Managing and Developing Innovation

This study material explores the concept of managing and developing innovation. It covers topics such as the introduction of the product, market and customers, target market, competitive analysis, finance forecast, and conclusions.

MANAGING AND DEVELOPING
INNOVATION

Contents
Introduction of the product...................................................................................................................2
Market and customers, Market Size and Trend.....................................................................................2
Target Market & Customer....................................................................................................................4
Competitive Analysis and Estimated Market share...............................................................................7
Finance forecast (cash flow)..................................................................................................................7
Finance forecast (capital funding).........................................................................................................8
Finance forecast (Break even Analysis)..................................................................................................8
Conclusions............................................................................................................................................9
References...........................................................................................................................................10

Introduction of the product
LI-FI lights will launch light bulbs, which are enabled with artificial intelligence, and sense
mover enabled lights as an innovative product. The product will be named as “AI bulbs.”
Artificial intelligence is evolving at high speed where various industries are being affected.
The product has an attribute of sense mover. For example- this light will operate according to
their mood where the light senses the person`s feeling before he enters the room or bathroom.
Although, this idea depends on the amount of sensation used in bathrooms, bedroom, dining
room, guest room and kitchen. By enabling the light with AI featured, which will stay all
ahead in the technology curve and ultimately reap the benefits of the near future opportunities
[2].
Market and customers, Market Size and Trend
Increasing demand for the connectivity, security, faster data, transmission, and bandwidth has
boosted the development and implementation of Li-Fi technology. The market reports reveals
the development era in the advancement of the Li-Fi technology. Companies such as Philips
and general electric started their investment in Li-Fi lights, which is due to huge market
growth. It is expected that 70% increase in the forecasted period. Tremendous growth in Li-Fi
technology is the consequence of Li-Fi signal` capability to spread the connection especially
at a speed which is 100 times faster than the Wi-Fi connection at the rate of 224 gigabytes
each second. The main players in the emerging fidelity market are Koninklijke Philips N.V.
(Netherlands), Acuity Brands, Inc. (U.S.), Velmenni (Tartu), and FSONA Networks (U.K.).,
and others [5].
According to industry trends, it is seen that this component segment has divided into
applications, optical sensing, photo detector, and microcontroller. As this application segment
is divided into smart phones and advanced tracking, it is seen that the market of Li-Fi
technology is estimated to increase in the Asian region and further North America is

accounted to have larger market share. Youth uses it for their comfort and enjoyable mood
and middle-aged people use it for convenient purposes [4]. Market trends for usage of AI
startups are-
(Source: [1])
(Source: [2])

(Source: [3])
Target Market & Customer
In order to track country level for the market is on the basis of current market segment and
prospects of future, it is important to identify the target audience of AI bulbs-
Sophisticated youngsters
Commercial banks
Educational-user sector
Technological vendors
Device manufacturer
Suppliers of the product
Research organisation

The segmentation can be according to different components that includes Visible light
LED`s, Image sensors, and opto-couplers. It enables underwater communication, indoor
application, smart lighting, and outdoor lightning [4].
SWOT analysis
Strengths
Positions itself as first market adoption.
The company will be the first mover of AL bulbs and it will enjoy the advantage of first
mover.
Its light rays and LED rays will not harm human eyes [5].
Weakness
Although, it uses VLC but its frequency ranges 400-600 THz in order to transmit data, which
indicate that it does not long life span.
Expensive and unproven
It requires extensive changes
Opportunities
The company can launch AI bulbs in North America as the country has strong infrastructure.
The increasing demand for comfort covers the use of IT, and Wi-Fi technology that can
increase the sales [6].
Threats
It is not able to develop commercial chipset for VLC with an objective of establish wireless
LED [7].

Piercing competition from other light manufacturer competitors as other companies may have
strong database system [4].
PEST analysis
Political factors-
New product may be suffer from political instability of Australia.
Taxation policy
Trade restriction
Corruption
Economic factors-
The Australia`s GDP is estimated to grow by 5-6%. Purchasing power of the customers is
estimated to high.
Inflation rates while manufacturing, hiring technologies, and interest rates.
Social factors-
Greater number of youngsters will help the company to grow but Australia’s population is
growing.
Lifestyle attitudes, ages, career concerns, and cultural barriers are the major factors that are
considered under social factors [5].
Technological factors-
Technological changes and technological awareness with considerable level of innovation.
R&D activity is one of the major technological factor that affect the development strategy of
the product [4].

