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Analyses the Business Innovation Model

Discuss about the Analyses the Business Innovation Model.

Answer:

Introduction:

This video has discussed about the business innovation and it’s important in present context. It highlights different aspects of business innovation and its application in different companies. The implication of business innovation model is that application of proper business model can give competitive advantage to the organisation in changing business environment. It is mentioned in the video that there may be 55 different types of innovation pattern in business. However, every business needs to choose the business model according to their capacity, resource and internal business environment (Chesbrough 2013). If there is inconsistency in business model and innovation pattern, lack of coordination may be resulted in business failure. Every business needs to have four processes such as initiation, ideation, integration and implementation. With the changing business environment, every co


mpany requires to change its business strategy and organisational development pattern in the needs of sustainability (Amit and Zott 2012). There is a concept of creative imitation. Creative imitation means taking ideas, which has been pioneered by somebody else, however, implementing this in business in a new way. Creative imitation adds value to the business despite using existing ideas (Laukkanen and Patala 2014). It may happen that the imitator has ability to implement the originator’s idea in a better manner. Macroeconomic environment and internal business environment influence the success of the business model. A same business model, which gives success to a business, may be detrimental for other company. The cause behind failure was that, they missed the moment, when they had to change the strategy and business model due to changing external business environment. The video highlights three misperceptions about the innovation. The first one is innovation is generation of a new idea, which has not been used before. The second one is requirement of big resources for big success. Third one is that innovation is based on fascinating technologies. Innovation is not only about technological up gradation. Its purpose is to meet the changing needs of customer as innovation increases the value of products and services from customer’s perspective and reduces cost of operation. The success of business lies in implementation of one business model at a time and the management should emphasis on long term KPIs instead of short term.

There are examples of giant companies such as Grundig, Nakamich, Nokia and Kodak that have failed in proper implementation of relevant business model. Apple has been successful to implement the business innovation model. Apple is not the originator of MP3 technology or electronics goods. In spite of that it has been successful to capture a large market share in the industry. Apple has been able to create high perceived customer value by implementing the creative imitation strategy. This company has achieved competitive advantage in the market despite having strong rivalry from Microsoft. The factor behind success of Apple is innovation of business model and not the technology. The strategy makers of Apple have strong market insight, which helped them to assess the market needs, customer choice and path of revenue generation (Dentchev et al. 2015). Continuous research on changing environment facilitates the generation of new ideas. 

This video highlights the idea of CAGE framework and its effectiveness in international trade. The analysis describes the views of Pankaj Ghemawat. He has discussed how CAGE framework is used in business in the context of international trade. International trade between two countries depend on the extent of similarity of economic environment between two countries. There are four dimension of CAGE framework, such as cultural distance between two countries, administrative distance, geographic and economic distances. The cultural distance implies the hierarchical structure of power of a country and individual perspective of the power. Language, belief, individual values create cultural distances among the countries (Serrato and Morales 2014). The administrative difference reflects the differences among the policies, regulations and legal framework of a country. Political factor affects the business environment of a company opening business in a new country. Due to differences in macroeconomic structure, the business environment differs across countries (Perera 2015). Geographical difference such as size of the economy, natural set up, difference in climate and transportation affects international business. Geographical set up affects the infrastructure of the country and thus the business (Wang, Wong and Granato 2015). Economic distances occur due to differences in GDP, per capita income, distribution of wealth, market segmentation etc. Choices of customer differ across the countries. Therefore, these factors affect the business. It is highlighted in the video that trade between two countries increases if there are similarities in cultural and economic aspects. If purchasing power of the people is same, then trade volume may increase. Cultural similarities improve trade relation between two countries.

The appropriate application of CAGE framework can be seen in case of Canada and US trade. Canada is the largest trade partner of US in the international trade. Being neighbour country of US, Canada has similarity in official language and culture with US. Per capita income is almost similar in Canada with US. Another factor for the successful bilateral trade is interdependency. Canada is major supplier of agricultural products to US. Moreover, valuable drugs are supplied by Canada to US at cheap rate. As US is major trading partner of Canada, Canada receives 20% of its GDP from export to US (Coughlin and Novy 2013). USA is major supplier of industrial products in Canada. Canada and USA both supports each other in employment aspect. In the CAGE framework, international trade may occur if there is comparative advantage in producing one good despite having differences in size. Economic distance may not be barrier for international trade if both the countries enjoy comparative advantage in different goods. USA is larger compared to Canada and therefore has absolute advantage in production. USA has greater resources in terms of capital. Trade between two countries is successful as both of them have competitive advantage in producing the exported good. Comparative advantage exists if there is a difference in opportunity cost of producing one good. A country produces and export that good, which has less opportunity cost compared to other goods.

References

Amit, R. and Zott, C., 2012. Creating value through business model innovation. MIT Sloan Management Review, 53(3), p.41.

Chesbrough, H., 2013. Open business models: How to thrive in the new innovation landscape. Harvard Business Press.

Coughlin, C.C. and Novy, D., 2013. Is the international border effect larger than the domestic border effect? Evidence from US trade. CESifo Economic Studies, 59(2), pp.249-276.

Dentchev, N., Baumgartner, R., Dieleman, H., Jóhannsdóttir, L., Jonker, J., Nyberg, T., Rauter, R., Rosano, M., Snihur, Y., Tang, X. and van Hoof, B., 2015. Embracing the variety of sustainable business models: Social entrepreneurship, corporate intrapreneurship, creativity, innovation, and other approaches to sustainability challenges. J. Clean. Prod, 113, pp.1-4.

Laukkanen, M. and Patala, S., 2014. Analysing barriers to sustainable business model innovations: innovation systems approach. International Journal of Innovation Management, 18(06), p.1440010.

Perera, P., 2015. Influence of International Trade Agreements on International Business: A Conceptual Model. Journal of East-West Business,21(3), pp.205-232.

Serrato, D. and Morales, D., 2014. Internationalization in Emerging Markets-The Case of Absolent AB entering Thailand.

Wang, M., Wong, M.S. and Granato, J., 2015. International Comovement of Economic Fluctuations: A Spatial Analysis. World Development, 67, pp.186-201.

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