Product development strategy
Product development strategy adopted by an energy company as it attempts to build an effective international innovation strategy.
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Choose two components of the new product development process e.g. idea generation, product development, market analysis, commercialization or product launch and describe and analyses the product development strategy adopted by an energy company as it attempts to build an effective international innovation strategy.
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Introduction
The dynamics of technology, competition, and markets have resulted to significant changes to almost all sectors of the global market and one of the activities that have remained most powerful is new product development (Ullman, 2009). Therefore, as global market continue to become more competitive due to increased provision of high quality products and services which are available in a wide range from numerous companies at affordable prices, adoption of new product development on regular basis through a comprehensive innovation policy remains the most important factor to any company a competitive edge in the international market (Bruiyan, 2011). This is attributable to the fact that companies that embrace innovativeness and creativity continue to strongly support their processes of new product development mainly because they make them unique in the market by using innovation and research to produce unique and high quality products. According to Ulrich and Eppinger (2004) new product development process involves all the steps involved in the entire process of developing and introducing new products to the markets. Therefore, in literature new product development is widely defined as the process through which a market opportunity is transformed into a finished product ready for sale either tangible or intangible (Krishna and Ulrich, 2001). However, in order for a new product development process to be successful it is always essential to have a clear understanding of consumer wants and needs, the nature of the market as well as the competitive environment (Kahn, 2013).
This report discusses the new product strategy at Total Energy Company in its attempts towards building an effective international innovation strategy. The reason for choosing Total Energy Company as the case study company for discussion in this report is motivated by the fact that the company has embraced almost all the components involved in the process of new product development, but the report will mainly focus on two components of the process such as idea generation and product development as the key initial stages of new product development process.
Background of Total
Total is a French international energy company operating in over 130 countries that began in 1920’s, then engaging in oil production in the Middle East region (Total, 2014). Over the years the company has widely expanded its operations globally together with diversification of its operations into refining, marketing of petroleum products, as well as production and marketing of chemicals. After almost a century of existence, Total has grown to become one of the leading energy companies in the world based on its cutting edge of innovativeness and new product development (Total, 2014). Total’s oil production activities began in 1924 majorly in the Middle East region, subsequent to the beginning of the expansion of the oil exploration to other countries in 1929 aimed at discovering and developing new resources. At the same year the company began its refining activities. The company’s chemicals business started in the 1960’s when the company’s retail network expansion also continued to grow eventually becoming the presently existing global operation network (Total, 2014).
Throughout Total’s history, the company has always embraced an unwavering emphasis on innovation whereby it discovered its first offshore fields in Gabon in the year 1961. In 1975, the company made its initial foray into solar energy which it has continued to grow until today (Total, 2014). The company also began its initial operations in deepwater drilling in the Mediterranean in 1986 (Total, 2014). Apart from focusing on developing new products through innovation, the company has also embarked on making sure that its customers get value for their money by producing high quality products at affordable prices where in 2011, for instance, the company created the network for Total Access consisting of low-price stations throughout France in order to make sure that its customers obtain its products conveniently and affordably (Total, 2014).
Energy is undoubtedly the most vital factor for improvement of living standards and economic development. This is attributable to the fact that modern day lifestyles rotate around the availability of energy because it helps in driving progress, but to ensure this trend is sustainable changes in the utilization and management of energy are inevitable and Total has been in the front line to use innovation in developing new products that are more efficient and effective (Total, 2014). Total has operations in about 130 countries and it is amongst the top international oil companies as well as a leading natural gas operator, petrochemical producer, refiner, and lubricant and fuel retailer (Total, 2014). Total Energy Company employees also leverage on their acknowledged expertise across the globe towards discovery, production, refinery and distribution of oil and gas for effective provision of products and services to the company customers globally (Total, 2014). The company has also been using its innovation strategy in developing new products, particularly energies that are likely to partner oil and gas. In addition to producing new and improved products that are related to oil and gas, the company has also embarked on producing products that are entirely new from their areas of specialization including solar energy and biomass energy (Total, 2014).
Through its new product development strategy, the company has managed to place itself to be among the market leaders in the global energy sector through its cutting edge exploration and production, gas and power, refining and chemicals as well as production of new and renewable energies particularly solar and biomass (Total, 2014).
