MANAGERIAL ECONOMICS

By Rajen Patel (AM 1112)

Case 1: How Do Firms Get New Technology?

Method of Acquisition Independent R&D Licensing Process Innovation 1 2 Product Innovation 1 3

Publication or technical meetings Reverse Engineering

Hiring employees of innovative firm Patent disclosures Conversation with employees of innovating firm

3 4
5 6 7

5 2
4 6 7

Case 2: Open Innovation at Procter & Gamble

A.G.Lafley changed P&Gs approach to innovation from the closed to open model. P&G encourages other firms to use their own innovations in their(P&Gs) own labs. Ex. Xerox Corporation and its Palo Alto Research Center (PARC) IBM created patent commons.

Innovation and Global Competitiveness

Innovations and the International Competitiveness of U.S. Firms The New Computer-Aided Production Revolution and the International Competitiveness of U.S. Firms

Innovations and the International Competitiveness of U.S. Firms

Product cycle model American innovations were first introduced commercially by foreign firms. U.S. firms generally stressed product innovations while Japanese firms stressed process innovations Toyota pioneered the Just-in-time production system Japanese are prepared to lose millions of dollars for innovation while American managers are concerned with quarterly statements and profits.

The New Computer-Aided Production Revolution and the International Competitiveness of U.S. Firms CAD (Computer aided design)
To design product To test their strength and reliability

CAM (Computer-aided manufacturing)

To instruct machine tools to produce prototype of a product Increase efficiency Increase accuracy

Case 3: How Xerox Lost and Regained International Competitiveness and Became a Leader in IT
Until 1970, Xerox had no competitors When Japanese firm entered , Xerox didnt respond. Xerox reorganized and integrated development , production and quality control efforts. Increased employee involvement, reduced inventories and number of suppliers Xerox reversed the trends toward loss of market share during second half of the 1990s.

Competition in todays globalized world requires constant alertness and continuous innovation on the part of the firm.

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