This article explains the impact of disruptive innovation in the hotel and taxi industry. It compares the success and failures of companies like Airbnb and Uber. It also discusses the relation between quality and mainstream customers in case of disruptive innovation.
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Running head: NEW TRENDS IN THE GLOBAL BUSINESS ENVIRONMENT New Trends in the Global Business Environment Name of the Student Name of the University Author Note
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1NEW TRENDS IN THE GLOBAL BUSINESS ENVIRONMENT Introduction Disruptive innovation has been hailed as one of the modern terms that support the fact of innovation within certain industries. It is very essential to clarify the term because the purpose of the assignment is about explaining the different perspectives of disruptive innovation in the hotel industry and taxi industry. It is one of the most interesting things because it impacts the industries in a large way. This technology affects the functioning of the market. This technology has left a lot of impact on the ways the companies used to do their business. This has impacted on the success rate of the companies as well because it would hamper the business of the companies who were not ready to adopt it. The organizations who have adopted the use of this technological innovation process have felt its impact on their business. The companies who have not improved on the previous technology can use this innovation technology in various aspects. It is a complicated process for the companies’ management to invest in disruptive innovation since they have to adopt on the disruptive technologies (Christensen, Raynor and McDonald 2015). Brief summary of the article This article is the manifestation of the use of disruptive innovation in many companies. The companies like Airbnb in hotel industry and Uber in taxi industry have felt the impact of disruptiveinnovationinahugeway(Guttentag2015).Manyupcomingandestablished companies have practiced this in their endeavor to become more famous. However, this has become to be the reason of its own failure. There are several shortcomings in this innovation processthathavehamperedthegrowthofthecompanies.Therehavebeencertain misconceptions about this disruptive innovation on whether it can be attributed to Uber. There
2NEW TRENDS IN THE GLOBAL BUSINESS ENVIRONMENT are many downward steps that could be attributed to the application if the disruption theory (Christensen, Raynor and McDonald 2015). The disruptive innovation process encourages the smaller companies to take big steps so they can be able to challenge the incumbent businesses which have already held the biggest places in the certain industry (Christensen, Raynor and McDonald 2015).The new entrants in the industry should like to address the business situations from an angle where they can successfully challengethe leadingbusinessorganizationsby targetingthe overlookedtarget segments (Markides 2012).These disruptive innovation models look to please the overlooked segments by functioning more effectively, delivering goods at a lower price. The already established business organizations do not intend to focus on these target segments (Armstrong et al. 2015). They focus on the segments where they can get more profits. This is how the new entrants move up in their industry as theydeliver allthe required performancesby their customers. Uber is considered to be an organization in the taxi industry who have contributed largely to bring advantages in this industry. the financial and strategic achievements that they have acquired in the recent times, do not let them fall into the category of the list of the companies to practice disruptive innovation (Wessel and Christensen 2012).The incumbent businesses overlook the low-end and new-market target segments. The disruptive organizations look to provide the best products and service to the low-end customers while the disrupters also make a market where no competitors have existed before. However, these conditions cannot be attributed to Uber (Lepore 2014).Some key questions will have to be identified in this scenario to do a literature review on this article. 1.Can Uber be an example for disruptive innovation? 2.Can the instance of Airbnb be taken as an example for disruptive innovation?
3NEW TRENDS IN THE GLOBAL BUSINESS ENVIRONMENT 3.What are the relations between quality and mainstream customers in case of disruptive innovation? 4.What is the mantra of ‘disrupt or be disrupted’ mean? Literature review In this part of the assignment, a mini literature review will be done on the various key questions that have been identified in the article. The proper justification has to be brought to the questions because these things have become one very important aspect in the business arena. the business associate have targeted to grab the market opportunities to the fullest. All the small startup companies should aim to take the advantages of this technology named disruptive innovation (Cortez 2014). 1. Can Uber be an example for disruptive innovation? Uber has always been taken as the example for the disruptive innovation process. However, Uber cannot be tagged as a proper example for disruptive innovation. This company hasbeenregardedasamuchcelebratedtransportcompanies(Isaac2014).Themobile application of that company has been helping the passengers. The organization has received a huge growth in the last few years. The financial success of the organization has been huge as well. The classic tests of disruptive innovation are not properly applicable to Uber. This is because Uber did not made its way from being originated in the low-ending or new-market footholds. The reason that is considered to be one of the most important things is the fact that Uber had caught hold of the mainstream market in a better way than the incumbents. This is why experts have suggested not including Uber in the list of the companies to practice disruptive innovation (Isaac 2014).
