Advantages & Disadvantages of Innovation

Advantages & Disadvantages of Innovation

Advantages

  • Businesses can initially charge higher prices for new products before competitors products come on the market
  • Being innovative good for a firm's reputation
  • If they have been first in the past - people naturally interested in future products
  • Innovations in processes add value to existing products / services
  • Businesses with lots of innovative products can take advantage of economies of scope

Disadvantages

  • Very costly and time consuming
  • Businesses can run out of money if they invest too much and don't get products to market quickly enough
  • End up wasting resources by developing something that doesn't sell
  • Businesses not able to produce new product on large scale at low enough cost - no guaranteed return on investment
  • Businesses risk ruining reputation if new product is poor quality

Evaluation

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