Management and Organizational Studies 2320A/B Chapter 8:
21 Dec 2018
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Document Summary
Why do firms create new products: new market offerings provide value to both firms and customers, the degree to which they do so depends on how new they really are. New doesn"t necessarily mean new-to-the-market , it generally means new-to-the- world . Managing risk through diversity: through innovation, firms often create a broader portfolio of products, which helps them diversify their risk and enhance firm value better than a single product can. If some products in a portfolio are doing poorly, others may be doing well: firms with multiple products are better able to withstand external shocks, including changes in customer preferences or intense competitive activity. In industries that rely on fashion trends and experience short product life cycles, most sales come from new products. If the same selection of books were always available for sale, there would be no reason to buy more.
