Summary Innovation, Organization, and Entrepreneurship
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Course
Innovation, Organization and Entrepreneurship
Institution
Tilburg University (UVT)
This document summarizes the entire course "Innovation, Organization and Entrepreneurship" of the Organizational Sciences study. The summary contains all the course material required for the exam. Extensive but clearly legible, easy to print out and to take to the exam so you can quickly scan every...
Hoorcollege 1 - Firm survival rates, innovation
Firm survival rates
1. Less than 0,1% of US firms live to the age of 40
2. Conclusion: average firms do not live as long as ordinary human beings
1. Neither strength nor intelligence guarantees survival. Only adaptation can do that
2. Biological evolution (flora and fauna)
3. Economic evolution (firms)
4. The ability to adapt and innovate separates successful companies from unsuccessful
companies
Different kinds of innovations
3. Innovations
1. Product innovations
1. In goods
2. In services
2. Process innovations
1. Technological
2. Organizational
Improvement / renewal
Improvement / incremental Renewal / radical
Evolutionary, incremental Revolutionary, jumps
Leitmotiv: we can always improve (more of Leitmotiv: crisis - we have to change (first
the same) change, then improve)
Preventive, correctable Destructive, no way back
Focus: management of operations Focus: management of oppurtunities
(efficiency) (resource leverage)
Dominant role of P&C Focus on creativity and entrepreneurship
Brings you money on short term Costs you money on short term
NO guarantee for the long term ESSENTIAL for continuity on LT
Two opposed forces at work
4. Voice of the customer > outside in > market pull > marketing
, 1. More incremental innovations:
improved car
5. Technological opportunities > inside out >
technology push > R&D
1. More radical innovations: invention of
the car (more recent: biotechnology,
internet)
Product life cycle / S-curve
Uitleg life
cycle
Characteristics Fluid phase Transitional phase Specific phase
Innovation emphasis Functional product Product optimization Process
performance & variation optimalization (cost
reduction)
Stimulated by Technological Users and Cost pressure and
possibilities technological improving quality
possibilities
Type of innovation Frequent product Large process Incremental process
changes changes change
Process General, flexible but More specialized, Highly efficient, but
inefficient less flexible but inflexible
more efficient
Size of organization Small-scale Medium-scale Large-scale
Organizational control Informal, Liasons, project Formal, rules,
entrepreneurial teams structures
, Characteristics Fluid phase Transitional phase Specific phase
Emphasis on Frequent redifinition From flexible and Stable tasks, more
of tasks, limited responsive to rigid hierarchy
hierarchy, high and predictable. (coordination and
lateral From entrepreneurs control), top-down
communication to managers. From communication
external orientation
to internal
orientation
Structure Organic structure From informal to Mechanic structure
(adaptability) formal (predictability)
Environmental High Moderate Low
uncertainty
Technological discontinuities
Competence enhancing Competence destroying
Large improvements in price/performance Large improvements in price/performance
Builds on existing knowledge Existing knowledge becomes obsolete
New products or new processes Entirely different knowledge and
competencies
Rich get richer: established players benefit Rich get poorer: new entrants benefit
Hoorcollege 2 - Roland Berger
Roland Berger Strategy Consultants is a global firm - they provide strategic advice to the
world’s top decision makers.
