Assessment Part 2
Executive Summary
The report entails an evaluation of a business issue faced by Trago Mills, UK-based retail organisation. Ways in which the company manages creativity and innovation has been highlighted in the report. The current business issue has been selected and the need for new growth strategies has been discussed. Concepts such as Product Life Cycle, Ansoff Matrix and Open Innovation have been demonstrated using relevant examples. A critical evaluation of these concepts has been done and thereafter, an evaluation has been done in order to manage the business issue faced by Trago Mills. Few recommendations include offering value-based services to customers and ensuring effective training to the employees.
Table of Contents
Business Issue Theoretical Review.. 4
Evaluation of managing the organisation’s business issue practices. 6
Conclusion/ Recommendations. 7
Introduction
The report will be written by considering a business issue prevalent in Trago Mills, a UK-based privately-held retail company. The company has department stores across four locations and the company primarily emphasises on stock variety and cheapness (Trago.co.uk., 2020). Management issues commonly occur in an organisation and both external and internal factors are responsible for development of the issues. An organisation needs to cope with its changing circumstances while operating in the local and international markets. Innovation as well as creativity can be a solution if an organisation wishes to continue its practices. Both are necessary because customer preferences and needs are always changing. Moreover, stagnation is also harmful as it does not allow the organisation to grow and expand beyond its boundaries. The competitive age demands excessive focus on change, growth and innovation. Therefore, the report will entail the importance of creativity and innovation by exploring three essential concepts such as Ansoff matrix, product life cycle and open innovation. It would be interesting to explore these three concepts in detail by considering a specific business issue. Using examples from other companies, the three concepts shall be discussed in detail. Moreover, the concepts will be evaluated so that the business can manage its issues effectively.
Business Issue Theoretical Review
Innovation and creativity ensures successful performance and growth of organisations. It is necessary to conceive both innovation and creativity as vital and integral parts of an organisation (Anderson et al., 2014). The stage of creativity mainly involves generation of an idea and thereafter the idea should be implemented based on its feasibility. Originality is always retained during the process of creativity. Similarly, innovation mainly includes the development and creation of a product or service that is entirely unique.
Trago Mills is currently facing an issue related to innovation and creativity. Excess focus on selling cheap products has led to the development of this issue. In 2014, BBC’s Fake Britain (consumer rights programme) featured Trago Mills after discovering the sale of a fake product in their store. A fake product of a top-brand shampoo has been on sale and it violated the local trading standards. Moreover, fake bottles have been found in two stores of Trago Mills. One has been found in the Cornwall store which was also available on discount and the other was found at the North Ireland store (Glanfield, 2014). Nevertheless, the management of Trago Mills has announced that they have purchased the product after testing the reliability of its source and has also made efforts to work closely with the local trading standards. Thereafter, the product has been taken off sale after it was identified as fake.
Concept 1
Ansoff Matrix- It can be used to evaluate the management of the issue related to creativity and innovation. The concept has been developed by Igor Ansoff and it is considered as the best strategic management technique (Loredana, 2016). The matrix outlines four areas such as market penetration, product development, market development and lastly diversification. The concept cab be used for managing growth and product innovation is a necessity. For example, Saudi Arabia based foodstuff companies has been able to enhance the overall marketing performance by applying the Ansoff Model. The food companies managed to achieve objectives like survival, profit-making and growth by implementing the matrix (Al-Bostanji, 2015). The decision-making capabilities of the companies has enhanced as well.
Concept 2
Product Life Cycle- It is another vital concept that helps companies to determine the strategic significance of innovation. It is necessary to terminate certain types of products once it nears the end of product life cycle and these should be replaced by new products. Moreover, research suggests that concerns related to sustainability matters has been growing at a significant rate and incorporation of sustainability in case of new product development is its initial stages (Gmelin and Seuring, 2014). Product life-cycle management is influenced by process management, product data management as well as engineering related project management. However, the need to incorporate sustainability requirements while developing a new product leads to increased complexity. For example, Walmart, one of the largest retail chains has adopted a beneficial lifecycle strategy for ensuring the sustenance of its brand value across global markets. The management at Walmart is aware of the fact that it is not necessary for every product to undergo all the phases. Some products might even stop at the first life. Nevertheless, the company uses a measurement cycle in order to expand and boost the content of the product. The company considers various types of audiences while developing every product. Audiences have been divided into suppliers, shoppers and in-store associates.
