Managing Innovation in Business (CW2)

This document discusses the importance of innovation in business and its impact on attracting customers and improving efficiency and profitability. It explores the future of the industry in 2020 and beyond, the innovation requirements for organizations, and how to build future innovation capabilities. The document also provides insights into Tesla's strategies and the supply chain process, including PESTLE analysis and the McKinsey 7s framework. It concludes with a discussion on collaborative arrangements in the supply chain and the changes required for improvement.

Managing Innovation in
Business (CW2)

EXECUTIVE SUMMARY
Innovation plays an important role in an organization as it help in attracting large number
of people towards brand that has positive impact on efficiency as well as profitability of
company. In addition to this, it also help an entity to remain in competition and sustain in market
for longer time. In addition to this, it is significant for an organization to conduct market research
before offering new product and service in market as it help in satisfying requirements of
customer and develop value in an effective manner.

Contents
EXECUTIVE SUMMARY.................................................................................................................................2
Introduction, purpose and structure.............................................................................................................4
The Future of the Industry 2020 and Beyond..........................................................................................4
The Organization Innovation Requirements 2020 and Beyond...............................................................4
Building the Future Innovation Capabilities for the Organization...........................................................5
CONCLUSION.........................................................................................................................................12
REFERENCES..........................................................................................................................................13

Introduction, purpose and structure
Innovation is defined as the ability for developing new and valuable ideas and convert
them into products as well as service effectively. Along with this, the imperative activities that is
conducted by an entity for gaining higher results is known a managing innovation in business
(Dodgson, 2018). The purpose of the report is to analyze future innovation, performance and
capabilities of industry in year 2020. For this, Tesla is taken into consideration. It is an
automobile industry specialization in offering electric vehicles and its headquarter is located in
California, U.S. The present report covers PESTLE analysis, SWOT analysis, Mckinsey’s 7s
framework along with blue ocean strategy. All this models is used for building future innovation
capabilities of respective company.
The Future of the Industry 2020 and Beyond
From electric vehicles to solar powered batteries, Tesla always bring innovation and new
endeavors with an aim to offer something unique and gain leading position in market. It has
come in market with a new electric car that is cost-efficient, feasible and convenient as well. The
company has delivered more than 70,000 electric cars and now it focuses on expanding it to solar
power batteries for home. It is analyzed that next step of company is to transform a brand luxury
car into an affordable one. In order to support demand of vehicle, it is going to build Gigafactory
in order to produce lithium to supply approx. 50,000 cars in a year that Tesla expect by the
ending of year 2020. It is determine that demand for electric vehicles is going to increase as
choice of people is shifted from fuel cars to electric cars, which shows the future of company is
wide. In addition to this, people are more concerned for protecting environment and more than
30% people in U.S is prefer to consume products as well as services that is environmental
friendly. This will help company to enhance its sales as well as profitability level. In addition to
this, its solar power home batteries is going to success in market as it has demand in market and
people will surely going to accept it. Moreover, the higher authorities of company is decided to
enter into other markets that is in Asia as it will help Tesla to enhance its customer base level and
strengthen its market position as well.

The Organization Innovation Requirements 2020 and Beyond
It is important for an organization to analyze and evaluate activities as well as
performance as it help in making improvements that has a positive impact on the overall
productivity and profitability of an organization. If it is talked about Tesla, the organizational
requirement is to improve the battery powerpacks as it assist in increasing the efficiency of
vehicles. In addition to this, its mangers is required to emphasis on declining level of fossil fuel
consumption in order to offer only electric vehicles in market and save the environment, which is
one of its objective. Increase in the ecosystem size will surely help company to grab
opportunities in market and attain competitive advantage as well. It is analyze that company is
require to make improvements in its supply chain in order to bring innovation in market in an
effective manner. Moreover, it is essential for Tesla to change its marketing strategy in order to
aware people about its innovation and to enhance its customer base level in a proper manner. for
bringing innovation, it is required for Tesla to focus on its batteries and make use of solar system
as it help in developing solar lights for homes that is one of a unique innovation come in market
by Tesla.
Building the Future Innovation Capabilities for the Organization
Step 1:
PESTLE Analysis
In order to develop future innovation capabilities, it is important for an entity to conduct
environmental analysis. For this, higher authorities of TESLA is using PESTLE analysis
PESTLE Analysis: It is mainly a framework that help an organization to find out the
impact of macro environmental factors on business performance and activities as well. The
factors involve in this framework are as follows:
Political factor: The political condition of US is stable and therefore Tesla has the
advantage to expand its operations in other countries and earn higher profits. Increase in tax rates
have negative impact on overall performance of organization.
Economical factor: The economic condition of US is good as it is one the world largest
economy. It is determine that people of US have high purchasing power and has positive impact
on overall profitability of Tesla.

