Essay on What factors influence the distribution of profits from innovation
What advantages do large food retailers have in extending value chains to other countries Why might they not always be successful in doing so.
Paper must be at least 1500 words.
Please, no plagiarized work!
It should be noted that there are certain factors that influence the profits from innovation. The first factor is presence of many strong innovators and competitors (such as HP, Dell and Toshiba in computer industry. similarly the presence of GM, Ford, Chrysler, BMW, Honda and Toyota in global automobile industry) may lead to division among many companies. The second major factor is the relatively greater bargaining power of some suppliers, which may also lead to distribution of profits because these raw material providers may demand higher prices / amounts for supplying essential inputs for production. In other words, the innovations by suppliers, retailers and distributors, Intellectual property owners and complementary asset (accessories) providers within a value chain system result in profit distribution among these above mentioned parties. The third major factor is the ‘industry standards’ set by top companies and market players. In explanation, the quality maintenance, number of product features, reliability and authenticity of products offered by leading companies actually become the standards / thresholds that influence the profits from innovation (Dedrick et al, 2009).It is worthwhile to mention the fact that Dedrick et al (2009) developed a new approach so that they could calculate and analyze the differences in value capturing and the impact on profit margins.
Indeed, the authors used the teardown data obtained for two different products: first was Apple’s iPod and the second was notebooks / laptops models offered by Hewlett Packard (HP) and Lenovo. The main reason behind choice of these two products was that they are manufactured and assembled in many nations across the globe including USA, Japan, China, Taiwan, South Korea and other countries. First of all, the researcher would like to highlight that these computing and mobile products are made up of several large / small components developed by many organizations worldwide.