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4NEW TRENDS IN THE GLOBAL BUSINESS ENVIRONMENT Before beginning their business in the taxi industry, Uber had started its business in the Black limousine car services. The tag of being a company encouraging disruptive innovation can be given to them in the scenario when they did their operations in the black limousine car services. The origins of Uber and its growth suggest that they have crossed an up-market path to crawl up so much. Uber has been direct competition from the beginning of their operations in the industry so they cannot be called as an example of the disruptive innovation. 2.Can the instance of Airbnb be taken as an example for disruptive innovation? The rise of the disruptive innovation theory can best be viewed and attributed to the case of Airbnb and similar other views. The accommodations provided by Airbnb have been used by several people. This has beenone of the best instances of disruptive innovation. This is because they have served the customers as a hotel substitute (Guttentag 2015)They wanted to improve the hospitality for the travelers and they wanted to democratize their hotels by the use of the sharing economy (Zervas, Proserpio and Byers 2014).They had been trying to capture the attention of the travelers by improving on their services and providing them with meeting the requirements that were not being made till date. This is one of the most successful strategic steps that they had taken in order to improve their business position. The sharing economy had helped them to a big deal as well (Guttentag 2015)The turnaround began to happen when all the hotels in San Francisco were sold out and the rest of the travelers had to be left out who were not able to accommodate themselves with high rents. Airbnb came to be their rescuer when the founders decided to rent out air mattresses on the floor of their San Francisco branch. This became the main turning pont for Airbnb. This is why disruptive innovation tag can be attributed to Airbnb positively (Guttentag 2015)
5NEW TRENDS IN THE GLOBAL BUSINESS ENVIRONMENT 3. What are the relations between quality and mainstream customers in case of disruptive innovation? There are two versions of the innovation process in the business terminology. They are disruptive innovation and sustainable innovation. According the second type of innovation process, the organizations tend to make the products better from the viewpoint of the customer. Quality is tge main factor that assimilates the attention of the customers and the selling of the products. If the disruptive innovators can satisfy the requirements of the customers who have been ignored till then will have very limited reactions on the mainstream customers. The incumbent customers do not put that much importance on the disruptive innovations indeed (Sultan and van de Bunt-Kokhuis 2012).The disruptive innovators offer their services to the customers at less expense. However, the incumbent customers do not want to switch to disruptive innovators just because they offer their services at a lower cost. Their only priority is quality of the services or the products (Weng and McElroy 2012).If the quality of the incumbent service providers degrades for some reason, then only the customers will think about switching totheneworganizationswhoexercisethedisruptiveinnovationprocess.However,the incumbent customers can wait till the quality issues can be mitigated. This is why the customers will be looking to stay with the organizations with the sustaining innovation rather than trusting the disruptive innovation (Sultan and van de Bunt-Kokhuis 2012). 4.What is the mantra of ‘disrupt or be disrupted’ mean? Disruptive innovation has been a much debated term that has got several challenges and issues. The incumbent organizations can opt to ignore the rise of the organizations with disruptive innovation. They are free to do it. However, they should not disturb the operations of
6NEW TRENDS IN THE GLOBAL BUSINESS ENVIRONMENT the small but still-profitable operations. They should focus on their operations since they should strengthen their bonding between the quality of the products and the attention of the core customers (King and Baatartogtokh 2015).They should maintain their quality and even try to improve on it. This is because they should not lose the incumbent core customers from their disposal. They should develop the sustaining innovation process at any cost. Many opportunities for growth can be identified from this disruption process (Weng and McElroy 2012).The organizations should look to capitalize on it. This is because they must shift all their focus from the disruption and aim to make new sustaining innovations in their operations management (Heizer 2016). If the incumbent organizations tend to make new segments or enterprises to launch new products they can succeed if they can put it separate from their main or core business scenario. The companies supporting the disruptive innovation must be coping up with the changes that are taking place externally in a lightning speed. This is why they should adjust themselves with these changes and make themselves presentable by satisfying the needs of their target customers. The organizations should execute all the plans to perfection so they can thrive in this ever changing and competitive business environment (Babatunde and Adebisi 2012). Conclusion The paper can be concluded by saying that disruptive innovation has become one of the major driving forces in the modern business environment. The famous companies in the taxi and hospital;ity industry like Uber and Airbnb respectively have been compared on the scale of utilizing disruptive innovation. The mainstream customers or the incumbents will likely to use the products or services of the incumbent organizations. The organizations supporting disruptive
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7NEW TRENDS IN THE GLOBAL BUSINESS ENVIRONMENT innovation will be able to compete with the incumbents by providing the best quality services. This mini literature review has been conducted in order to highlight the different aspects that surround disruptive innovation technology and process.
8NEW TRENDS IN THE GLOBAL BUSINESS ENVIRONMENT References Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015.Marketing: an introduction. Pearson Education. Babatunde, B.O. and Adebisi, A.O., 2012. Strategic Environmental Scanning and Organization PerformanceinaCompetitiveBusinessEnvironment.EconomicInsights-Trends& Challenges,64(1). Christensen, C.M., Raynor, M.E. and McDonald, R., 2015. Disruptive innovation.Harvard Business Review,93(12), pp.44-53. Cortez, N., 2014. Regulating disruptive innovation. Guttentag,D.,2015.Airbnb:disruptiveinnovationandtheriseofaninformaltourism accommodation sector.Current issues in Tourism,18(12), pp.1192-1217. Heizer, J., 2016.Operations Management, 11/e. Pearson Education India. Isaac, E., 2014.Disruptive innovation: Risk-shifting and precarity in the age of Uber. Berkeley Roundtable on the International Economy,[University of California, Berkeley]. King, A.A. and Baatartogtokh, B., 2015. How useful is the theory of disruptive innovation?.MIT Sloan Management Review,57(1), p.77. Lepore, J., 2014. The disruption machine.The New Yorker,23, pp.30-6. Markides, C.C., 2012. How disruptive will innovations from emerging markets be?.MIT Sloan Management Review,54(1), p.23.
9NEW TRENDS IN THE GLOBAL BUSINESS ENVIRONMENT Sultan, N. and van de Bunt-Kokhuis, S., 2012. Organisational culture and cloud computing: coping with a disruptive innovation.Technology Analysis & Strategic Management,24(2), pp.167-179. Weng, Q. and McElroy,J.C., 2012. Organizationalcareergrowth, affectiveoccupational commitment and turnover intentions.Journal of Vocational Behavior,80(2), pp.256-265. Wessel,M.andChristensen,C.M.,2012.Survivingdisruption.HarvardBusiness Review,90(12), pp.56-64. Zervas, G., Proserpio, D. and Byers, J.W., 2014. The rise of the sharing economy: Estimating the impact of Airbnb on the hotel industry.Journal of Marketing Research.
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