Innovation Management and New Product Development Sixth Edition

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tend to be characterised by few product changes. Often, they are referred to as traditional products. Indeed, some companies promote their products by stressing the absence of any change, for example Scottish whisky manufacturers.
A technology strategy provides a link between innovation strategy and business strategy
For each of the strategies discussed above, there are implications in terms of the capabilities required. When it comes to operationalising the process of innovation, this invariably involves considering the technology position of the firm. Hence, the implementation of an innovation strategy usually is achieved through the management of technology.
Many decisions regarding the choice of innovation strategy will depend on the technology position of the firm with respect to its competitors. This will be based largely on the heritage of the organisation. In addition, the resource implications also need to be considered. For example, a manufacturer of electric lawnmowers wishing to adopt an innovation leadership strategy would require a high level of competence in existing technologies, such as electric motors, blade technology and injection moulding, relative to the competition, as well as an awareness of the application of new technologies, such as new lightweight materials and alternative power supplies. Adopting a follower strategy, in contrast, would require more emphasis on development engineering and manufacture.
In terms of resource expenditure, whilst the figures themselves maybe very similar, it is where the money is spent that will differ considerably, with the leader strategy involving more internal RD expenditure and the follower strategy involving more emphasis on design or manufacturing. This area of
technology strategy
and the management of technology is explored in more detail in Chapters 9, 10 and Case study
This case study explores the use of cork as away of sealing wine in a bottle referred to as a closure in the wine industry. This 400-year-old industry, with all its associated working practices, has continued largely unaffected by technology changes in almost all other industries – until, that is, the s when synthetic plastic closures were used by some wine producers instead of natural cork. With a requirement of over 17 billion wine bottle closures a year, the cork industry could, arguably, afford a little competition, but it seems the cork industry had not recognised the significant changes taking place in the wine industry to which it acts as a supplier (Cole, 2006). The wine industry was experiencing a revolution where new producers from Australia, California and Chile had new and different requirements. Ina matter of a few years, the industry had changed completely.
The cork industry
The Portuguese cork industry is facing an environmental and economic disaster as winemakers and large grocery chains defect from natural cork closures to modern synthetic closures, such as rubber or plastic. The cork industry, the wine industry and the need for closure

Case study

Chapter 7 Managing organisational knowledge
Portugal supplies more than half of the world’s cork and has been experiencing a slow move away from cork since the mid-1990s. More recently, the trickle has turned into a flood, as changes in the wine industry and buying behaviours contribute to the rise in demand for modern closures. The cork industry accounts for nearly 3 percent of Portugal’s GDP. Its cork forests, and workers, are under threat from innovation in one of the oldest industries in the world. For hundreds of years, cork was the accepted method of closure for bottles, especially wine, but a wide range of closures for bottles have existed for many years, including screw caps and resealable plastic caps.
Few in the wine industry believed that vineyards, bottlers and wine drinkers would ever wish to use anything other than natural cork. However, the wine industry has changed significantly over the past 20 years. The historical dominant producers of Europe – France, Germany, Italy and Spain – are being challenged by new wine producers, such as California, Australia, New Zealand, South Africa, Chile, etc. Moreover, these new producers have developed international wine brands, such as Jacobs Creek and Blossom Hill, which fundamentally have changed the wine market. This is because the international brands have demanded a consistent product that has little variation. This is incomplete contrast to the traditional wine products that have always had a degree of variety, dependent on the grape, the climate and production. Furthermore, the buyers of wine were changing, too – the supermarket chains, such as Tesco, Sainsbury, Carrefour, Wal-Mart, had become the biggest buyers and they now have enormous power in the industry and are able to offer wine producers access to millions of consumers and, correspondingly, millions of sales of bottled wine.
Cork is harvested exclusively from the cork oak, found predominantly in the Mediterranean region. Though the tree can flourish in many climates, the conditions that favour commercial use are fairly narrow. The major cork-producing nations are listed in Table 7.3. Cork is harvested in a steady cycle that promotes healthy growth to the tree over its expected lifespan of over 200 years. Typically, virgin cork is not removed from saplings until the 25th year, and reproduction cork (the first cycle) may not be extracted for another 9–12 years. Cork suitable for wine stoppers is not harvested until the following 9- to year cycle, so farmers have invested over 40 years before natural wine corks are produced.
Table 7.3 Cork production, 2015
Forest area Hectares of world’s forest area
Production Tons (000)
% of world’s production
725,000 33 175 Spain 23 110 Italy 10 20 Morocco 9
15 Algeria 21 Tunisia 3
9 France 1
5 TOTAL 100 340 Source The Picture Pantry/Alamy Images

