Functions, Benefits, and Limitations of MySQL

MySQL is a multi-threaded and open source relational database management system (RDBMS) that uses the client/server architecture (Dyer, 2008).Other RDBMSs include Oracle, DB2, SQLite, PostgreSQL, and SQL Server. These tools are used to store, retrieve, and manage data for businesses or organizations (DuBois, 2009). This paper provides an overview of MySQL, types of organizations that use it, benefits of the tool, and its limitations.

MySQL in an open source distribution that contains three core tools: (1) a SQL server that powers the database system and permits database access to users, (2) utility programs and a database client for database administration and user interactivity, and (3) a client library, which allows users to develop their own database programs. Database administration tasks the tool offers include backup generation and database performance monitoring (DuBois, 2009).A typical database system environment has several components as depicted in the figure below.

Database system environment (Rob & Coronel, 2009)

 

MySQL is used by different organizations in diverse industries. Examples of corporations using MySQL to power their business-critical systems and large websites to saving money and time include Facebook, Alcatel Lucent, Google, Zappos and Adobe (Oracle Corporation, 2015). Many web developers use MySQL for web development because it integrates well with Apache web server and PHP scripting language (Dyer, 2008).

There are several benefits of using MySQL.First, MySQL is fast. According to its developers, the database system is almost the fastestDBMS (Oracle Corporation, 2015). Second, it is easy to use. Third, the tool uses the standard Structured Query Language (SQL) for manipulating databases. Fourth, MySQL is multi-threaded making it possible to access multiple databases concurrently. Fifth, it is secure and fully networked. This provides protection against illegal access to databases and ensuring that users can access the database through the Internet respectively. Other benefits include its portability, small installation size, cost and availability, and a great support team (Dyer, 2008; DuBois, 2009).

However, in using MySQL database system, organizations face a few limitations. One such limitation is that MySQL does not fully comply with the SQL standard, which causes challenges in querying or manipulating the database forcing one to learn the SQL variant of MySQL. Another limitation is that free MySQL lacks a few features found in commercial database systems like Oracle such as role-based security and clustering that are essential in an enterprise RDBMS (DuBois, 2009).

            Using a DBMS does not compel database designers to ensure that database table structures are coherent. According to Rob and Coronel(2009), inexperienced database designers often create unnecessary complexity through poor choice of data types, which eventually limits future development of the databases. This problem becomes evident where a company’s database consists of multiple tables related through foreign keys but where the table structures are poorlydesigned making querying slower and outputs less meaningful.

This paper has covered an overview of the MySQL database, organizations that use it, benefits of the tool, and its limitations. The paper highlighted benefits of the tool as including performance speed, ease of use, and portability among others. Two limitationsof MySQL identified in this paper are non-compliance with some SQL standards and lack of some useful features found oncommercial enterprise databases. Finally, the paper highlighted poor database design as a problem RDBMSs cannot solve.

 

 

References

DuBois, P. (2009). MySQL (4th ed.). New Jersey: Pearson Education, Inc.

Dyer, R.J.T. (2008). MySQL in a Nutshell (2dn ed.). Sebastopol, CA: O’Reilly Media, Inc.

Oracle Corporation (2015). MySQL: The world’s most popular open source database.Retrieved     from http://www.mysql.com/

Rob, P & Coronel, C. (2009).Database Systems: design, implementation, and management (8th      ed.). Massachusetts: Thomson Course Technology.

Alexander the Great by Philip Freeman

From the start, the reader can deduce that Alexander the Great by Philip Freeman relays a tale of greatness and conquest in an interesting period in the world’s history. The book follows the story of Alexander, giving an account of the man behind the legend and demystifying the desire and intentions of conquering the world. Freeman does a proper analysis of the different requirements that each new conquest imposed on Alexander and his kingdom, as well as the different reactions that ensured its survival and expansion. Journeying through the book also takes the reader through an introspective journey whereby he or she looks at the contrasts between him or her and Alexander. In so doing, the reader can form a bona fide scrutiny of the military tactics that earned Alexander the acclaim associated with his endeavors since his rule. The fact that his reign accomplished all these feats in an era that had none of the amenities and luxuries present today also serves to enforce the magnitudes of what the main character of the book accomplished in his lifetime. Nonetheless, the publication serves as a sobering reminder of the dual-sided nature of conquest and power while still giving the story of a man who changed an era and the history of the world.

