Notesale: Turn your study into money

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Innovation
A2 Business Studies

What is Innovation
• The process of turning an idea into a saleable product or service is known as
Innovation
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E
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Apple
may innovate by creating a new iPhone (a product) or internally improving
its communication systems (a process)
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• Developing better quality products which meet customer needs more
successfully
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Research and Development (R&D)
•
•

R&D is a key element of innovation, it refers to the generation and application of
scientific knowledge to create a product or develop a new production process
which can increase the firms productive efficiency
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Even if you do manage to launch a product, you may find that you
don’t have very long to recover the costs of the development
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Pharmaceuticals and biotechnology companies are now the biggest investors in
R&D worldwide
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More than 81% of global R&D occurs in five countries: USA, Japan, Germany,
France and the UK
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5%

Internal or External Ideas
Firms may generate their ideas for innovation internally or externally
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To encourage innovation a business will want a culture that encourages people to
try out new ideas, that does not punish failure and that rewards those who do
come up with new approaches
If you really want innovation to occur the senior managers will need to set an
example this will mean making funds available to those who need them to
experiment and try ideas out
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Innovation requires the sharing of ideas and approaches, this means a structure
that puts people together from different departments rather than one where
individuals stay very much within their own area
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