The cork forests, owing to the mutual efforts of the European Union (EU) and various environmental groups, is expected to increase, due to the active efforts to protect existing forests and sponsorship of significant new plantings. Cork bark is removed from trees in spring or summer. At this time of year, the cork comes away easily from the trunk because the tree is growing and the new, tender cork cells being generated break easily. Harvest difficulties occur if the process is not carried out when the tree is in full growth. To keep the trees in good productive health, there are laws that regulate the harvest of cork oaks. In Portugal, trees are harvested every 9 years and on the island of Sardinia (Italy) the harvest occurs every
12 years. (Numbers are painted onto the bark to keep track of when a tree was stripped) Therefore, harvest forecasting is based on 9- or year cycles, i.e. projections for the 2016 Portuguese cork harvest are based on the kilos harvested in 2007. It is in the forests where the management of cork quality begins.
Cork production has shown significant expansion in recent years – reflecting the impact of approximately hectares of highly productive, new cork forests in Spain and Portugal (see Table Applications of natural cork
Cork is used in a wide variety of products – from construction materials to gaskets and, most importantly, as a stopper for wines. The cork industry employs an estimated 30,000 workers in a variety of jobs. Wine corks are the most visible and most profitable of the many products derived from cork. They account for approximately 15 percent of total production by weight and two-thirds of cork revenues. The wine industry is by far the most important customer of the cork industry, the dominant cork producer being
Amorim. More than 13 billion wine bottle closures are needed each year and the market is growing.
The wine industry
Wine consumption in the UK has grown dramatically over the past 20 years and this has been the casein the USA, too. The UK wine market is expected to grow in value by 6.1 percent to £13.14 billion by 2018, with volume growth forecast to pickup again in 2017, according to a market report by Key Note. The USA remains the world’s biggest market for all colours of wines. Wine has continued to be the drink of choice for increasing numbers of younger people in the USA. China has become the leading market in the world for red wine. Over the past five years it has seen an increase of 136 percent. The colour red is considered lucky in China and is also affiliated with the Communist Government, whilst white is associated with death and is seen predominantly at funerals.
Wine has become a fixture on the weekly grocery list of UK consumers, alongside bread and eggs. This has meant that the UK multiples (Tesco, Sainsbury’s, MS, Morrisons, ASDA) have become some of the largest buyers of wine in the world. With this buying power has come the ability to make demands on suppliers. In particular, a homogeneous product free from fault. The world of wine has changed considerably over the last couple of decades and, whilst many of the changes have been for the better, some are giving cause for concern. One area of considerable change is the growth in branded wines or so-called modern wine by traditionalists.
According to the traditionalists, wine maybe divided simply into two categories the first is a commodity, that is grapes are grown, crushed and made into wine, which is then sold cheaply and consumed uncritically. In this case, as long as the quality is adequate and the price is right, consumers are not too worried about the source. This first category accounts for the majority of wine across the world. This is the modern approach to wine production and distribution. The second type of wine is traditional wine that is purchased and consumed not because of low price, but because of interest. This interest stems from the fact that there exists a diversity of wine types that are each able to express elements of their cultural and geographical origins in the finished product. Crucial here is the importance of the starting material – the grapes. Unlike lager or whisky, where the agricultural input (wheat or barley) is minimal and the human input is dominant, this kind of winemak- ing is best viewed as a process of stewardship rather than one of manufacturing.
The diversity of wine is vast. Not only are hundreds of different grape varieties in relatively common use, but there are also the complex influences of soil types, climate, viticulture (the study and production of grapes) and winemaking practices. There is also a rich traditional heritage in the more established wine- producing countries, whereby cultural and viticultural influences collude to produce a variety of wine classifications (appellations in France, that is, geographical areas where grapes for certain wines were grown. Case study