One of the key elements necessary when seeking to understand something is to analyze its roots, and Philip does this by looking into Alexander’s early teachers and sources of inspiration. Aristotle was young Alexander’s tutor, which played a significant role in influencing the latter considering the acclaim associated with the former. Freeman relays the idea that Alexander found himself surrounded with many bases to develop his ideas around, and the reader can see him interacting with other acclaimed individuals such as Demosthenes in the course of the text. The book also describes Alexander as adventurous and curious, as evident in his pursuit of Troy and knowledge of its great war after reading Homer’s texts on the subject. Thereby, Philip ensures that the reader is, from the beginning, aware of Alexander’s military and intellectual leanings as early as possible. The approach suggests that the author also acknowledges these as the primary influences responsible for propelling Alexander to heights greater than many kings before and after his reign ever reached. In so doing, it is easier to make the transition from viewing the book’s protagonist as a boy to perceiving him as the shrewd, cunning, bold, and somewhat authoritarian character that he was.

Alexander’s upbringing as the son of Philip of Macedonia was instrumental in facilitating his prowess in political matters. For instance, his parents married in a bid to cement a political relationship, which led Alexander to understand the requirements set out in the position that he filled. His father’s affinity for peaceful relations with the Greeks also ingrained an understanding of the importance of peace with his neighbors, which is a practice that would repeatedly feature in Alexander’s career. His father’s notions about Alexander had the duality of pain and success in equal measure and according to Freeman, Alexander himself was subject to an undoing fashioned by his hands. The book shows how Alexander reacted swiftly after his father’s death, consolidating his power, and winning the Greek Army over to his side using his oratory skills. At just the age of 20 years, the book’s protagonist comes into power, publicizes his intent, and begins quelling rebellions with the wisdom of someone beyond his years. In this short series of moments, the reader can see how quickly Alexander masters and utilizes his skills, which sets the stage for a story of conquest that the world will sensationalize for many more years to come.

Even though inheriting a kingdom is a large responsibility in itself, some kings have to contend with their boundaries while others, as is Alexander’s case, take the path of conquest and glory for themselves and their subjects. In any case, the king’s capabilities greatly determine the success or demise of his subjects as evidenced throughout history. The author depicts Alexander as a calculating military man, in that he always concentrated on his goals and utilized them in his later conquests. For instance, his act of quelling Greek rebellions consolidated his hold on the kingdom, which then served as a launching platform for his excursions into neighboring territories. In turn, these colonies served as a buffer between Greece and the world, and the rest of Alexander’s conquests sought to increase this border and make Greece the center of the world. In his reign, Alexander turned out to be more successful in spreading the influence of the Greek society to the world than any of his predecessors. In fact, the book reiterates that he was one of the main factors that influenced modern society as well since humanity today draws countless references from philosophers of the era of Alexander’s Greece.

Although he was a calculating military man, Alexander was also good at ruling as revealed in the countless crucial decisions that Freeman attributes to him throughout the book. For one, he removed the threat of internal conflicts and galvanized the nation to serve his thirst for glory. While achieving his ends, the book also depicts Alexander presenting opportunities to the Greeks, in that they could venture into markets that were hostile to them before his reign. In this way, he could then carry on his military conquests without the fear of mutinous motions within his jurisdiction. Freeman also depicts Alexander as a legitimate king, whereby he displayed no negativity towards conquered kingdoms and even let them keep their leaders if they pledged their loyalty to him. The trend indicates that he must have drawn inspiration from these decisions from the tales that spurred him to expand his kingdom since the book references his comparisons to Greek heroes on countless occasions. Nonetheless, his unrelenting need to increase his power ultimately led to his demise, and Freeman vividly depicts Alexander dying and depriving the Greeks of their thirst for conquest.

Alexander the Great was a riveting historical figure, and Freeman excels at engaging the reader in the tales of this man’s life. In the book, the reader encounters a biography that relays the life and times of Alexander in a simple but vivid manner. The book vividly and exceptionally describes Alexander’s journey through life, chronicling the events that made and ultimately broke him. Freeman succeeds in bringing Alexander’s egotistic, intelligent, and inspirational journey through life to the reader in an engaging manner that provides the same information available in other resources but in a more palatable form. In essence, Freeman’s interest in this historical figure’s life is evident in the way he describes the battles that Alexander fought, as well as the contribution that he made to turning society into what it is today. From the book, the reader can discern the complex traditions that people practice and begin to understand the role that historical interactions played in their formation. Therefore, Philip Freeman’s Alexander the Great succeeds in providing an engaging and emphatic portrayal of one of the greatest historical figures and the part that their desires played in changing the world.

