Huawei as a Lowest Cost Position Innovator in the Global Telecommunication and Consumer Electronics Segment
By
Jennifer Davis-Adesegha,
Cloud Analytika-Bridgetown, Barbados, June 10, 2024
Position innovation is often reflected in the message sent to the public about the values that the business stands for as well as the values that it is committed to continuously create and deliver to its market. Position innovation is the radical or incremental innovation process of positively projecting how a business is perceived by the market in terms of the quality of its products, customer services, competitive capabilities and the overall values that it offers. Position innovation which is a sort of branding process is influenced by the prowess of product or process innovations.
Product innovation creating more quality products that were previously unanticipated by the customers and even rivals enhances position innovation. It enables the business to use position innovation to position itself in the minds of the consumers as the consistent creator and deliverer of the best quality product. If it’s about process innovation leading to improved process efficiency, this improves position innovation as the business which is consistently committed to use the most efficient and cost effective processes to create and deliver its products/services in the way that delights or even exceeds customer expectations.
As product innovation is about product/service innovation and process innovation is about the creation and introduction of novel value creating business processes, position innovation is about the strategies that a business applies in the market to extract as much values as possible from its innovations. However, for the values created from product or process innovation to be used as the basis for position innovation, the created values must be consistent and reliable for a long time.
Position innovation is about evaluating, understanding and discerning the best market segment to target as well as the new segments that must be approached. It is about identifying and consolidating the market position as the best business to serve the designated target market. As Air BNB was hitherto positioned to serve the needs of conferences with delighting simple cost effective accommodation, it subsequently moved to serve the general needs of holiday makers and travelers in the tourism and travels industry.
Position innovation reflects the kind of unique values that the business builds its brand image around. The likes of Walt Disney have positioned themselves in the global recreational, film and entertainment industry, as the superior creator and deliverer of more superior recreational, film and entertainment services that continuously strives to offer the best.
Founded in 1923 by Walt Disney in California, Disney has been engaging in aggressive radical and incremental position innovations that not only disrupted its rivals, but also its own business approaches to introduce new thinking that bolstered its overall competitiveness and sustainability. Disney has through radical and incremental position innovations created, delivered and captured enormous values from a series of its innovation outcomes like studio entertainment, media networks, theme and amusement parks, resorts, and consumer products and interactive multimedia.
Through a series of such disruptive innovations, Disney has evolved from its California base that was largely built on animated movies into a global theme and amusement park and multimedia entertainment giant that the likes of Netflix are struggling to displace from the music streaming segment. Despite such success, Disney still faces an enormous competition challenges from the imitating new comers like Parques Reunidos that seek to imitate and even do better what Disney has so far been good at doing since its inception in 1923.
Walt Disney’s Position Innovation
To counter such threats, Disney has engaged in position innovation as the film and entertainment business that continuously engages in continuous innovations to create and deliver the most disruptive films that reflect the everyday life realities. From its theme parks, Disney is also recognised not because of its rides, animals or the under or overpriced quality foods, but because of its consistency to brand itself by offering delighting and unforgettable customer experience in the ways it creates and offers its different services to its clients.
Even if this bolsters Disney’s position innovation, some of the controversial issues and actions that may affect Disney’s market positioning include its silence on Florida Parental Rights in Education Act which was an indirect Gay-Bill, integrating sexist, racist and LGBT positive features in its films, plagiarism, poor working conditions and remuneration and poor animal treatment. Such negativities may also affect the effectiveness of Disney’s paradigm innovations.
Besides Disney, position innovation is also reflected in the case of Ryanair that repositioned itself as the lowest cost airline operator. When Ryanair that had hitherto instigated fare war as the lowest fare airline along Dublin-London route faced enormous competition heat from British Airways and Aer Lingus leading to £20 million loss in the 1990s, it restructured its airline business operation to adopt Southwest Airline’s lean-low-cost airline business model[1]. Ryanair adopted radical waste and cost minimisation strategies that left it offering the lowest fare across Europe as compared to its rivals like Easyjet and legacy airlines like British Airways, Aer Lingus, KLM and Lufthansa.