Chapter 7 Managing organisational knowledge
According to the traditionalists, it is this diversity that makes wine so interesting. They argue that, divorced from its geographical origins, wine is only marginally more interesting than fruit juice, lager or gin. And you do not get people naming either of these three beverage types as one of their interests or hobbies.
These two genres of wine have coexisted quite happily and there is no reason that they cannot continue to do so, sitting side-by-side on the shelf. They serve different functions and are consumed indifferent situations, often by different groups of consumers. These two genres may also be labelled branded and estate bottled (see Table The modern retailing environment
The traditionalists argue that estate bottled wine does not sit well with the modern retail environment see Figure 7.11). They argue that, because wine is an agricultural product, not a manufactured one in the eyes of the big retailer, this is a bad thing. The way the modern multi-outlet branded/franchised shop is configured, continuity of supply and economies of scale are hugely important. This is not something the traditional wine producers, most notably in France, have been willing to embrace. It is the diversity within wine that the traditionalists want to celebrate vintage variation – at times a frustrating reality, but one that adds an extra level of interest – and typically the limited production of each producer means that wine is not an easy product to deal with. Usually, it comes in small parcels and the production level changes each year. Modern retailing, however, is big business. To survive in the modern retailing environment, you need to be big, highly visible and have lots of outlets. Effective marketing in this modern environment is an expensive business and you can only really make use of it if you area big player. This automatically rules out almost all estate wines, leaving the market open to the international brands. Figure 7.11 illustrates the power and influence within the supply chain of wine.
The illusion of choice
Supermarkets and other multiple outlets do not like dealing with the diversity and complexity of wine, but they are quite attached to the idea of diversity. So, typically, they will stock hundreds of different lines, giving the consumer the impression of abroad portfolio of wines. The problem here is that this diversity is actually an illusory one. The wines are, almost always, industrially produced, in large quantities and to a formula. For example, you may have in your minds the romantic notion that all wine is discovered by a dedicated wine hound who has trekked across remote parts of the world stopping at cellar after cellar searching out a wine that will give your tastebuds a treat. The truth is very different. Most wine purchased by the supermarkets today is led by financial motives, which are driven by cost sheets and market forecasts.
Remember also that wines that appear on recipe cards or in magazines have been paid for. Waitrose charges suppliers a nominal fee of £300 fora mention in its Wine List magazine (Moore, 2007). According to the traditionalists, whilst customers now experience far less risk of picking a bad bottle, they also have far less chance of picking a wine that is at all interesting. Traditionalists argue that, whilst high quality is desirable, a uniformity of style is disastrous. They maintain that branded wines, with their Table 7.4 Modern and traditional wine
Branded (modern)
Estate (traditional)
suitable purchased grapes, these wines often are widely available neighbouring vineyards the company making the wine or are supplied by growers on long-term contracts place’
limited production