Works Cited

Freeman, Philip. Alexander the Great. New York, NY: Simon & Schuster, 2011. Print.

Nature and Purpose of Financial Statement Analysis

As the name states Financial Statement analysis is the process of analyzing, reviewing and evaluating the financial statements of a company.A financial statement or a financial report is a record of the financial activities of a business. It includes balance sheet, income statement, statement of retained earnings and statement of cash flows.The analysis will consist of a thorough examination of the past and current financial data of the company. Financial statement analysis will compare the financial movements of a company of one year with that of the next or previous years and helps in recognizing the patterns in revenue and profits.The analysis are used by investors, shareholders executives, employees, creditors such as banks or other vendors, and any other person or institution that needs to know the financial position and the operational efficiency of a company. Some of the common methods used for financial statement analysis are trend analysis, and ratio analysis. Stickney, C., Brown, P., & Press, D. (1993) argues the current financial position of the firm can be assessed using financial statement analysis. We can estimate the types of assets owned by the company or firm and also the different liabilities due against them.A financial statement analysis is capable of yielding enough information which can be used by the management to project revenues and profits of the company for three to five years. These assessment and estimations are needed for decision making process. By evaluating the past and current financial statements we can estimate up to a certain level the future risks and potentials of a company. One of the most important purposes of analyzing financial statements are to drive clear of any risks which may come associated with making an investment on any business or company.Financial statement analysis also helps in predicting future profits and growth rates in earning which can be used by the creditors and investors of the company to compare alternatives and to judge the earning potential of a company and financial statement analysis will also help in predicting a bankruptcy and the probability of failure of a business of a company. Whenever a company is interested in investing in a small business, a financial analyst may be hired to analyze the risks of such business. Management wise, it helps to estimate how efficiently the operations of the company are carried out. Financial statement analysis compares the actual performance of the company with the standard performance which was set earlierto know the deviation (if any) to evaluate the efficiency of the company. The analysis can help a company to plan in advance for its equipment and material requirements and also helps take the initiative as and when it is needed. In general a financial statement analysis can give quality information regarding trends and relationships of a company. The quality of earnings by a company can be assessed. The weaknesses and strength of its financial position can also be summarized. Therefore a financial statement analysis can be viewed as a tool in achieving the goals and objectives of the company.

Stakeholders

Stakeholder is a person or a group affected by a business decision. There are two types of stakeholders. Internal and External. Internal stakeholders are employees, Business owners and management. External stakeholders includes government, debt holders and suppliers.

Shareholders: The most important stakeholders in any business is its shareholders. They worry a lot about a company financial performance than other stakeholders. Their focus is mainly on growth prospects and Earnings per share. Though dividend is the original return, they care less about it. They have two things in mind while analyzing a financial statement. They are how well their investment performed and scope for investing more. The earnings per share for 2014 is 43.44 cents. It’s two times higher than the previous financial year. So shareholders made good profit last year. They may still be interested in investing more or exit the holdings after cashing in on the profit

Brokerages and Investment banks: Investment banks and brokerage firms always try to find good investment opportunities. So they go through a financial statement inch by inch and see whether the firm will generate profit in the future or not. The information will be shared with their clients.

ASX: Security Exchange boards always look into the annual reports of a company to see if there is any violations. ASX will oversee the auditor’s report to confirm there is no violations. And It’s must to mention an auditors responsibility in an annual report

 

Descriptive Review

Australian market ASX 200 generated 36% return over the last 3 years .But Bega Cheese generated 168% since the inception. It outperformed its benchmark index by 4 times. The peers of Bega Cheese is Australian Agriculture co (AAC), Freedom Foods Group (FFG) and Warrnambool Cheese & Butter Factory. Freedom foods group is at top with 800% increase in share prices over past 3 years and Warrnambool Cheese & Butter Factory gained 85% over past 3 years. The current P/E ratio of Bega Cheese is at 21.6 it’s comparatively higher than both the market and industry. The market P/E is at 14.7 and the industry P/E is at 15.9. The P/E is growing at 10% per year for Bega cheese. Which is higher than industry (2.83%) and Market (1.1%). But the Price to Sales ratio is at .68%for berg Cheese which is way lesser than the market (2.8%) and industrial average (1.1%). Comparing the return on shares. The Price to book ratio is at 2.33 for Bega. It’s higher than market and sector. And the earnings is at .21 which is lesser than market average (.91) and Industrial average (.59). So it’s obvious that Bega Cheese share is overpriced and very likely to underperform in the upcoming days. It’s time to clear out the stocks from our portfolio and take short positions on this stock.