The world is changing - so are consumer preferences and behavior
6. Ageing population
1. Increasing demand for functional food (health-supporting diets)
7.Increasing share of private label
1. Consumers trade down in some areas so they can trade up in others
8. Increasing number of immigrants
1. Increasing demand for native food
9. Accelerating smart-phone penetration
1. Constant access to information and services
For all players focus is needed on key trends
10. Health
1. Fitness
2. Wellness
11. Corporate responsibility
1. Ecological awareness
2. Social change
12. Polarization
1. Poor vs rich
These lead to the following FMCG-trends
16. Strategic alliances
17. Increasing penetration of private label
18. Uptrading vs downtrading
19. Efficiency pressure
20. Growth in developing countries
21. Customization
22. Vertical integration
23. Sustainability
24. Social responsibility
25. End-to-end supply chain
The retail industry is a result of the regular rising of new retailing concepts which offset old ones
Increasing private label penetration has been putting brand space under pressure: brands own a
shrinking part of the
consumer wallet
Private label growth:
26. Happens across categories and countries
27. Is not likely to stop
28. As it it driven by intrinsic advantages for both retailers and consumers
Private label expansion is an international phenomenon, driven by private label’s attractiveness to
retailers and customers
Food retailers professionalize their private labels and push growth by increasing market spend
Supermarkets and drugstores are extending the Private Label gamut: cost advantages result in a
higher margin for the retailer
Only in a few categories, brands have been able to resist the growth of private labels
1. Diapers
2. K
e
t
chup
3. Dry
cat
food
4. Breakfast
Some major retailers have been actively driving the penetration of Private Label
extending coverage to all price points
Challenges for corporate brands:
8. Develop high quality, innovative products that justify positioning
compared to A-brands
9. Develop large assortment of high-quality natural products while maintaining
favourable price
10. Fast follow new National Brand products at similar quality and a better price
11. Obtain prices comparable to that of discounters, while maintaining quality standards
Premium Private Label products put pressure on Premium Brands
12. Market share decrease due to premium value and mid value private label products
,13. Decrease of brand equity to value erosion
Discounters, offering products equivalent in quality to private label for cheaper prices, have created a
price slide
Development trends:
14. In the 1980s, retailers
created their private labels
corresponding to the
positioning “good value for
money”
15. Hard discounters,
thanks to their new concept
benefits (simplification, de-
profileration) manage to
offer equivalent quality to
private labels products at
first price level
16. National brands,
retailers private labels and
first price products adapt
price positioning
Discounters show ongoing growth and challenge the status quo
17. Key playeers drive internationalisation (Aldi, Lidl, Dia)
18. Growing discounter share in and outside home markets
19. They challenge the status quo
Hard discounters have superior EBIT-levels
De EBIT (Engels: earnings before interest and tax) is een
maatstaf voor de operationele inkomsten van een
onderneming voor aftrek van rente (interest) en belasting
(tax).
Discount has become a distribution channel that attracts all consumer profile types
20. Discount has broken down several stereotypes (low prices, large surfaces and high
prices/proximity)
21. Discount is most often a complementary channel to traditional trade like hyper- and
supermarkets (77% of discount shoppers are also buying in hyper- and supermarkets)
Innovation emerges from three areas
22. Lifestyle
1. Healthy and fresh food
2. Convenience
3. Flexibility
, 4. Unique and enjoyable
5. Experience
6. Cost-conscious
23. Technology
1. Household technology
2. Internet
3. RFID
4. Narrowcasting
24. Society
1. Eco-awareness
2. Aging - affluent elderly
3. Smaller percentage of food expenditure
4. Customers are erratic and less loyal
5. Smaller households
6. Higher demand for personal contact and smaller scale
History has proven that successful innovations contribute to growth
Level of innovation Innovations Examples
Innovation in the product 1. Quality and 1. Unox soups in a bag
offering packaging 2. Precut vegetables
2. Healthy and fresh 3. Steam-cooked meals
3. Easy and ready-to- 4. Optimel, Actimel,
eat Yakult, Vific, Becel Pro-activ
4. Functional diary
Innovation in the retail 1. Additions to existing 1. Albert, AH to go, XL
format retail concept 2. Aldi, Lidl
2. Retail lines, 3. Albert Heijn, Tesco,
discounters Carrefour
3. Private label
positioning and coporate
brand strengthening
Innovation in the value 1. Products enter retail 1. Nespresso, DE,
chain 2. Propretors with a lot Swirl, Ola
of traffic enter food retail 2. Schiphol, NS
3. Non-food and food 3. Ikea, NS, V&D La
producers innovate Place, Gas stations
4. Senseo, Perfect
Draft, Coolskin
On global level, natural and minus claims are the largest claim-groups - convenience and ethical
having growth rates
, A lot of companies advertise with claims like “Natural”, “Less fat” of “100% Pure”
A large part of the products is claimed natural or minus among both leading food and beverages
companies and private label
The shelve functional is increasing
Neighboring industries, including pharma and ingredient suppliers, are
jumping into the consumer healthcare market
25. Pharma
1. Targeted market
2. Marketing via healthcare
professionals (no consumer marketing power)
3. Focus on disease and pre-disease
4. Strong through knowing how regulation works
26. Functional food
1. New mass market
2. Marketing to consumers
3. Focus on growing risk factors
4. Often medical endorsement
5. Regulated health claims
27. FCMG
1. Mass market
2. Marketing to consumers
3. Focus on pleasure, convenience and human needs
4. Strong branding, consumer understanding and access to
mass retail
28. Ingredient suppliers
1. B2B market
2. Focus on active ingredients
3. No strong brands
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