manufactured, processed character and lack of connection with the soil, hinders complete choice and diversity. Worst of all, they argue, their growing dominance of the marketplace threatens the very existence of the traditional article estate wines.
Wine bottle closures
Cork has been used as a closure for bottles for hundreds of years. Indeed, one might reasonably ask why it has survived so long. It is partly because it is a natural product that breathes, which is a quality required for some wines. For most wine drinkers, the pop of the cork from the bottle is an intrinsic part of the wine drinking experience and they love it. Wine producers, on the other hand, view natural corks with deep suspicion, due largely to the rogue chemical 2-4-6 trichlo- ranisole (TCA, a compound created by the interplay of a cork-borne fungus, the chlorine used to sanitise wine corks and plant phenols), often referred to as cork taint that makes wine taste anything from slightly muted to very mouldy. Although it is harmless if swallowed by humans, TCA imparts a musty, wet cardboard smell and taste to the wine it affects. TCA is detectable in wine at concentrations as low as four parts per trillion and, although some wine drinkers are more sensitive to it than others, the taste and smell of a corked wine areas unforgettable as the disappointment a sommelier trained wine professional) or host feels upon the discovery of a tainted bottle. The wine industry argues that this had risen to an unacceptable level. Estimates of this level vary wildly, as do different people’s sensitivity to and awareness of TCA. The cork industry quotes less than 2 percent. Some wine producers claim it is as high as 15 percent. Whatever the precise figure, wine producers are deeply worried that a significant proportion of their customers experience a substandard form of the liquid they originally put in the bottle. And they are almost more worried by alight incidence of TCA that simply flattens the aroma and fruit of their wines than by TCA at its most obvious, virtually undrinkable extreme. In the first case, the consumer probably will think, wrongly, that the fault lies with the wine rather than the cork. The cork industry has been working hard to introduce new techniques that minimise the incidence of TCA taint in their products, and to demonstrate that TCA can arise not just from corks but other sources, such as wooden pallets. Because of all this uncertainty, wine producers have been seeking alternative bottle stoppers, or closures, with much lower or minimal risks of TCA taint, and closure manufacturers have identified this business opportunity that demands more than 13 billion wine bottle closures and is a growing market. But they risk alienating their customers who love cork or at least the pop of the closure.

Wine brand owners Bottling plants
Wine buyers
Tesco, etc.
Cork industry
Cork closure producers
Bottle closures
End users – consumers of bottled wine Wine critics/tasters
Figure 7.11 Power and influence in the supply chain of wine
Case study

Chapter 7 Managing organisational knowledge
Illustration Breaking into the UK wine market
Consider the lot of a wine producer looking to break into the UK market. With 75 percent of wine sales in the UK going through supermarkets, you might want to target them first. So, you approach the supermarket buyers. If you are from a relatively unfashionable country like Portugal, probably you will be talking to a
22-year-old junior buyer fresh out of college who has, perhaps, two slots to fill at a £3.99–
4.99 price point. They want serious volumes, afresh, fruity style and the cheaper the better. If you are from Australia, you may have better luck, but the volumes required will be huge and the price points will be very keen. Even at the higher price points, the continuity of supply and volume issues favour the branders very heavily. If you are selling wine from recognised appellations, such as Chablis or St
Emilion, then the buyers will be looking for the best Chablis at the entry-level price point for this wine, effectively ruling out the estate wines here also. A supermarket would much rather have a vaguely palatable Chablis at
£5.99 – which will fly out of the door – than a really good one at £8.99. That is life . . . it is hard.
Source: Wine, It is wider changes in the wine industry that have led to innovation in wine bottle closures and suitable remedial activity in the natural cork industry itself, even though this problem/opportunity has been obvious to all in the wine business for at least 15 years. The first generation of alternatives to natural cork were synthetic copies of the real thing, cylinders of various oil-industry-derived materials, plastic corks which, though improved, can still be difficult to get out of a bottleneck, and even more difficult to put back in. They retain natural cork’s disadvantage of needing a special tool to extract them. In 1999, the synthetic cork was dealt a significant blow by the Australian Wine Research Institute (regarded by the industry as the most important impartial research project) comparing the technical performance of different closures. This showed that synthetic corks started to let in dangerous amounts of oxygen after about 18 months, which means they are really suitable only for the most basic wines for early consumption.
In terms of costs, synthetic was initially more expensive than natural cork, but fierce competition between different manufacturers and economies of scale have brought synthetic cork prices down rising oil prices have put pressure on this but, generally, a plastic cork costs considerably less than a natural one – well under peach, when a good quality cork can cost easily more than p. Cork and synthetic require a foil capsule over the top, which costs p. Synthetic corks have several more big drawbacks, such as they are non-biodegrada- ble, unlike natural cork. Furthermore, the ecosystem of southern Portugal depends on our continuing to buy natural corks – an argument that is questionable, given that the cork forests of Alentejo were planted expressly for the cork industry.
Both natural and synthetic are cheaper than the next most obvious alternative, screwcaps, which currently are the favourite closure for many a wine technician anyone who has to open a lot of bottles, although the special bottles needed for screwcaps are expected to become cheaper as screwcaps become more common – and there is no need to pay fora foil capsule over a screwcap.
Unlike synthetic corks, screwcaps are extremely good at keeping wine’s enemy, oxygen, out of the bottle – almost too good, in fact. It is becoming increasingly clear that screwcaps are associated with the opposite of oxidation reduction, which can suppress wine’s all-important aroma and even imbue it with a downright nasty one. This problem particularly affects Sauvignon Blanca grape that tends naturally to reduction, but not Riesling.