Social factor: The managers of Tesla ensure that requirements of people is fulfilled by
their product. In addition to this, company conduct research in order to know about taste and
preference of customers so that they can fulfil it and retain them for longer time.
Technological factor: It is important for an entity to make use of advanced technology in
order offer something unique and sustain in market for longer time (Biemans, 2018). By
considering this factor, Tesla offer electric vehicles in market that help in attracting large number
of people and raise in sales and profitability of organization.
Legal factor: This factor has high influence on activities and thus it is essential for an
entity to follow all the laws and policies made by government in order to smoothly carried out all
activities and operations as well.
Environmental factor: In order to protect environment, Tesla launches electric vehicle, it
help company to develop positive image in market and enhance its sales and profitability level.
Opportunities and threats:
Opportunities: It is said that opportunities for an organization mainly identified with the help
of SWOT analysis. In reference to the present context of Tesla, it has been identified that the
main opportunity for business entity is collaborative arrangements. Some of the methods are
franchising, merger, joint ventures which can be adopted by managers of Tesla in order to grab
opportunities at new marketplace. This will help them in order to expand their business functions
at international marketplace. Along with this, modifying models and services according to the
requirements of customers can be taken as an opportunity for the business organizations. Needs
and requirements of people are dynamic therefore modifications according to the changing
situations help in grabbing opportunities in an effective manner.
Threats: Rather than opportunity threat which is faced by management team of Tesla is that
the supply chain process of rival companies are more effective as compared to them. This as a
result become threat for the organization. In order to supply products in an effective manner,
rival organizations adopt different techniques and channels which creates threat for Tesla and
influence their overall performance at marketplace. In addition to this, another threat is that
rivalry business entity adopt new and advanced technology before Tesla and introduce new and

innovative products at the competitive marketplace. This as a result affect overall profitability of
the company at competitive marketplace in an adverse manner.
Step 2:
McKinsey 7’s framework: It refers to a framework coined by Tom Peter and Robert Waterman
in the year 1970. They work as former consultant at an organization named as McKinsey &
Company. They examined seven essential internal factors of a business entity which is required
to be align in an effective manner in order to become successful at the competitive marketplace.
All these seven elements are going to be discussed as follows:
 Strategies: In reference to Tesla, there are planned strategies and policies which are
formulated by the higher authorities so that all the activities will be conducted in a
systematic manner.
 Structure: Management team of Tesla used functional structure which assist them in
order to perform all their functions in an effective manner.
 System: In relation to Tesla, all the daily activities are arranged in a report format so that
there must be some evidence related to the functions.
 Shared values: Managers and leaders of the company like Tesla follow all the norms and
rules and take proper precautions not to harm any living and non living beings while
doing their business functions.
 Skills: Staff members of the company Tesla are highly skilled and competent which as a
result provide them opportunities to create high quality products so that they can beat the
level of competition.
 Style: It the another essential element need to be considered by management team while
doing business operations. In reference to Tesla, participative leadership style is mainly
followed by the leaders within the organization.
 Staff: All the staff members working within Tesla are highly educated and have effective
competencies which as a result help the business entity to perform all their functions and
operation in an effective and appropriate manner.
Step
Identify all the main inputs and outputs that relate to the supply chain for the business

