The Impact Of New Product Development On The Performance Of An Organization

Project and Seminar Material for Marketing

The Impact Of New Product Development On The Performance Of An Organization


Abstract


The study examines the need for establishing new product development processes and investigates whether the adoption of such processes enhances industries competitive advantage and business performance. The study focuses on manufacturing industries in Nigeria. The analysis has shown that the NPD process is mainly related to the business strategy, the organizational culture, and partly the personnel skills, while management involvement does not necessarily have a statistically significant positive effect on the “NPD” plan. However, for successful business performance–business strategy, management involvements; personnel skills; organizational culture; product quality, the level of the goal achievement and the applied (NPD) process adopted and implemented, all significantly affect a business performance level. The findings have shown that if all the steps of NPD are not followed, then the new product will not meet the targeted quality standard, neither will it meet customer expectations and needs, and thus it will not be profitable and will not have positive impact on the business performance, especially in manufacturing industries.


Chapter One


Introduction

1.1 Background of the Study

The society expects that all the manufacturing industries should continuously improve their business performance. To do this, all industries strive to operate and compete in an expanding and dynamic environment, and new product development is a vital source of competitive advantage. As posit by Grupta et al (1986), Edgett (1996) and Taylor et al (1994), Vourlioti et al (2008) technological evolution, the highly competitive environment and the varying (diversified) customer needs, have forced enterprises to search for and apply new product development processes that could improve their product unique characteristics, quality and business performance. According to Vourlioti et al (2008), Balbontun et al (2000), industries adopt its own standards and different approaches to design new product development process (NPD), depending on its size, types and number of products or services that it produces, as well as its business environment. Consequently some industries focus their attention on the improvement of the product’s technical specifications, while other look for new product development processes that could reduce the development time and accelerate the production process and the business performance. Basically, there are two elements needed for an effective new product development – process and people. According to Techeuchi and Nonaka (1989), Wheelwright and Clark (1992), Prasad (1996) and Vourlioti et al (2008) in the last few decades the rule of the new product development “game” have dramatically changed. Industries haverealized that high quality, low cost and differentiation strategies are not enough to lead them to business success (Kaplan and Norton, 2001). Pooltan and Barcley (1998). They posited that innovation should be focused on customers, while its success depends on how much innovation conceptualizes consumers needs and requirement.

According to Calantone et al (2000s), Gevirtz (1994), there is no one right strategy for a company, rather for new product development, the different stages are allowed to overlap, and to accelerate the product development process right from the idea generation to commercialization. The product development process should focus on the following strategies, time to market, low product cost, low development cost, innovation and technology, quality, reliability and robustness services and responsiveness (Calatone et al 2000) techniques to speed cycle time while maintaining product quality, and customer satisfaction. Positive business performance includes concurrent engineering, integratig marketing, research and development, teams and reducing product complexity (Gevirtz (1994) Droge et al (2000) Calantine et al (2000).


1.2 Statement of the Problem

Huang (2010) considered New Product Development as the key in businesses and the motive of competitive advantages. In the process of New Product Development, a business does not simply promote new prod-ucts, but has to satisfy customer demands and cope with competitors’ threats. It is therefore important for businesses correctly analyzing the consumer market to draw the new product de-velopment strategies mostly suitable for the business. Since such strategies are the basis of New Product Development, they would affect the in-novation of New Product Development, and valuable information should be mastered in the process of New Product Development.
Szutu (2010) proposed one of the strategies to promote operating performance, as consider-ing the minimal impact of products on the environment during the production and the balance among quality, convenience and price required by customers. In this case, a business should have the innovation of product functions and appearance designs conform to and satisfy cus-tomer demands so as to enhance the operating performance and satisfy customers.


1.3 Objectives of the Study

The objectives of this study are:

  1. The description of NPD processes, which constitute one of the basic success components for a manufacturing industries.
  2. The determination of the NPD methods that have occasionally been used from manufacturing industries in Nigeria.
  3. The examination of the NPD practices and their importance for business performance.

1.4 Research Hypotheses

  1. HI1: strategy positively affects new product development plan
  2. H21: personnel skills positively affect new product development plan
  3. H31: management involvement positively affects new product development plan
  4. H41: organizational culture positively affect new product development plan.
  5. H51: new product development plan positively affects product quality.
  6. H61: product quality positively affect business performance
  7. H71: new product development plan positively affects business performance.

1.5 Significance of the Study

The study examines the need for establishing new product development processes and investigates whether the adoption of such processes enhances industries competitive advantage and business performance. Specific factors affecting an enterprise goals / business success are examined and a new model concerning the factors affecting the NPD process is presented.

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Conclusion


The analysis have shown that new product development plan is mainly related to the business strategy, the organizational culture, partly the personnel skills, while management involvement does not necessarily have a statistically significant positive effect on the “NPD” plan. However, for successful business performance– business strategy, management involvement;ss personnel skills, organizational culture, “NPD” plan, product quality, the level of “NPD” process goal achievement and the applied “NPD” process adopted and implemented, all significantly affect the level of a business performance.


Managerial Implications

From the managerial perspective, the first managerial implication concerns the findings that new product development process has significant relationship with business performance, especially in manufacturing industries in Nigeria. Developing economies firms, hoping to initiate new products, should take note of the new product development process plan and its impact on business performance. It can be concluded that if all the steps of the NPD process arenot followed, then the new product will not meet the targeted quality standard, neither will it meet customer expectations and needs, and thus it will not be profitable and will not have a positive impact on the business performance. Understanding of the requirements of customers as regard the product, poses advantage for the activities of new product development. Likewise, industries should further strengthen their new product development process, to improve the chances of success of new products and likewise business performance.
This study also contributes significantly to the industry players. Manufacturers will benefit from the findings which concluded the study on new product development process, and its impact on business performance in Nigeria. Academically, the findings from the study add new understanding to knowledge and literature, particularly in the area of new product development.


Limitations

Limitations associated with sample size could limit the influences of new product development process and business performance. The sample since is considered as relatively small (180 manufacturing firms with 230 useable questionnaire) may limit the influence of the findings of this study. This was due to the respondents’ unwillingness to return their questionnaires. Therefore, a similar study could possibly be applied to bigger sample.

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