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Role of innovation in creating the competitive


In order to achieve sustainable competitive advantage, firm needs to become better than its competitors and this competitive advantage can be sustained. This can be achieve through doing new things or doing existing things differently in a way that make it difficult for other competitors to imitate.

‘Companies achievecompetitive advantage through acts of innovation. They approach innovation in its broadest sense, including both new technologies and new ways of doing things’ (Porter, 1985).

This report will focus at what Porter said through using Porter’s five forces framework and through referring to suitable examples from the two-innovator companies (iRobot and Dyson)

Porter’s five forces framework andinnovation:

Michael Porter's arguments for the new economy provide a useful starting point in the analysis of the environment. His arguments are based on exaggerated phenomena. Factors that determine a sector's profitability could be enriched with the innovation.
Porter’s five forces are the:
❖ Bargaining power of suppliers,
❖ Bargaining power of buyers,
❖ Threat of newentrants,
❖ Threat of substitutes, and
❖ Rivalry among competitors.

Not all of these forces are equally important when assessing the overall magnetism of an industry. In some industries, it is easy to gain entry, but very difficult to get out. (Porter, 1996)

I will discuss that through the role of innovation in achieving competitive advantage at iRobot.

iRobot distributes innovativerobots that are making a disparity in people’s lives. iRobot doing new things, Such as cleanouts floors to disarming explosives. They provide a big help to the world.

In the case of Dyson Company, the role of innovation had very important effect of the achievement of competitive advantage in the electrical cleaners industry.

Innovation and competitive advantage
Deciding where to build youradvantage
Today, business needs to look further afield to build sustainable Competitive Advantage.
The starting point is to focus on being great at one thing consistently at the expense, if need be, of others. Dell Computer, Apple Computer, IBM, Amazon, Wal-Mart, Tesco are examples of great companies who have built advantage and, if needed, ignored short term profitable choices along the way. HP,Barnes and Noble, K-Mart and Sainsbury’s all pay testimony to that.
It is not easy to stay this focused. It is too easy to chase every opportunity. Discipline is paramount. Many become distracted by their competition.
• “How are we faring relative to our competition?” “How do our products compare relative to our competition?”
• “Before we decide how much to spend on R&D, howmuch is the rest of the industry spending?”
These are valid questions, but they must never become the main guiding posts for decision making. Great companies are built from the absolute that is ‘how can we be our best at our one thing’.
Michael Porter, the Harvard professor, is the father of competitive strategy thinking– it is worth revisiting his thoughts.
He believes that CompetitiveAdvantage can only come from three sources.
1. The first type is a cost advantage – tools for achieving this might include economies of scale, a proprietary technology advantage or materials supply advantage.
2. Competitive Advantage can result from differentiation. Differentiation often comes from the product you sell. However it could also come from the way you sell your product or, asin the case of some luxury brands, how you market it. Reliability is a great differentiator for industries like logistics.
3. Finally, Competitive Advantage can come from focus. This sits across the other two. It suggests that competitors are failing to deliver on either a cost or differentiation basis because of their more general approach. You provide that benefit through your focus....
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