Tesla is the business entity chosen in this report which consist of various inputs as well as
outputs mainly linked with supply chain of the business organisation. It can easily be understood
with the help of value chain analysis model where primary and supportive activities are
undertaken. These activities help in converting inputs into outputs. Raw materials, machinery,
equipment, logistic, distribution channel are the input and output sources. In relation to the
present context of Tesla, input for the organization are man, money, machinery, technology, time
whereas output for the same is commodities, services, profit, satisfaction and many more. All
these mentioned elements are associated with supply chain which as a result assist in
accomplishing organizational aims and objectives.
Assess the status/ relationships between the different parts of the chain (relationships)
It is said that the value chain analysis model includes different elements which are
interrelated with each other and help in attaining desired targets effectively and appropriately. In
the present context of Tesla, these elements includes Inbound coordination, operation, outbound,
marketing and sales, services and many more. These are the major elements need to be
considered by the management team of an organization as these elements are interrelated with
each other and help in maintaining long term sustainability at the marketplace.
 What is the function of each component?
Main function of all these elements is to produce high quality products and services
which satisfy the requirements of customers in an efficient and effective manner.
Function of Inbound coordination is to perform all the task in a coordinated manner and
on the other hand function of operation is to covert raw materials into finished goods.
Outbound refers to the step where goods and services are transferred and distribute to the
final destination. Marketing and sales are used to promote goods and services whereas
services includes after sales services given to the customers.
 How do they link together?
These elements are interrelated with each as managers goes from one stage to another
only after the completion of previous stage. Therefore, it is said that all the activities and
elements related to supply chain are interrelated with each other.
 Which elements are internal, and which are external?

In this supply chain process various elements are included which help in performing all
the operations in an ethical and systematic manner. These elements are mainly categorized on the
basis of internal and external factors which are as follows. Inbound coordination (Internal)
Operation (Internal). Outbound (Internal) Marketing and Sales (External) Services (External).
What collaborative arrangements are in place between the organisation and the external elements
of the supply chain?
Collaborative arrangements define as a written contractual arrangement according to which
two and more than two parties takes participation in a joint activity & mainly exposed to some
risks as well as rewards which based on the business activities. In general, collaborative
arrangements is a process where two or more business entity perform their functions together and
gain success at the competitive marketplace.
Merger: A merger defined as the agreement where two or more than two business entity
come together and form new one on order to enhance profit margin, expansion of business,
increase market share and many more (Clinton and Whisnant, 2019). Such activities help in
attaining opportunities available at the competitive marketplace.
Recommend a table comprises of:
Supply
chain
element
Internal/ External Internal/ External:
Function/role
How well is it
working
What Changes
are required
Inbound
coordination,
Operation,
Outbound,
Marketing
and Sales,
Services.
There are some
supply chain element
mainly categorized
into internal and
external elements.
Categorization of all
these factors are as
follows: Inbound
coordination
(Internal) Operation
Inbound
coordination
(Perform all the
initial stage work in
a coordinated
manner) Operation
(Converting
material into
finished goods)
Outbound
All the elements
work in a well
defined and
systematic manner
which leads towards
the attainment of
organizational goals
and objectives in an
effective manner.
Therefore, it is said
In order to beat
the level of
competition, it is
said that there
must be
modifications in
their supply
chain process
which creates
opportunities for