Ryanair’s Position Innovation as the Lowest Cost Airline Operator
Expanding from its Dublin-London route to other UK and European routes, Ryanair revolutionised the European air travel market by using value-stream mapping to eliminate all non-value-adding services like drinks, food and larger luggage services to instigate travellers to demand only the movement from one airport to another. It instead preferred charging for food, drinks and larger luggage services for passengers that require them.
Ryanair emulated lean principle of pull-based system to create and deliver only the services and products that travellers desire and are willing to pay for. To eliminate wastes from delays and waiting time, Ryanair not only eliminated larger luggage that delay checking in and boarding, but also opted to use smaller remote airports that have lesser air-traffic. This eliminated waiting time arising from immigration checks and clearance for departure and landing to delight travellers’ experience of moving quite faster and efficiently across different European destinations.
Ryanair further eliminated involvement of travel agencies that add costs of fares to have online booking, ticket issuing, boarding pass printing and check-in accomplished through its airline online system. Ryanair eliminated “Self-Check-in Machines to optimize space and reduce unnecessary movements of its operational staff. To reduce personnel costs, fewer flight attendants are expected to multi-task by not only selling drinks and food on board, but also cleaning and assisting with luggage handling. Ryanair also standardized by using only one type of aircraft which is Boeing 737-800 to standardise and control maintenance costs where smaller similar fleet maintenance teams and pilots are seamlessly moved across different aircrafts when required[2].
Besides eliminating classification of seats according to first class and economy, Ryanair also sells its seats according to different prices depending on the time of the day, booking and the season to minimise risks of the aircraft moving with empty seats. To respond to Easyjet’s imitation threats and British Airways that eliminated chocolates and canapés, Ryanair further adopted the lean kaizen principle of continuous improvement to eliminate advertisement and marketing costs by gaining free publicity using certain contentious lean proposals to eliminate and remain only with one aircraft toilet and threats of installing standing seats.
Though these lean principles influenced Ryanair to bolsters its overall competitiveness, Ryanair still faces supply chain vulnerability-related challenges and pressures arising from its global sourcing and continued trend of “leaning down”. In addition to that, bad or good position innovation is also reflected in Cargill’s case.
Cargill is an American based multinational food processing corporation that was established in 1865 by the families of Cargill and MacMillan in Wilmington-Delaware. Though it still remains a family business, Cargill has grown from its roots in Delaware into one of the multinational food processing giants which is involved in processing beef and poultry products as well as purchasing and distributing agricultural commodities like palm oil, vegetable oils and fats and other ingredients like glucose syrup and starch.
Cargill that now has divisions dealing in agricultural products, meat and poultry products, pharmaceuticals, beauty and personal care, financial services and transport and logistics operates across all major regions of the world with a net income of US$4.93 billion in 2021.
However, in addition to reputational damage arising from its human rights and ecological environmental abuses, Cargill still faces stiff competition from the other global food processors like Beyond Meat, Ingredion, COFCO, ADM and Hormel Foods[3]. To therefore reposition themselves to remain competitive and sustainable, Cargill has a system for engaging with its shareholders with the effect that as the business used to replough 80% of its profits into different investments to spur growth and more dividend yields, it responded to the complaints about minimal dividends paid out from the Cargill and MacMillan families by introducing the employee stock ownership plan.
Combined with reorganization of Cargill’s board of directors to reduce family representatives and introduce more expert managers, employee stock ownership plan as contrasted to public listing as a public company catalysed Cargill’s growth and revenue generation to US$114.695 billion with retained profits of US$3.103 billion.
Cargill, Ecological Concerns and Position Innovation
As this responded to shareholders’ interests by paying more dividends, the employee stock ownership plan also responded to employees’ needs as part of Cargill’s stakeholders. It influenced improved employees’ feelings of the ownership in the business and subsequently their motivation to Cargill’s current better operational performance and growth[4].
However, Cargill also scores lowly for not effectively engaging with its employees as in 2018, employees’ protests in its Virginia Plant about bad work conditions and poor health benefits were met with firing and arrest of employees who attempted to create a labour union to advance their concerns and interests. Such incidents affected its reputation and brand image, but Cargill still uses certain strategies of engaging its suppliers from different regions around the world who supply its products like the suppliers in Argentina who provide beef, Brazil that supply poultry products, Africa that supply palm oil and the Pakistan and Indian supplies that provide grains[5].
