruptive goods and services are brought into the low-end or new markets, the product cycle advancement starts. This is due to rapid growth in technological pace than the Customers' willingness and ability to consume them.
Disrupting has greatly paralyzed the work of industrial leaders (Adner and Snow, 2010). This is because they are encouraged to move up-market and never motivated to work and defend a low-end or new market that is attractive to the disruptors. The leaders can easily get motivated if the new product and market idea is designed into disruption. Designing a business idea and opportunity into a disruption is an efficient way of outdoing the already established competitors. Therefore is very easy to be able to beat the competing firms by the use of motivating strategy to flee instead of fighting them. However, sustaining innovation is more attractive and the best sustaining business enterprises effective ignore disruptive opportunities and threats until the battle is over.
The entrepreneurs who encourage the sustaining innovation tend to turn around to sell the idea to the other industry leaders who are behind them. If these business ideas are effectively and efficiently executed, the companies will be ahead of their leaders on the sustaining innovation and then selling them quickly in order to make huge and attractive financial returns. If one wants to sell the best product into a well-established market into the capture and attractive the competitors' consumers, the competitors will get more motivated to fight back instead of fleeing the market (Ansari, Garaud and Kamaraswamy, 2016).
When most companies try to apply the expensive economic model in the market in order to sell goods and services at the relatively low prices, because none of the increased income may fall towards it bottom line. Established companies targeting the growth brought by disruption required the business enterprises to embrace it from both within and outside a particular autonomous business. Therefore, to establish a new business one should target markets and goods and services that the already established business units are likely to ignore or avoid them completely (Afuah, 2013).
The business idea identified by various business units can be shaped into sustaining innovations which could be further designed into business plans that are disruptive in nature, with an objective of increasing growth and development potential. This is because the disruptive theory is just a conceptual economic model of effect and cause that enhances the possibility to predict the results of competitive battles under different economic circumstances (Adner and Snow, 2010). These factors almost made the existing industry leaders to be toppled by their competitors since the disruptive techniques can be easily predicted by the competitors and respond immediately by bridging the market gap and providing the product that is most needed by the customers and investing in the business environment that is more attractive and profitable.
The targeted try to get their work done, but since they lack adequate income or knowledge and skills, the simpler and relatively cheaper products provided by companies has been beyond their reach. Most of these customers may compare the incumbent product and disruptive goods and services to have nothing unique at all. Consequently, the clients are contended purchasing goods and services available cost to existing consumers who have the perfect knowledge of the market.
The technology that is required to facilitate the disruption may be more sophisticated, but the disruptors tend to make the goods and services convenient, foolproof and simpler. The aspect of foolproof creates motivation among the people with less training and money to start consuming the products. Disruptive innovation leads to the emergence of the new value market network. The new clients buy the goods and services through established new channels and use the good or service in new forums (Adner, Oxley and Silverman, 2013)
The business organization that operates in a more than conducive environment may not win. This is because disruption may take away its market share or commoditization may steal its proceeds. However, de –commoditization takes place where there is attractive proceeds were unattainable in the past.
In conclusion, where one starts a business, relative the line of technological, competitive and profit seeking factors influencing the performance and operation of the business, can bring a big difference in the chance of succeeding. This way companies can be able to simplify the challenges of establishing new-growth business enterprises. This means that the business entities should start and establish their businesses without necessarily predicting how new technology will evolve. Instead, they should focus primarily on both internal and external environment to get the initial conditions right.
Part Two
INTRODUCTION
Disruptive innovations involve the introduction of new goods and services that are powerful and unique than the incumbent products hence leading to disruption in the whole industry (Afuah, 2013). For example, the introduction of mobile technology it caused disruption because it has greatly revolutionized the way people communicate. The cloud also is disruptive in nature since it has changed the process of storing and applying information. Apart from the cloud and mobile technologies, another new disruptive innovation has continued to emerge in the world economy (Adner and Zemsky, 2006). For example, Uber has caused disruption in the globe transport industry, changing everything in the public transport to the private transport that involves a use...