Competitive Analysis and Estimated Market share
Threat of new entrants- As Li-Fi technologies are becoming demanding and popular. There
are several business opportunities for the emerging players that are collaborating with the
huge players while providing products and services.
Bargaining power of suppliers- this power is high as Li-Fi technology and its new start-ups
are emerging with the new technology with advanced products and services. It is expected to
get double in number in next 5-7 years [3].
Rivalry among the existing competitors- This power is low as General Electric and Philips
are supporting the company with the wireless technologies that had connectivity with data
centric companies. However, the company faces high competition from Velmenni, LVX
system and Valcossa [4].
Bargaining power of customers- this power is low as the company offers new AI enabled
product with sophisticated LED lights in it. However, at the same time, as the life span of the
product would not long span due to technical issues, the company might have to face
customer dissatisfaction [7].
Threat of substitutes- This threat is nearly low, as companies have reached to sensor movers
LED lights and air conditioners but AI enabled bulbs are still to emerge [6].
Finance forecast (cash flow)
Estimated sales volume, overhead expenses and profit margins-
AI bulbs
2019 2020
Estimated Sales ($6*200) 1200 ($6*230)=

1380
Overhead expenses 300 350
Profit margin 5% 7%
The above table reveals that the company has to increase its sales with at least 10% every
year. The overhead expense is estimate to increase by certain amount. The above tables
indicates that in the first year in 2019, the sales was estimated $1200 with per unit price at $6.
In 2020, the company will increase the number of units nearly 230 to sell @$6.
Finance forecast (capital funding)
The below table elaborates the sources of funding for the new product (AI bulbs). Li-Fi LED
lights raise funds from equity share capital (initial public offer, long-term loan, and grand and
sponsorships). The proportion of capital structure signifies 2:1 for the debt equity ratio.
Source of finance for AI bulbs
Funding (in $)
Equity share capital 120
Long-term loan 300
Sponsorship and grants 100
Finance forecast (Break even Analysis)
Breakeven point- 2019 2020 2021
Sales price per unit $6 $6 $7
Variable cost per unit (@2.5) 2.5 2.5 2.5
Contribution per unit 3.5 3.5 4.5
Fixed cost 200 200 200
BEP (units) 57.14 57.14 44.44

2019 2020 2021
0
10
20
30
40
50
60
BEP (units)
The above graph indicates that in order to attain a situation of non-profit and no-loss, the
company has to sell at least 57 units of AI bulbs in 2019 and 2020. In 2021, the company can
sell 44 units of AI bulbs so that company can attain a situation of no profit no loss. In 2021,
the number of units decreased because the company has increased the price.
Conclusions
From the above discussion, it can said that increasing employment of AI in each sector of the
operations of the organisation has increased the demand too. People started thinking more
about comfort and sophistication level because of mood swings or level of pressure from
work life. To meet the needs and understand the perception of the people, Li-Fi LED lights
has introduced AI bulbs.

References
[1]MarketMedia, "Wireless Fidelity (Wi-Fi) and Light Fidelity (Li-Fi) Market SWOT Analysis including
key players IBSENtelecom, Alcatel-Lucent, Ericsson, Hewlett-Packard Enterprise « MarketersMEDIA
– Press Release Distribution Services – News Release Distribution Services", Marketersmedia.com,
2018. [Online]. Available: https://marketersmedia.com/wireless-fidelity-wi-fi-and-light-fidelity-li-fi-
market-swot-analysis-including-key-players-ibsentelecom-alcatel-lucent-ericsson-hewlett-packard-
enterprise/444122. [Accessed: 15- Apr- 2019].
[2]Marketwatch, "Visible Light Communication (Li Fi) Market Global Trends, Size, Share, Growth and
Forecast 2016 to 2022", MarketWatch, 2019. [Online]. Available: https://www.marketwatch.com/press-
release/visible-light-communication-li-fi-market-global-trends-size-share-growth-and-forecast-2016-to-
2022-2018-11-28. [Accessed: 15- Apr- 2019].
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[3]Y. Hsu and Y. Zhu, "DEVICE UTILIZING A PID CONTROLLER, CONTROL METHOD THEREOF,
AND ROBOT UTILIZING THE CONTROLLER", The Journal of the Acoustical Society of America, vol.
131, no. 6, p. 4862, 2012. Available: 10.1121/1.4728375.
[5]M. Violette, "IoT Standards", IEEE Internet of Things Magazine, vol. 1, no. 1, pp. 6-7, 2018.
Available: 10.1109/miot.2018.8552483.
[6]G. Mulgan, "Artificial intelligence and collective intelligence: the emergence of a new field", AI &
SOCIETY, vol. 33, no. 4, pp. 631-632, 2018. Available: 10.1007/s00146-018-0861-5.
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management and control of PV/wind hybrid system,” Renewable and Sustainable Energy Reviews,
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