Review of Firm’s Financial Performance

Bega Cheese ltd. became a publically listed company in 28th August 2011.On the initial year their performance was subpar. But the firm posted stunning numbers in 2013 annual statements. In fact it made shareholders happy by paying the dividend payout ratio of 60% which is almost twice up from the previous year. But in 2014 their earnings fell short of expectations. Their revenue growth fell from 9% CAGR to 6%. Their cost of goods sold is increasing which is another negative factor. On the positive side The Asset turnover is improving along with the return on assets. Most importantly the EPS is expanding exponentially. Which is a good news from the perspective of investor. But from our previous analysis and backed by analyst’s prediction we can say that the share price is expected to see an adjustment in the near future. Analysts predict the Bega Cheese will go through a rough patch for at least next two years. One of the major limitations of this project is we only have access to last 3 year data. Though the company is over 100 years old. So it’s really hard to spot a trend.

References

Australian Industry Report 2014

Cornell, B., & Shapiro, A. C. (1987). Corporate stakeholders and corporate finance. Financial management, 5-14.

Lindblom, A., &Ohlsson, J. (2011). STAKEHOLDERS’INFLUENCE ON THE ENVIRONMENTAL STRATEGY OF THE FIRM: A Study of the Swedish Energy Intensive Industry.

Penman, S. H., & Penman, S. H. (2007). Financial statement analysis and security valuation (p. 476). New York: McGraw-Hill.

RE, F. R. R., & Reed, D. L. (1983). Stockholders and stakeholders: A new perspective in corporate governance. California management review25, 88-106.

Stickney, C., Brown, P., & Press, D. (1993). FINANCIAL STATEMENT ANALYSIS.

White, G. I., Sondhi, A. C., Fried, D., & Aiello, E. (2003). The analysis and use of financial statements.

Appendix

 

Auditors Report: Page no. 31 on the Annual report of berg Cheese.

Auditors Responsibility: Page 78-79 on the Annual report of berg Cheese.

Income statement

Income Statement 2012 2013 2014
Revenue 9,32,911 10,10,086 10,69,392
Cost of sales -8,17,545 -8,74,961 -9,51,117
gross profit 1,15,366 1,35,125 1,18,275
Other income 9,141 8,660 67,907
distribution expense -36,192 -44,255 -42,455
marketing expense -6,948 -9,733 -6,129
Occupancy expense -2,790 -2,552 -3,295
administration expense -42,294 -43,449 -43,679
Finance costs -9,204 -8,447 -6,392
profit before income tax 27,079 35,349 24,946
income tax expense -6,650 -9,904 -27,525
profit for the year 20,429 25,445 66,055
Other comprehensive
items that may be reclassified to profit or loss
Cash flow hedges -1,042 -2,868 3,413
Change in the fair value of other financial assets -6,860 3,289 -6,901
total other comprehensive income -7,902 421 -3,488
total comprehensive income for the year 12,527 25,866 62,567
Profit is attributable to:
equity holders of Bega Cheese Limited 17,534 25,445 66,055
Non-controlling interests – 2,895 62,567
Total 20,429 25,445 66,055
total comprehensive income for the year is attributable to: 62,567
equity holders of Bega Cheese Limited 9,794 25,866
Non-controlling interests – 2,733
Total 12,527 25,866
2012 2013 2014 (In Cents)
EPS 12.81 16.77 43.44
Diluted EPS 12.77 16.68 43.23
P/E 13.1 16.0 12.3

 