For the moment, these two grapes are those most frequently found under screwcap, because their bright, aromatic, unoaked wines have so far seemed to respond best to this particular seal.
In New Zealand and Australia, an estimated 30 percent of all wines, red and white, are already bottled under screwcaps, which are gradually spreading throughout the northern hemisphere. But the jury is still out on the effect of screwcaps on oaked whites and reds, which actually may need more oxygen during the ageing process than screwcaps allow.
Globally, cork has a total market share of 40 percent and screwcap 60 percent locally but this changes for reds retailing for over 30 euros a bottle – 60 percent bottled under cork. It would seem that no single closure works for every wine on the market.
But not all consumers areas thrilled by screwcaps as producers. They still carry the stigma of being associated with cheap wines and spirits – and, unlike the natural cork, they involve precious little theatre of corkscrew and pop. Furthermore, screwcap application requires the installation of a completely new set of machinery from the old cork insertion kit. This has discouraged many smaller producers from adopting the screwcap, or Stelvin as it is known in many markets after the market leader. It has also made plastic corks seem a much more attractive alternative.
In Australia and New Zealand, there is near total acceptance that the screwcap is the preferable closure. In the UK, they are now commonplace in mass market wines UK wine bottlers report that the proportion of all wine they stopper with a screwcap has risen to 85 percent in the past three years. But, in much of mainland Europe, and certainly in the USA, there is still considerable consumer resistance to this innovation.
More innovative alternatives now include the
Vinolok, a glass stopper reminiscent of an old-fashioned pharmacy, currently being trialled in Germany Gardner Technologies MetaCork, a US stopper that can be screwed off but is lined with a natural cork for resealing and, more recently, from Australia, the Zork, a plastic, peel-off stopper that, so far, seems good at keeping oxygen out and also provides the vital pop when being extracted (see Illustration 7.3).
Zork has the disadvantage for producers of being a relatively late arrival on the scene and, initially at least, being more expensive than any other closure. But it is extremely easy to use and may well find favour with consumers because of what the manufacturers describe as the sex appeal of the cork’.
The cork industry fights back
The cork industry has launched its own offensive against synthetic closures. First, the cork industry via the Cork Quality Council (CQC) is sponsoring ongoing research into the relationships between TCA, cork and bottled wine. The following research was carried out in
2010 by ETS Laboratories. It involves the use of chemical tests to quantify TCA content in individual corks and in cork harvests. The results have shown several interesting characteristics of TCA in cork soaks (cork soaking is the process prior to putting the cork in the bottle. It has also demonstrated a direct relationship between the level of TCA found in a cork soak and
TCA that is transmitted to bottled wine. Testing has proven to be quicker, more sensitive and accurate than previous analysis available to the industry. The procedure offers an immediate improvement in cork quality control procedures involving screening manufactured corks. Further value is seen in other research projects designed to eliminate TCA prior to the completion of cork manufacture. The chemical testis now being used by CQC member companies to supplement sensory analysis of incoming cork shipments.

