In first two sections of my article, I had designated best competitive environment for Vestas and focused on internal and external analysis of Vestas.
In third section, I am going to make selection of competitive strategy and technology to innovate for Vestas by taking previous informations into account.
Selection of Competetive Strategy:
For all the reasons indicated in previous articles, competetive strategy of Vestas is selected as differentiation strategy. Differentiation is aimed at the broad market (Europe) that involves the creation of a product or services that is perceived throughout its industry as unique (unique technologies which are going to be implemented on products, are going to be explained in “Selection of Technology to Innovate” section). Vestas may then charge a premium for its product. This specialty can be associated with design, brand image, technology, features, dealers, network and customers service.
Differentiation is a viable strategy for earning above average returns in a specific business because of the resulting brand loyalty lowers customers' sensitivity to price. Increased costs can usually be passed on to the buyers. Buyers' loyalty can also serve as an entry barrier-new firms must develop their own distinctive competence to differentiate their products in some way in order to compete successfully. Differentiation strategy is more likely to generate higher profits than a low cost strategy because differentiation creates a better entry barrier. A low-cost strategy is more likely, however, to generate increases in market share (relatively).
Selection of Technology to Innovate:
Every Vestas wind turbine offers modern, competitive energy solutions based on 25 years of experience that incorporates the continual development of known technologies within aerodynamics, power regulation and generator regulation. This section contains information about some of the areas and patented technologies that Vestas work with:
- The lighter the weight, the higher the profits
- CFD – mapping wind currents
- OptiTip® – optimum blade positioning
- OptiSpeed® – increased power in changing wind conditions
- Active Stall® - maximum energy, minimum load
These technologies can be briefly stated under product innovation. Anything which is new to the business and its product range is counted as innovation, even if similar products are available elsewhere or if the change is an incremental one. The reason why we name these technologies as product innovation is that:
- There is an performance improvement in terms of material change and changing some sort of manufacturing conditions,
- Bringing userfriendliness to product,
- Adding new fuctionality.
Conclusion:
By taking all above information, we can clearly state that Vestas’ technology to innovate is incremental product innovation because a potential marketable improvement to an existing product is quickly placed within a clearly defined, time-tested product designed to prove or disprove its value to the company.
If we state the reasons why we name them as innovation;
- There is a new product, process or method,
- There is process to obtain this new output,
- This output reaches to customers or users,
- Timing is right (they weren’t used advanced before),
- They change the current way of doing something and they create a significant value from the eye of customer,
- They have an impact on industry,
- They bring competetive advantage.
If we adapt Social Deterministic School’s evaluation criterias to Vestas current situation:
- Department Starts Innovation: R&D, customer, goverment, competitors etc…
- Innovation Type: Incremental & Radical Innovation
- R&D Investment: High for Radical, relatively low for Incremenal Innovation (high in general terms)
- Profitability: High for Radical, relatively low for Incremenal Innovation (high in general terms)
- Uncertainty & Risk: Low for company
- Innovation Sourcing Department: Innovation source can be goverment, customer, R&D department, competitors etc...
Because of the special condition of market, it can easily be seen that there is a little difference between System Integration Model and Vestas’ current situation.
To be continued...
A.Yigit NEPHAN
05.03.2010
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