CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Is product development strategy rewarding in terms of company performance? Studies in wide ranging contexts have found mixed results in different measures of performance. Researchers have connected higher profits with the ability for firms to innovate (Schumpeter, 1934), while performance in development projects has been found to be determined by a firm’s product strategy and its capabilities in overall processes and organization (Clark & Fujimoto, 1991). Others have found financial market losses from product losses failures being larger in magnitude than financial market gains from product development successes (Sharma & Lacey, 2004). Effective product development rests on a product’s design’s ability to create a positive product experience (Clarke & Fujimoto, 1991) while product innovations performance has been seen as an important driver for firm growth particularly the combination of product and processes innovations significantly improving firm growth (Goedhuys & Veugelers, 2008). The researchers’ further point out that product innovation translates into superior sales growth rates and access to finance. Haeussler, Patzelt & Zahra (2012) concluded that new product development is important for new firm’s successful performance though they also attest that developing new products is costly and time consuming with at times uncertain outcomes. Ansoff (1987) brought into limelight the concepts Product development which he defined as the focus on the needs of the current customers and the wider customer markets.
According to Raible (2013), industrial theory is key in the influence on the choice of strategy and decision making of company. Ramsey (2001) further articulates that industrial organizational theory is reflected in the structure-conduct-performance model, which claims presence of a link between the structure of a market, the organizational conduct and organizational performance. Porter (1981) pointed out that the central analytical aspect of industrial organization theory can be used to identify strategic choices. Product development strategy is recognized and realized through a process whereby those with the power to make decisions for the organizations interact among themselves with other organizational members and with external parties. This study therefore considers choice of strategy mainly in terms of product development.
Many organizations today are focusing on becoming more competitive by launching strategies that give them an edge over others. Sugar companies are equally facing the same challenge in their choice of strategy given the crisis the subsector is currently experiencing. The challenge of liberalization, increasing competition from cheap sugar imports, poor industry policies and structures in sugar industry forms the basis of this study Institute of Economic affairs (2005). It is worth noting that a major part of the industry’s challenges are emerging from the dynamics of macro environment. According to the Institute of Economic affairs (2005), stakeholders have not been involved in the creation of industry policies which brings into focus the role of corporate social responsibility and the resultant outcome of the choice of strategies.
1.2 STATEMENT OF THE PROBLEM
Company performance is a function of combination of factors. The concepts of environment, strategy and performance have been found to have a linkage that derives from the structure conduct-performance (S-C-P) paradigm of the industrial organization economics. Continued existence of house hold product companies necessitates that they continually consider how product development strategy impacts on their performance. How consistent their strategic behaviours are with environmental changes is expected to have implications in their performance. There is empirical evidence of the relationship between choices of strategy on performance of companies. Haeussler et. Al (2012) related development of new products with successful firm performance, Goedhuys & Veugelers (2008) associated product innovations with firm growth while Sharma & Lacey, (2004) found evidence in financial losses to have an implication of product development failures. While different studies have been conducted in different contexts and industries, in the view of the above, this study seeks to address performance implications of product development strategy in terms of development of new products and improvement of existing products in Pz Calabar, Cross River State.
1.3 OBJECTIVES OF THE STUDY
The objectives of the study include but not limited to;
1. To determine the effect of product development strategy on the performance of an organization.
2. To determine the extent to which new product development and improvement of existing products affects performance of an organization.
1.4 RESEARCH QUESTIONS
1. What is the effect of product development strategy on the performance of an organization?
2. To what extent does a new product development and improvement of existing products affects performance of an organization.
1.5 RESEARCH HYPOTHESIS
H0: There is no significant impact of new product development on the performance of an organization.
H1: There is a significant impact of new product development on the performance of an organization.
1.6 SIGNIFICANCE OF THE ESSAY
The study will be of great benefit to prospective entrepreneur by improving the performance of the current product line adding new product line. It is noteworthy to maintain that almost in all growth strategies, it follows an up-signing process. This is a management fad used in the context of increasing the size of an organization by mainly hiring more employees.
1.7 SCOPE OF THE ESSAY
The study is limited to the impact of new product development in an organization.
1.8 LIMITATIONS OF THE ESSAY
In the course of carrying out this essay, certain factors militated against the smooth operation of the work. The exercise was greatly limited due to some factors. Some of the factors include:
- Lack of funds
- Time constraints
- Inadequate research materials to collect data such as textbooks, journals, magazines
1.9 DEFINITION OF TERMS
New Product Development: Process of developing a new product or service for the market
Organization: Is an entity comprising multiple people, such as an institution or an association, that has a collective goal and is linked to an external environment.