Illustration 7.3
According to its manufacturer, ZORK
is a revolutionary wine closure product that combines the benefits of cork and screwcap. The company humorously suggests that ZORK
is Australian for cork. Similar to synthetic and screwcap closures, ZORK
offers the winemaker a competitively priced, quality- controlled consistent barrier to oxygen that will not taint the wine or scalp its flavour. Unlike synthetic, however, it is made from Case study

Chapter 7 Managing organisational knowledge
Second, cork manufacturers have invested $200 million in the past five years in new plants and supply chain integration, says APCOR (Association of Portuguese Cork Producers. The industry passed a self-regulatory code into standardise manufacturing practices. Over 200 Portuguese cork makers have been certified. Cork producers have also vertically integrated their distribution channels. For example, Amorin Cork, the largest producer of natural corks, has taken oversupply and distribution lines it once contracted out.
Marketing the benefits of cork
Third, in 2003, the Portuguese Government and APCOR members launched a month $6.5 million marketing campaign to turn consumers against synthetic closures Almond, 2003). One of the tactics has been to stress the dangers of switching to synthetic and the environmental disasters that could result. Another has been to gain support from wildlife groups to stress their concerns to wildlife if the cork forests are lost. In 2004,
WWF, the conservation group, urged wine drinkers to avoid bottles sealed with plastic corks or screwtops. It said that falling demand for traditional corks was threatening the habitat of the Iberian lynx, the world’s rarest big cat. The latest figures from the IUCN, the World Conservation Union, show that there are only 156 lynx left, prompting the IUCN to upgrade its status to critically endangered (Bugalho et al. A slightly more sophisticated tactic has been to focus on the consumer. For example, surveys show that wine drinkers dislike synthetic closures, long associated with cheap wine. Yet, the synthetic market share is growing, mainly from medium-end wines from new world markets Argentina, Chile and Australia. Synthetics account for 7–8 percent of a worldwide market of an estimated 17 billion bottle stoppers, growing at a rate of 10–30 percent a year, according to US-based Supreme Corq, the largest synthetic cork maker. The challenge for the cork industry is to try to nurture the consumers love of natural cork.
The use by some wine brands of the flanged bottle (roll top rim) first introduced into try to convey a premium product, is now being replaced by the standard shaped bottle. This is partly in response to consumer research that reveals that premium quality is no longer associated with the flanged bottle, largely because the design became almost universal amongst the international wine brands. A similar argument could be made with the use of screwcaps, where there maybe a consumer backlash because people may associate screwcaps with mass market wines, which would result in enormous damage to the premium labels (Almond, 2003).
This case study has explored some of the issues surrounding changes in the wine industry and their impact on one of the world’s oldest industries – cork wine closures. The issues stir strong emotions and there are powerful lobby groups at work trying to influence consumers and government officials. durable, food-grade polymers and is fully recyclable.
, developed and manufactured in Adelaide, South Australia, seals like a screw- cap and pops like a cork. The ZORK
snaps onto a standard cork mouth wine bottle and, after simple, low-cost modification, can be applied at high speed using industry-standard capping equipment.
closure consists of three parts a robust outer cap that provides a tamper- evident clamp that locks onto the European
CETIE band of a standard cork mouth bottle, an inner metal foil that provides an oxygen barrier similar to a screwcap, and an inner plunger that creates the pop on extraction and reseals after use. The closure is easy to remove by hand and simple to reseal.
To open the bottle, peel the seal to remove the tamper-evident tab. The closure can then be pulled out like a cork, and pop After pouring, the bottle can be resealed by pushing it back in. According to the advertising copy
delivers a superior technical seal but retains the sense of celebration associated with traditional closures.
No corkscrew, no crumbling, no cork taint, no worries.