Though Cargill engages its suppliers on the expected quality, delivery timelines, payment terms, safety and environmental concerns and standards, accusations have often still flared up for Cargill’s continuous purchase of palm oil and cocoa beans from the suppliers in West Africa who use child labour and those who engage in unsustainable agricultural practices.
In the midst of such accusations, Cargill still places its customers as part of its stakeholders at the center of its business operation. Through its people centered and customer centered business philosophy, Cargill continuously strives to create and deliver superior meat solutions, proteins and nutritious foods to all its global customers. As it emphasizes continuous innovation, it recently introduced Cargill’s (2017) Customer Engagement Approach that focuses on engaging customers across the globe to understand and integrate their needs in different new product developments.
But in such customer engagement strategy, Cargill has not responded to the needs of the increasing vegetarian and health conscious consumers who are increasingly avoiding meat products. Cargill also emphasizes the importance of food safety and environmental sustainability to respond to the needs of its customer and the society, but of recent, Cargill is still accused of churning out contaminated foods leading to the recall of 185000 pounds of turkey products in 2011 and 29339 pounds of ground beef that caused sickness and hospitalization of customers in Vermont due to salmonella contamination in 2012[6].
Cargill is also accused by the global society for land grabbing, deforestation, air pollution, tax evasion and purchase of supplies from suppliers and business partners who use child labour. These imply though Cargill has still been able to grow and earn US$4.93 billion in 2021, diagnosis of its stakeholder engagement strategy still suggests it would still score 80% to require high need for action. However, even with such rating, Cargill still uses a combination of different strategies to create and deliver the desired values for its customer and the business[7]. In otherwords, all these imply how position innovation can leverage a firm’s overall effective market performance.
REFERENCES
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Cargill. (2021). Overview: Cargill Protein. Wilmington: Cargill. Available at: https://www.cargill.com/meat-poultry/overview-of-protein-na (Accessed 3 June 2022).
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Crews, J. (2021). Cargill makes leadership changes as part of growth strategy. Minneapolis: Meat & Poultry. Available at: https://www.meatpoultry.com/articles/24666-cargill-makes-leadership-changes-as-part-of-growth-strategy(Accessed 3 June 2022).
Chavez, M.D. 2019. Cargill Reports Latest Investments and Efficiency Strategies in Financial Report. Minneapolis: Cargill.
Disney. (2023). The Walt Disney Company announces strategic restructuring, restoring accountability to creative businesses. Burbank: The Walt Disney Company; Deng, Z. (2022). Analysis of Disney’s marketing strategy and competitiveness —— based on 4ps theory and swot analysis. BCP Business & Management,. 34(2), 449-455.
Giambrone.(2022). Ryanair’s initial threat to suspend flights between UK and EU over Brexit. London: Giambrone.
Griffith, J. C., & Roberts, D. L. (2021). Customer service 2.0: The effect of Ryanair’s policy change. International Journal of Aviation, Aeronautics, and Aerospace, 8(2), 161-199.
Humphries, C. (2022). Ryanair voices concern over Boeing delays and MAX 10 certification. London: Reuters.
Hilal, N. (2019). Strategic pricing practices: Ryanair example. JEL Classification: L83, M31, N74, O18.
McKenzie, J. (2021). Cargill’s Digital Transformation Drives People-First Strategy. Boston: Forbes. Available at: https://www.forbes.com/sites/sap/2021/05/27/cargills-digital-transformation-drives-people-first-strategy/?sh=7c5608f6ec50 (Accessed 3 June 2022).
Roembke, J. (2022). Cargill announces plan to acquire Delacon. New York: Watt Global Media. Available at: https://www.feedstrategy.com/mergers-acquisitions/cargill-announces-plan-to-acquire-delacon/ (Accessed 15 June 2022).
Author
Jennifer Davis-Adesegha is a Research Apprentice at Cloud Analytika-London, UK as well as an expert of bank crisis management who is based in Bridgetown, Barbados. E-mail: jdadesegha20@gmail.com
