Open Innovation: Strategies and Effectiveness of Samsung and General Electrics

OPEN INNOVATION

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Contents
Introduction................................................................................................................................1
Two firms that supports open innovation...................................................................................1
Effectiveness of their strategies.................................................................................................2
Financial analysis of both the companies...................................................................................3
Current ratio...............................................................................................................................3
Quick ratio..................................................................................................................................4
Net profitability ratio..................................................................................................................4
Return on total assets.................................................................................................................5
Conclusion..................................................................................................................................6
REFERENCES...........................................................................................................................6

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Introduction
Open innovation strategy is used by the organisations where the strategy acts a paradigm that
assumes that a firm might and must use external and internal ideas along with paths to market
as the firm searches for doing improvements in their technology. Open innovation strategy
heavily inclined towards purposively managed knowledge flows all across the organisational
peripheries using monetary and non-monetary mechanism in line with firm’s business model
(Morikawa, 2016). In this innovation strategy not only firm but other external communities
also gets involved. There are several big firms that utilises such kind of innovation strategy
for their development. General Electrics and Samsung are the two major firms that support
open innovation strategy in their business. This report showcases the open innovation
strategy used by both the company as well as it also evaluates the effectiveness of these while
comparing the organisational practices. A comparison is also made by comparing practices of
an organisation on the basis of their open innovation and strategic innovation theory. Report
also provides financial results to support the analysis.
Two firms that supports open innovation
Two firms that support open innovation in their distinctive fields are:
Samsung
In order to utilise open innovation strategy, this firm has made several type of collaboration
as a strategy. They understand the necessity in distributing the innovation process for making
the innovation more effective. Using collaboration as an open innovation strategy, they have
divided it into 4 types that include accelerators, acquisitions, ventures and partnership. As a
part of partnership, company has done collaboration with start-ups that are present in Silicon
Valley. Such kinds of partnership are very useful in adding new features into the products
that are already produced by the company. Since every partner has a different strength hence
it helps the company in making the best innovation. At the same time following collaboration
in open innovation strategy, Samsung has also used Ventures as a part of the strategy (Yun,
Jeong & Park, 2016). Such type of collaboration is used for putting revenue in the existing

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projects and providing access to new kinds of strategic resources such as technology,
workforce which Samsung can utilise.
Acquisition helps the firm to bring start-ups under them which helps in doing innovations
which are core to their future strategic area of Samsung. This type of acquisition generally
remains as a distinct unit and also joins the program of other type of collaboration i.e.
accelerators. Such acquisitions are mainly done by the firm to make strategy based
innovations and that too in different parts of the world. Along with this another type of
collaboration that is done by Samsung is in the form of accelerators. They are in the form of
start-ups providing empowering and innovative environment for creating new products (Han,
Oh, Im, Oh, Pinsonneault & Chang, 2012). Samsung gives some kinds of initial investments,
facilities to work with and specific kinds of resources to do their work. The idea towards it is
product stemming from internal start-ups that could help in adding to the product portfolio of
Samsung over a long period of time or just sometimes work as a learning experience for the
company. Samsung utilises it as their major collaboration strategy under the open innovation.
General Electrics
General electrics have a name in the market for its open innovation challenges and initiatives.
This is displayed on their open innovation page. Such kinds of challenges focus for external
open innovation as well as new ideas. Because of these challenges, the cited firm prepares
itself to future potential talents all across the globe. Such type of challenges promotes new
young talents to join with the company. The prizes for such challenges are very appealing for
the professionals and students that are young and includes prizes like Monetary rewards, paid
internships, scholarships as well as company also provide chance to work with the firm on the
issues faced by the company (Whelan, Parise, De Valk & Aalbers, 2011). The most effective
thing about this type of strategy is that it helps the company to get on top of the innovation
work. Such type of challenges also opens the possibilities they offer also has an impact on the
GE’s employer image in a positive manner. For instance the Unimpossible Mission: The
university Edition challenge was especially for the students that are creative and have higher
levels of technical skills as well as appropriate motivation for recruitment. Through such
initiatives, General Electric aims to hire three creative and smart students to have their
internships at the firm (Gawer & Cusumano, 2014). This is one of the best methods for hiring
young and talented professionals as their capabilities are being tested before hand only and
the innovations at the workplace gets boosted. The fresh minds that comes under this also