Balance Sheet

ASSETS
Current assets 2012 2013 2014
Cash and cash equivalents 24,235 22,698 28,630
Trade and other receivables 1,04,303 1,03,476 1,06,660
Derivative financial instruments  – 2,084
Inventories 1,63,277 1,63,027 1,84,167
Total current assets 2,91,815 2,89,201 3,21,541
Non-current assets
Other financial assets 39,028 39,028
Property, plant and equipment 2,09,892 2,09,123 2,13,567
Deferred tax assets 9,157 9,157 10,907
Intangible assets 1,580 1,580 1,481
Investments accounted for using the equity method 1,132 1,141
Total non-current assets 2,59,657 2,60,020 2,27,096
Total assets 5,51,472 5,49,221 5,48,637
LIABILITIES
Current liabilities
Trade and other payables 1,44,940 1,42,689 1,64,152
Derivative financial instruments 15 601 7,191 15 232
Borrowings 7,191 601 588
Current tax liabilities 1,397 1,397 22,425
Provisions 22,893 22,893 24,773
Total current liabilities 1,77,022 1,74,771 2,12,170
Non-current liabilities
Borrowings 1,10,300 20,000
Provisions 1,10,300 2,198 2,079
Total non-current liabilities 2,198 1,12,498 22,079
Total liabilities 1,12,498 2,87,269 2,34,249
Net assets 2,89,520 2,61,952 3,14,388
EQUITY 2,61,952
Contributed equity 1,01,902 1,03,642
Reserves 1,01,902 25,585 22,390
Retained earnings 25,585 1,34,465 1,88,356
Capital and reserves attributable to owners of Bega Cheese Limited 1,34,465 2,61,952 3,14,388
Total equity 2,61,952 2,61,952 3,14,388

 

Cash flow statement

Cash flows from operating activities 2012 2013 2014
Receipts from customers inclusive of goods and services tax 9,45,638 10,40,955 11,02,022
Payments to suppliers and employees inclusive of goods and services tax -9,44,365 -9,66,921 -10,49,082
interest and other costs of financing paid -8,772 -8,115 -5,327
income taxes paid -3,040 -3,933 (7, 139)
Net cash inflow/(outflow) from operating activities -10,539 61,986 40,474
Cash flows from investing activities
interest received 388 224 370
dividends received 1,250 1,000
Payments for property, plant and equipment -27,569 -27,810 -27,923
Payments for shares in listed companies -3,813 -3,455 98,906
expenses on merger with tatura milk -570 -506
Proceeds from sale of property, plant and equipment 80 770 507
Proceeds from sale of shares in unlisted companies 114 14 938
Net cash (outflow) from investing activities -30,120 -29,257 67,935
Cash flows from financing activities
Proceeds from borrowings 38,213 86,612
Repayment of borrowings -42,078 -87,413 -90,313
Repayment of leases -827
share capital subscribed by members 35,000
expenses incurred in capital raising -2,324
share capital purchased back from non-controlling interests -58
dividends paid to members -3,701 -10,619 -12,164
dividends paid to non-controlling interests -1,227
Net cash (outflow)/inflow from financing activities 22,998 -11,420 -1,02,477
Net increase/(decrease) in cash and cash equivalents -17,661 21,309 5,932
Cash and cash equivalents at the beginning of the year 20,587 2,926 22,698
Cash and cash equivalents at the end of the year 2,926 24,235 28,630

Market Comparison

  Earnings P/E Ratio P/B Ratio P/E Growth P/S Ratio
BGA 0.21 21.6 2.33 10.00 0.68
Market 0.91 14.7 1.04 1.10 2.84
Sector 0.59 15.2 1.33 2.82 1.10

Source:

Share Performance

Source: Yahoo Finance

ORGANIZATIONAL ANALYSIS OF NESTLE

Nestle is known all over the globe as the largest multinational food and beverage company. It’s among the FMCG leaders. The company has its headquarters in Vevey, Switzerland. It operates in over eighty countries and has almost four hundred and fifty factories. The company follows a similar network in nearly all the markets it operates in (King, 2009).

Nestle utilizes open innovation to co-develop innovation and produce quality with both customers and consumers. Intelligence presses forward through innovation. It is recognized as as significant economic growth contributor. Generally, a well implemented innovation results from challenging the conventional wisdom, searching, finding and implementing solutions to both the new and old problems the company faces. This paper will look into the open innovation process of Nestle, the innovative lessons learnt and the reasons those lessons have made Nestle a successful company (Chesbrough, 2007).

