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INNOVATION AND GLOBAL COMPETITIVENESS

- Harshit Modhia AM 1411

Contents
Introduction of international competitiveness of U.S firms Case study of Xerox, Leader in information technology Introduction of Computer Aided Production Revolution Case study of New U.S. Digital Factory Case study of Euro and International competitiveness of European Firms

Innovations and the international competitiveness of U.S. Firms


According to the product cycle model, firms that introduce an innovation, lose their market. Firms introduce more advanced products and technologies. In many cases, American discoveries were introduced and first exploited commercially by foreign firms. Although many U.S. firms remain world leaders in many high-

tech industries and some firms lost competitiveness to foreign


competitors.

Reason for this U.S. firms stressed product innovation while


Japanese firms stressed process innovation. During 1970s and 1980s, Japanese firms became

technological leaders in many fields.


Toyota pioneered the just-in-time production system. U.S. auto producers have learned from that increased efficiency since 1980s. Then also Japanese introduced improvements in production.

Japanese always prepared to lose dollars and Americans


concerned with quarterly profits.

Japanese also face domestic competition hence face a greater


stimulus to innovate. Some American firms underwent painful restructuring during 1980s, returned them to a position of leadership during 1990s.

case study
How Xerox Lost and Regained International Competitiveness and Became a Leader in Information Technology

In 1959, Xerox Corporation was first to introduce a copying


machine. In 1970, Japanese firms began to take over the market with cheaper copiers, Xerox did not respond. After 1979, Xerox awakened to the seriousness of the

Japanese threat.
From comparison, Xerox was startled to find that Japanese competitors were producing copiers of higher quality at far lower costs.

Xerox with the help of its Japanese subsidiary mounted a


strong response which involved integration of production. By taking these drastic actions, Xerox reversed the trend toward loss of market share during 1990s. History seemed to repeat itself, when Xerox became found itself battling Japans Canon in the new digital world of information technology. During 1990s, Xerox became as a digital document and

solutions company that combines that combines hardware


and software.

The new Computer Aided Production Revolution and the International Competitiveness of U.S. Firms

Since 1990s, Revolution in production has been taking place in


United States, based on Computer-Aided Design and Computer-Aided Manufacturing.

Hence increment of the productivity and international


competitiveness of U.S. firms. CAD allows to design a product on a computer screen and relatives of product. CAM issues instructions to a network to produce a prototype.

These allows firms to avoid problems, increases speed and


reduce the optional lot size hence runs to increase efficiency.

The New U.S. Digital factory


During 1990s, a new American factory, by information age marvel, increased productivity resulting from the combination

of computer software and networks in industries.


Digital factory allows system to customize production down to one unit. This is called software controlled continuous flow manufacturing. After losing competition during 1980s,U.S. regained all of its lost ground.

CAD increases the level of innovations which allowed to


design Neon Subcompact Car in 33 months instead of 45. Because of innovations, test driving of huge machines before making could be possible. The Boeing 777 Jetliner was developed in this way.

CAD also used to design and simulate entire assembly lines.


With these developments U.S. became superior in software technology.

Case study

The Euro and the International Competitiveness of European Firms

On January 1,1999, the euro became the common currency of


11 of the 15 member countries of the European Union and other reserved the right to join later.

In January 2002, the local currencies of the 12 countries were


withdrawn and Euro circulated. Because of change, the Euro made price variations transparent across the continent at both the wholesale and the retail levels. In such an environment, companies that develop products that are sufficiently innovative and diverse to win customers will prosper.

The introduction of Euro is forcing European companies to


stay in supply chains and develop integrated products and market strategies. Hence, it makes European companies more competitive, as American companies have been for long time.

Conclusion
To remain competitive in todays globalization world requires constant alertness to the competition and continuous innovations on the part of the firm.

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