(Internal). Outbound
(Internal) Marketing
and Sales (External)
Services (External)
(distribution of
products to
warehouse)
Marketing and
Sales (Promoting
products to attract
customers by
adopting effective
marketing methods)
Services (Providing
after sales services
to customers)
that all the supply
chain activities
perform their
functions in an
effective manner
which as a result
assist them in
attaining their pre
defined targets and
objectives.
the business. On
the other hand,
another changes
required by the
management
team is related to
the adoption of
technology so
they can produce
innovative
products within
stipulated time
frame and attract
customers
towards them.
Step 3: Why changes: From the discussion in the step to it can be said that there is requirement
of adoption of updated Technology so that there can be continuous innovation as with the
changing time customers become more demanding and if necessary changes are not adopted by
organization then it might lead to an organization might fail loss of customers. Supply chain
process is also to be modified so that there can be more opportunities created for the organization
and it will also lead to for the creation of employment opportunities that can lead to benefit of
society.
where changes: It can be said regarding the changes the overall supply chain process is going to
take place in a modified manner in Tesla where there can be addition of new suppliers in the
overall value chain vertically or maybe changes can take place. Apart from this the adoption of
new technology will lead to more innovation apart from the existing range of electric vehicles of
Tesla.
Step 4:

In the process of implementation of change every activity will take place with a particular
sequence. Such as first priority will be planning stage there will be for sufficient time period of
will be provided so that, what when where and how are the various actions related to
achievement of objective to be planned. From this there will be organization of necessary
resources in given time frame and for this a period of five days is assigned. After there has been
planning organization there will be directions which will be provided to overall workforce who
will be involved in implementation of change. After directions have been provided there will be
last step that is related to controlling and overall monitoring of the whole functions that are going
to perform in the process of implementation of changes as there is requirement of measurement
of the actual results with the standard that were made at the time of planning. So, whole activity
and whole process of implementation of change will be completed in a period of approximately
two months.
Step 5:
Basically two level of changes that is going to take place in the organization in case of
micro level changes there will be a complete change in the way organizations internal
functioning is taking place and is going to impact the internal stakeholders of the organization
such a employees, top management etc. are all the stakeholder that are going to be affected by
such micro level changes (Vom Brocke and Mendling, 2018). On the other hand macro level
changes take place when there are changes impacting the society and all the external
stakeholders that are not part of the internal management of the organization.
Gantt chart is basically a tool that consists of graphical representation of all the
activities with respect to given time frame it helps in achievement of the task in the whole work
to be completed in the given time frame only. It is a very effective tool in measurement of each
task with its assign time period so that the graft depicts a particular activity will be completed.
Blue Ocean Strategy is basically pursuing the differentiation and low cost for a new
market segment and approaching completely new customers. It is based on a marketing
theory and it is about creation of a new demand in the new target segment of market.
Ansoff growth matrix is basically a tool that is used for the purpose of identifying the
various types of strategies that can be adopted by organization for the purpose of achievement of

high growth in the coming time period. There are certain different types of strategies that are part
of for every organization and that can be used for the purpose of enhance present level of
position that a particular organization is experiencing. In present scenario the answer of metric
strategies are discussed with reference to Tesla:
1) Market development:
This is a strategy that is related with new market segment that is approached by
organization with the existing product. In case of Tesla this strategy is very helpful in
implementation of the change and approaching a completely new segment of market.
2) Market penetration:
This is a strategy that is related with existing market segment and existing product that
there is no new launch which is made in the strategy by organization. Tesla can make the
strategy profit table if they find potential in their existing loyal base of customers. That they can
use for the purpose of expansion of their present level of sales by the help of existing products
only.
3) Product development:
The managers of Tesla can make use of this strategy in order to attract large number of
people as this strategy involve offering of new product within the existing market. Product
development strategy is consist of less risk as an organization has knowledge about market
trends and have stable market image.
4 Diversification
This strategy involve high risk, as new product is launch within the new market (Tan,
2020). It is important for an organization to conduct market research before offering product and
it increase acceptance level and decline the level of risk.
From the above discussion, it is determine that one of suitable strategy that help Tesla to
attract large number of people and gain growth is Market development strategy.

CONCLUSION
From the above study, it has been conclude that bringing innovation is necessary in
today’s current situation as it help an entity to remain in competition and sustain in market for
longer time. In addition to this, various frameworks were used in order to find out capabilities
and performance of an organization. Ansoff matrix is consider as one of the growth matrix
strategy that help an entity to attain success effectively.

REFERENCES
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