Idea Generation
According to Cooper (1990) stage-gate model is definitely the widely used approach to managing development of new products which consists of ideas generated from the need for product improvement, as well as extension of product line and product launch through product innovation. All sections at Total are involved in product development ranging from top level management to the lowest cadre of level employees through strong leadership and integration across the company. Idea generation through innovation and new product development not only involves technical research, but also the total company technology, internal organization of the company, the entire marketing, the consumers and the customers, as well as the technological ambience which surround the company such as the physical and social environments and the competitors presents around the company (Krishna and Ulrich, 2001).
Considering that idea generation is the most crucial step in the new product development process, then this is the step at which the ideas developed through the research & development (R&D) process are refined in order to ensure that they are developed to new products (Smith and Reinertsen, 1998). In a company setting idea generation is definitely the protocol or precursor for the subsequent steps in an idea generation process where a new product is envisaged to be developed. At Total Company research and development (R&D) remains very critical in determining the viable ideas and those which are not. At this stage the company should be able to know if the market research done has provided valid and/or reliable results since the subsequent step in the research process can not be carried out without his/her consent which is often done on the basis on the initial instructions provided by the individual person (Krishna and Ulrich, 2001). Furthermore, the company has been able to highlight the necessary steps that should be followed during the research and development (R&D) process in order to make sure that the company’s production has been improved on the basis of the records kept by marketing and supply staff (Krishna and Ulrich, 2001). This is attributable to the fact that the generated ideas are eventually transformed into viable products that can be marketed and supplied to the general public in order in any viable commercialization of the idea generation towards a product generation.
Product Development
This is undoubtedly the most involving and costly step in the new product development process since it includes prototype development, simulations and designs all the way to the eventual or desired product. At this stage the actual product is produced prior to its commercialization and marketing in order to make sure considerable volumes of the product are sold to ensure the company’s competitive edge is sustained (Yan-mei, 2009). According to Kim and Wilemon (2007) BAH model suggests that the most crucial outcome of any new product production process is to see a finished product from the entire process of new product development where innovation was at the center stage.
Therefore, the considered product development is vital towards making sure that the process is effectively completed. The company has been very proactive towards implementing its industrial property policy aimed at protecting its innovations which has made the company to be amongst the leading energy companies in terms of patents registration. For instance, in 2012 Total in conjunction with Peugeot developed a new car model known as the Peugeot 208 Hybrid FE Concept which had the capacity to produce very low carbon emissions. This was achieved by levering on the cutting-edge expertise of the company staff together with that of its partners. This vehicle is to accelerate to significant speeds within a very short period of time and emit very low levels of carbon into the environment (Total, 2014).
Moreover, Total has been in the forefront towards making sure that its innovations and new product development are aimed at reducing environmental. This has been necessitating the company to make sure its petroleum products have the least negative impact to the environment. For example, in 2009 through its innovativeness the company developed a new diesel product that significantly improved fuel efficiency known as Excellium Diesel which acts as an automotive diesel likely to achieve an average of 2.5% fuel efficiency improvement. This newly developed product has been boosting engine efficiency through its enhancement with specific additives aimed at preventing engine clogging (Total, 2014). This product was also chosen for the Total Ecosolutions label award which the company began to identify the most innovative services or products that offers the best environmental standards or energy performance. The company has been very active in making sure that in the company’s R&D strategy there is a very strong link between the idea generation and product developments stages in the new product development process. This has ensured that Total is able to consistently produce new products into the markets through its cutting edge innovation (Total, 2014). Therefore, by embracing innovation and implementing an appropriate risk management strategy, the company been able to constantly develop new products throughout its history as a mode through which it achieves its competitive advantage against its competitors. The company policy towards innovation and new product development has also been very critical towards ensuring that it remains a frontrunner in the energy sector globally (Total, 2014).
Conclusion
In conclusion, it is evidently clear that Total has embraced innovation as an integral part of its day to day operations as a way of matching its solutions towards environmental and energy challenges. Total company has inherently embraced innovation as a way of enhancing new product development to ensure that the company maintains its cutting edge competitiveness in the international market through production of high quality and unique products at affordable prices. Thorough screening of new ideas likely to result to new product development has been in the forefront towards making sure that the company maintains its vigor in innovativeness and new product development both of which are essential in ensuring the company remains competitive in the international market. Thus, idea generation and product development considered in this report seems the most important components of new product development process embraced by the company to make sure it continues to leverage on its innovativeness and risk management for posterity and achieving more global competitiveness.
Reference List
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