Organization Innovation

The industries are currently competing to with open innovation by opening up to external partners, working with many partners in the value chain becoming less protective with their intellectual property and increasing dependence on collaborative idea generation. Consequently successful open innovation partnerships are enabling meaningful and new ways of meeting the consumer’s demand. Nestle isn’t any different (Spradlin, 2011).

In 2007, Nestle faced increased competition from multinational companies such as Danone and Unilever. Additionally, there was increased competition in the local market in China, Brazil and the US. For the company to maintain it target 5% to 6% growth rate, it was necessary for the company to use innovation to counter this. Instead of seeking internal innovation, Nestle found a way to work with partners in a new way (Chesbrough, 2007).Through open innovation, the goal of the company was co-creating innovationand value with both external suppliers and partners.

INNOVATIVE PROCESS IMPLEMENTED BY NESTLE.

Innovation partnership collaboration is the key piston that drives economic growth in the new millennium. In the open innovation context, companies increasingly acquire technologies from external source. Additionally, a lot of companies have recently started to commercialize technology(Chesbrough, 2009). Nestlé’s adopted an innovation strategy that focused on conducting business with its partners. The company ensured that their joint work met all the rules and regulations that surrounded antitrust(Editor, 2010). All the things were presented as having a clear innovation goal. It was paramount that everything was done transparently and withstood all the scrutiny of the trade commission in any country(Spradlin, 2011).

To sustain open innovation, Nestle adopted the ‘sharing is winning’ business model. The company recognized that for it to thrive and survive in the global market, it was important to seek alliances. The slogan represented the spirit of partnership the company was practicing. It didn’t suggest the naive approach that the partners were giving up any proprietary territory. However, it expressed deep respect that the partners would have for each other as they entered co-development(Chesbrough, 2009).

Value partnership, trust and goodwill evolve via three essential stages; value, trust and goodwill. It’s the creation of value at the beginning is the ultimate partnership goal. Without creation of value, the whole concept is meaningless(Linssen, 2009). To drive creation of value, Nestle, applied a disciplined approach to the process of innovation. The company involved its partners in briefings. Additionally, for its upstream partnerships, Nestle compiled all its future needs for all its business units and shared information with its innovation partners.

Before any company shares its vital and confidential information, it should consider legal issues. The company should establish a legal framework. Initially, Nestle used existing agreements that spelled out the terms and confidential information that could be shared. As progress on shared innovation path was made, however, partners realized the information shared was inadequate. To overcome such obstacles, the company established master joints development agreements.(Linssen, 2009)

LESSONS LEARNT FROM OPEN INNOVATION OF NESTLE.

Embracing open innovation

The company recognized that for it to achieve its growth objective, it was necessary to extend the company’s internal capabilities by establishing a big number of strategic partnerships relationships. By embracing open innovation and working aggressively with strategic partners, Nestle co-created significant product and new market opportunities. Globally, the company has more than 5000 people working in 24 R&D centers. It has extended its research by tapping into the expertise and technologies of over a million researchers all over the world (Perkins, 2012).

Strategic focus importance within the target benefit areas

Nestle had a clear framework of screening new opportunities. The company identified target benefit areas that related to taste, compliance, quality and nutrition. Any idea that was to be pursued had to align with at least one of the identified target benefit areas (Chesbrough, 2014).

 

Building Partnerships based on trust and goodwill

The company developed an internal culture based on “sharing is winning’ philosophy. It recognized that massive growth opportunities can be achieved by co-created with partners if the relationship is based on the trust and goodwill foundation (Lindegaard, 2010).

Upfront Clarity on handling intellectual property

The company recognized that the manner of sharing IP was the key determinant in moving the partnership discussions toward the desired goals. It made its framework of sharing IP very clear early in the conversation to ensure there were no gaps (Chesbrough, 2014). While there were exceptional cases the norm was that every physical solution was owned by the organization that provided competency. In turn, Nestle owned the new smart applications solution for the period specified in the individual agreement. The partners were aware on the expectation of Nestle right from the start which enabled a more efficient process of partnership evaluation (Lindegaard, 2010).

CHALLENGES AND RECOMMENDATIONS OF ADOPTING OPEN INNOVATIONS

Open innovation has a wide range of constraints and challenges that limits both small and large companies. They range from; legal risks and intellectual property issues, lack of creative resources, processing ideas efficientlyand adopting a more open culture (Gutierrez, 2013).