Concept 3
Open innovation- The concept can be used by companies that focus on partnering with other external sources rather than completely relying on internal sources and knowledge while innovating its business model, processes, services or products. Moreover, a study conducted on SMEs suggests that open innovation can be potentially beneficial for SMEs and networking is one of the most effective methods that catalyses the process of open innovation (Lee et al., 2010). For example, Aston Martin and Porsche have adapted this strategy to create a place in the market. Both the companies have realised that the future will be dedicated to electric cars and the growing consumer base is affluent as well as environment-conscious (NS Business, 2019). Hence, both the companies have set its ambitions to step into the electric car industry. By remaining open to innovation, both the companies are pushing their limits or boundaries. Moreover, these carmakers has also realised the significance of using an “open-innovation platform” as it can help both the developers as well as the start-ups to innovate and work efficiently on creating a new car brand.
Evaluation of managing the organisation’s business issue practices
Concept 1
Ansoff matrix – Trago Mills can apply the concept of Ansoff Matrix because the usage of fake or cheap products in its stores suggests that the company lacks a proper innovation strategy. The company already owns few independent businesses along with stores in Newton Abbot, Falmouth and Cornwall. However, the need of continuous innovation cannot be denied as it operates in the highly competitive retail industry. Trago Mills need to innovate its business practices. By focussing on right ways of doing business, it would be possible to enhance the company’s lost brand image. It is famous for emphasising on stock variety and cheapness. Hence, the need for improving the present business practices is prominent. Again, there is a rising demand for retailers that operates its businesses in a transparent manner. The customers shall be able to make quick purchase-related decisions if the company practices are aligned with transparency. Market penetration can be considered by Trago Mills because operating in few selected markets in UK will not be profitable for the long-term. However, before penetrating in a new market, it is necessary for firms to take into consideration the market environment because customer requirements might change at any instance and the company is supposed to fulfil the requirement (Hussain et al., 2013). Ultimately, market penetration by considering market needs would allow the business to grow.
Concept 2
Product Life Cycle- Trago Mills operates in the retail sector and naturally, the organisation passes through various identifiable stages such as innovation, followed by development, maturity and lastly the decline stage. The organisation is likely to follow an S-shaped curve of development that can be categorised into four components- innovation, accelerated growth, maturity and decline. At the innovation stage, the organisation was capable of increasing the number of customers because the management has fairly adopted the experimentation strategy. Following that, accelerated growth stage, the organisation came across competitors as it is the stage two of development. At this stage, the organisation managed to enhance its position by playing the leadership role. Excess focus is given on improving processes and systems. However, the stage only lasts for 5-8 years and near the end of this stage, excessive cost-related pressures start to emerge. The third stage is the maturity stage and feeling a sense of pressure is common at this stage. Since markets become competitive, the rate of profit naturally slows down. Lastly, at the decline stage, the retail firm has already lost its competitive advantage and the decision to continue or stop the business comes to the forefront. Trago Mills can consider adding new items to the existing stores or re-inventing the existing stores. Repositioning can be effective as well. It is not necessary for any retail store to undergo all the four stages of product life cycle. Rather, it can consider moving to the phase of growth even after reaching the maturity stage.
Concept 3
Open innovation- The concept can be strategically relevant to Trago Mills’ business issue. Emphasis on open innovation is necessary because the company needs to get over its bad reputation. Studies claim that single aspects of open innovation can be effective for organisations. For instance, commercialisation of external technology and third-party collaboration can be effective aspects of open innovation (Cheng and Huizingh, 2014). Moreover, a positive relationship exists between innovation performance and open innovation. In terms of strategic relevance, all the aspects of open innovation have positive effects. Trago Mills can consider an entrepreneurial orientation as it can strengthen the firm’s overall impact. The firm can consider strengthening the entrepreneurial orientation rather than resource orientation or market orientation. Again, it should be noted that consumers can be regarded as innovation drivers. Ensuring the satisfaction of consumers should be the core motto of the business. Market needs and expectations can change any time and in European nations, societal, demographic as well as economic changes can have a significant impact on consumer-facing companies.