Environmentalists say that undercutting demand for natural cork will render cork forests less profitable and spark an ecological and economic disaster. Such arguments, whilst they play well with certain consumer groups, are hard to sustain when many of the forests have been planted specifically to harvest cork.
It seems the switch to screwcap has been made for the benefit of the wine, not just the image or for reduced costs. The cork industry’s response has been to invest in research to address the issue of cork taint and to increase promotional campaigns about the benefits of cork. This, however, largely has been through the use of fear, arguing that the cork forests of Portugal will be lost, along with all the associated wildlife if the move from cork as a closure continues and to suggest that consumers will reject wine from a screwcap bottle. The evidence for this last claim is not there, certainly in many parts of the world.
According to wine industry figures, faults attributable to the use of cork as a seal run between 3–7 percent, depending on who you ask this is high and would be labelled a disaster in any other industry, especially for food and beverage. It is particularly so when there are ways the industry can directly address the issue, by looking at alternative seals, as they are now doing. The decision to change closure, however, has to include consideration of costs and consumer preference. At present, a plastic cork costs considerably less than a natural one. With regard to consumer preference, this is more difficult to gauge. In some countries, most notably Australia and New Zealand, consumers, it seems, have readily embraced the screwcap. Indeed, the corkscrew is rapidly becoming redundant in both countries. When even Kay Brothers of McLaren Vale, the dusty old winery that has hardly changed since the eponymous brothers bought it in
1890, is using screwcaps exclusively, the time fora cork revival maybe too late.
According to the cork industry, more than one in two wineries are considering using the screwcap. However, many in the industry will continue to use natural cork for higher-priced bottles largely, they say, because of cork’s ability to facilitate the proper aging of wine and overall consumer acceptance. The new synthetic corks have succeeded in getting the natural cork producers to take quality control far more seriously and, as a result, the quality of cork closures has improved. But many winemakers and retailers remain unimpressed and argue that the cork industry has not yet eliminated cork taint.
Whilst the battle over closures rages, the so- called traditionalists argue that the wine industry is merely exploiting profits in the short term by producing large volumes of homogenised wine and that this may harm the wine industry in the long term because consumers will grow bored with the uniformity of style.
Source: Almond, M. (2003) The cork industry spins out the fear factor,, 23 March Bugalho, M, Caldeira, M, Pereira, J,
Aronson, J. and Pausas, J. (2011) Mediterranean cork oak savannas require human use to sustain biodiversity and ecosystem services, Frontiers in Ecology and the Environment, vol. 9, no. 5, 278–86. Cole, E. (2006) Americans set to overtake French in wine consumption, Decanter, vol. 8, no. 4; Houlder, V. (2002) Wildlife body takes a pop at plastic corks, Financial Times,
27 December Moore, V. (2007) The great wine ripoff, The Guardian, G, 5 April, 4–7; Randolph, N. (2002) Cork industry fights off taint, Financial Times, Commodities and Agriculture,
27 August Robinson, J. (2004) A question of closure,,
11 June
1 To what extent is the cork industry guilty of complacency and alack of innovation If consumers love corks, why are the producers not providing what their customers want Is it wine quality or costs that have driven producers to synthetic How could technology forecasting have helped the cork industry What level of RD investment would be required to help the industry diversify and develop new opportunities for its materials What portfolio of RD projects would you establish for the cork industry What role have the wine buyers (end users and others in the supply chain) played in contributing to the fall in demand for cork as a closure Use the CIM (Figure 1.9) to illustrate the innovation process in this case.
Case study

Chapter 7 Managing organisational knowledge
Chapter summary
This chapter examined how business strategy affects the management of innovation. In so doing, it introduced the notion of an organisation’s knowledge base and how this links strategy and innovation. The heritage of a business was also shown to form a significant part of its knowledge base. Moreover, a firm’s knowledge base largely determines its ability to innovate and certainly has a large influence on the selection of any innovation strategy.
Discussion questions Explain the role played by core competencies in a firm’s strategic planning What is meant by the technology escalator in the concept of technology trajectories Explain why a business’s heritage needs to be considered in planning future strategy Try to plot two firms in each of the quadrants on the profit–competency matrix Figure 7.4).
5 Explain the difference between individual knowledge and organisational knowledge and show how an organisation’s knowledge can be greater than the sum of individual knowledge bases How would you compare the knowledge bases of two organisations How can late entrants win the innovation race?
Key words and phrases
Technology trajectories Dynamic capabilities Core competency Knowledge base of an organisation Organisational heritage Learning organisation Dominant design Degree of innovativeness Technology strategy 251 9 In terms of closures, what are the disadvantages that the cork industry needs to address and what are the advantages that it could promote Will the cork industry have to concede defeat to the Zork?

Abernathy, W.J. and Utterback, J. (1978) Patterns of industrial innovation,

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