Legal risks and intellectual property issues

Intellectual property is the most complex and problematic issue that companies face when implementing open innovations. The potential for dispute over intellectual property rights can stall the innovation development submitted by outside sources.The fact is; companies need sufficient information to make innovation decisions while being legal aware (Sloane, 2011).With this in mind, the open innovation program of a company should be designed to accept the desired information. The key for the open innovation being successful is controlling the quantity and type of information being submitted to limit the litigationrisk of the receiving company (Straus, 2010).

Lack of creative resources

There are companies that believe their employees are not cut for thinking creatively. This is an anti-ethical cultural belief to the open innovation principles. Sloanestated that there should be no communication, collaboration, innovation or ideation barriers that people should hide when applying for jobs (Sloane, 2011). There have been suprise idea gleaned from unexpected areas with crowdsourcing assistance simply by availing a platform. Thus, companies implementing open innovations shouldn’t overlook their employees (Chesbrough, 2014).

Processing Ideas Efficiently.

The amount of ideas submitted is one of open innovation’s success. However, when the volume of information hinders the reviewing process and decision making, it creates a huge challenge (Gutierrez, 2013). Without a strategy, there certainly will be disorganization and can result in many receiving companies to either set aside or completely abandon the efforts of open innovation. To overcome this challenge, the companies should establish a strong criteria of evaluation that will allow for submissions to be scored and ranked for business value (Sloane, 2011).

Adopting a More Open Culture

Individuals’ ‘absorptive capacity’ in a company is one of open innovation’s barrier. It isn’t just about the not invented here syndrome, it’s also about the openness of people to different ways of doing, or thinking than what they are normally used to. It’s also about individuals being open to change and developing comfort level with fluid ownership and a certain uncertainty level.Any company that realizes this can assistfoster a more accepting work culture. One of the way of countering this challenge is by instituting activities that will require collaboration across internal groups (Chesbrough, 2014).

CONCLUSION

Open innovation is comparatively a new concept. Both large and small companies are adopting it while still learning how to get the best results with open innovation. There are barriers for open innovation that are difficult to overcome (Straus, 2010). Nestle company will have to refine its existing practices for it to benefit more from open innovation. Additionally, with digitalization, open innovation has become an even more distributed phenomenon (Sloane, 2011).Open innovation has evolved from a company oriented concept to a more distributed phenomenon the organizational boundaries are blurred and the digital technology has created a new playing field (Chesbrough, 2014).

 

References

  1. Chesbrough, H., 2009. Open Innovation: Researching a New Paradigm. l.:OUP Oxford.
  2. Chesbrough, H. W., 2007. Open Innovation: The New Imperative for Creating and Profiting from Technology. l.:Harvard Business Press.
  3. Chesbrough, H. W., 2014. New Frontiers in Open Innovation. l.:Oxford University Press.
  4. Editor, O., 2010. Nestlé’s Open Innovation Strategy. [Online]
    Available at: http://openinnovation.net/open-innovation/nestle%E2%80%99s-open-innovation-strategy/
    [Accessed 27 August 2015].
  5. Gutierrez, R., 2013. Creating Successful Inovation Partnerships. [Online]
    Available at: http://www.crowdsourcing.org/document/creating-successful-innovation-partnerships/24605
    [Accessed 27 August 2015].
  6. King, W. R., 2009. Knowledge Management and Organizational Learning. l.:Springer Science & Business Media.
  7. Lindegaard, S., 2010. The Open Innovation Revolution: Essentials, Roadblocks, and Leadership Skills. l.:John Wiley & Sons.
  8. Linssen, J., 2009. Open Innovation at Nestle. [Online]
    Available at: https://innovationfactory.eu/blog/2009/05/05/open-innovation-at-nestle/
    [Accessed 26 August 2015].
  9. Perkins, C., 2012. Open Innovation Success Factors. [Online]
    Available at: http://innovationedge.com/2015/01/20/open-innovation-success-factors/
    [Accessed 27 August 2015].
  10. Sloane, P., 2011. A Guide to Open Innovation and Crowdsourcing: Advice from Leading Experts in the Field. l.:Kogan Page Publishers.
  11. Spradlin, D., 2011. The Open Innovation Marketplace: Creating Value in the Challenge Driven Enterprise. l.:FT Press.
  12. Straus, T., 2010. An Integrated Approach to New Food Product Development. l.:CRC Press.