Conclusion/ Recommendations
It can be concluded that Trago Mills’ stores are in need of immediate re-invention because one of its lingering issues is the usage of fake products across its various stores. It has been understood that both innovation and creativity will play a significant role in re-inventing the image of the company. At the beginning of the report, a brief overview of the current issue faced by Trago Mills has been outlined. The need for considering innovation and creativity as core areas of growth and performance has been highlighted as well. The three relevant concepts associated with creativity and innovation has been presented. These are Ansoff Matrix, Product Life Cycle and Open Innovation. The usefulness of the Ansoff Matrix across food companies in Saudi Arabia has been highlighted. The companies can ensure its survival in the market. Similarly, after exploring the concept of Product Life Cycle, it has been understood that every product need not go through the same four stages. Moreover, after reaching the maturity stage, the company can consider taking the product back to the growth stage as noted in case of Walmart. Moreover, open innovation is another vital concept explored in the report. It has been noted that SMEs can be benefitted by partnering with other organisations and sharing resources so that market demands can be met. The case example of Porsche and Aston Martin has been used here. The importance of an open innovation platform is noted. Thereafter, considering the business issue of Trago Mills, effective management techniques with respect to three course concepts has been evaluated here.
It can be recommended that Trago Mills need to understand the business issue firmly. The root cause of the issue is the lack of innovation. It can be a frustrating persuit, however, adopting best practices is not the best solution. It is recommended that the company should determine ways in which value can be created for customers. Based on environmental changes, the company is supposed to align its practices (Pisano, 2015). Secondly, the organisation can consider the usage of secondary resources creatively. There is a direct link between creativity and resource use by employees and managers (Sonenshein, 2014). They are the pioneers of creativity. Hence, Trago Mills should consider training the employees and managers efficiently so that creativity can be fostered. The availability of abundant resources might not foster as much creativity as the lack of resources in an organisation.
Reference List
Al-Bostanji, G.M., 2015. Impact of applying of Ansoff model on marketing performance for Saudi foodstuff companies. Journal of Marketing and Consumer Research, 15, pp.71-81.
Anderson, N., Potočnik, K. and Zhou, J., 2014. Innovation and creativity in organizations: A state-of-the-science review, prospective commentary, and guiding framework. Journal of management, 40(5), pp.1297-1333.
Cheng, C.C. and Huizingh, E.K., 2014. When is open innovation beneficial? The role of strategic orientation. Journal of product innovation management, 31(6), pp.1235-1253.
Glanfield, E. (2014). Stores across UK found to be selling fake bottle of Head and Shoulders. [online] Mail Online. Available at: https://www.dailymail.co.uk/news/article-2860378/Stores-Britain-selling-fake-bottle-Head-Shoulders-shampoo-containing-sex-change-chemical.html [Accessed 15 May 2020].
Gmelin, H. and Seuring, S., 2014. Achieving sustainable new product development by integrating product life-cycle management capabilities. International Journal of Production Economics, 154, pp.166-177.
Hussain, S., Khattak, J., Rizwan, A. and Latif, M.A., 2013. ANSOFF matrix, environment, and growth-an interactive triangle. Management and Administrative Sciences Review, 2(2), pp.196-206.
Lee, S., Park, G., Yoon, B. and Park, J., 2010. Open innovation in SMEs—An intermediated network model. Research policy, 39(2), pp.290-300.
Loredana, E.M., 2016. The Use Of Ansoff Matrix In The Field Of Business. In MATEC Web of Conferences (Vol. 44, p. 01006).
NS Business. (2019). How Porsche and Aston Martin are building the future of luxury cars. [online] Available at: https://www.ns-businesshub.com/transport/porsche-aston-martin-future-luxury-cars/ [Accessed 15 May 2020].
Pisano, G.P., 2015. You need an innovation strategy. Harvard Business Review, 93(6), pp.44-54.
Sonenshein, S., 2014. How organizations foster the creative use of resources. Academy of Management Journal, 57(3), pp.814-848.
Trago.co.uk. (2020). Trago Mills | The South West’s Original Discount Retailer. [online] Available at: https://www.trago.co.uk/ [Accessed 15 May 2020].