The Impact Of Competitor Patenting On Firm Value

Similarly, another advantage of the patent is restricting competitors. In the smartphone industry, Apple had a patent for its slide and lock feature and other competitors such as Samsung are unable to use that feature. With patents, companies are able to differentiate themselves and their products and they can restrict the innovation of other companies.

America is characterized with excessive competition and innovation within its capital markets. This competition within industry groups provides a foundation for this innovation can occur and flourish. As firms become more profitable, competitors enter the market in attempt to steal market share and retain profits for themselves. This gives rise to competition between rival firms which results in new products and services for society. All parties theoretically show incur economic benefit. Companies make an adequate return on investment in the form of profits while society gains access to new and innovative products. Such is the nature of capitalism which is the backbone of American enterprise (The Buzz, 2011). The technology industry is no different in this regard. Competition has given rise to new and innovative solutions to many consumer needs. In fact, the technology sector has provided products society never deemed necessary until they were created (i.e. Apple's IPod). Motorola has been at the forefront of this innovation and has entered markets previously dominated by older more established companies. My aim with this document is to provide competitive insights in regards to Motorola.

Value, rarity, and can be obtained, are used to characterize resources that contribute to initial competitive advantage. To sustained competitive advantages, the resources must be imitable, imperfectly mobile, and have low substitutability. Imitability is, whether other will be allowed to imitate or copy the resources. Mobility is the easiness of an organization to acquire the resources to imitate. Example of it, are hardware and software that are easily obtained. Finally, substitutability is the ability of others to make use of substitute resource.

Organizations gain a competitive advantage by utilizing their rare and valuable resources. These rare resources may either be tangible, such as machinery and equipment, intangible, for instance brand names, money, customer knowledge, or they may be in the form of human assets possessed by the organization. Ongoing capabilities, actions and prior investments of an organization are what give rise to resources. Moreover, resources may be relational, legal, reputational, physical, human or knowledge and informational.

Innovation is normally used to denote the process that takes place when a product or a process is developed, from idea to market; the concept of invention only denotes the process that takes place when new ideas or solutions are generated. Baumol (2002) argues “is it possible to have lots of inventions and still lack innovations. Nevertheless, inventions are a necessary precondition for innovation”.

Resource Based View is still a hot topic although the theory is more than 20 years old. The Resource-based view's foremost proposition is that an organisation's capacity for competitive advantage is limited to the management of its own bundle of resources (Wernerfelt, 1984;Rumelt, 1984).

“As more and more companies see innovation at the heart of their growth strategy, it is not surprising that more and more companies also seek to identify ways to measure the impact of their innovation activity. The critical questions are, what to measure and how?” (Stamm, 2003,

The productivity of firms plays such an important role in their competition policy. The productivity performance of firms depends on their own R&D efforts. It can affect the productivity. The pool of knowledge, which developed by other firms, also can give an impulse to own R&D expenditures of firms. R&D expenditures from other firms can be thought to influence mutually productivity, as a source of technological spillovers. It’s not possible to disregard that firms evolve in a competitive environment and their R&D decisions are not taken independently from R&D choices of competitors. Consequently, R&D efforts are a source for competition too.

Innovation offers the companies a competitive advantage. Presently and within the future, more than any time in history, the key to competitive advantage is innovation. However innovation will facilitate businesses meet all of their strategic challenges, not simply competition; to illustrate, in confronting accelerating rates of change, globalization, apace advancing technology, a additional numerous workforce, associated a modification from an industrial to a knowledge-based economy. Meeting all of those challenges helps the firm attain competitiveness, and meeting these challenges suitably depends on innovation. Innovation allows a firm to workout its challenges in distinctive ways in which build competitive advantage either through relative differentiation, a relative low-priced position, or few acceptable level of each. Innovation cannot assure success, however success cannot be achieved within the end of the day without it.

Innovation: The term innovation generally refers to making a change or creating newer products and ideas or newer procedures which can result in the success of the company. Sanitarium utilises the innovation concept in various departments and ways.

Business organizations are composed of intangible and tangible assets. It is more challenging to manage the intangible assets. However, intangible assets are the main makers of sustainable value creation. Competitive advantage results from valuable skills, processes and capacities which are not easily duplicated by competitors. Dynamic capabilities enable an organization to innovate new developments. However, dynamic capabilities are easily not transferable. Resources form an organization’s foundation hence forms a basis for an organization’s capabilities (Teece, Pisano & Shuen, 1997). Resources are regarded as facilitators of competitive advantage. In environments of dynamic market however, the resources do not last for a long time and in that case, they cannot lead into competitive

Capabilities: “ability to deploy resources and competencies, usually in combination to produce desired service” (Porter). As an example a health care organization has money. It purchases equipment’s such as MRI and CT machine which represent resources. The organization hired someone to trained employees on the use of the machine. The employees learned how the

A resource must give the firm a value creating strategy by either offsetting its competitors or by eradicating its weakness.

A company’s share in specific market can be influenced by a new entry of a competitor in such market. In other words, if a business requires a large number of capitals to start with, then the threat of new entry is relatively low. Additionally differentiated products or services are pivotal to keep new entrants away. This means that a company has acquired unique technology will be easy to maintain its current market share.

Moreover only big monopolies with significant market power have the capacity to carry out research and development on their products. This leads to innovation since new knowledge is applied to the production process. The nearly twenty year monopoly enjoyed by Microsoft in manufacturing of its computer software has not only ensured harmony and uniformity in computer software but also facilitated accessibility of computers by the greater population. Consequently, this has lead to the information technology revolution