Innovation
Past examination questions and excellence-level answers from NZQA
Exam paper 2012
Q
Explain how innovation in production processes can allow firms to compete more
successfully in an international market.
A
Innovation in production processes occurs when firms take new steps in the way they create
their products. This may allow them to be more efficient, and this will reduce costs /
produce a better quality product. This may allow the firm to sell at a lower price.
Q
Fully explain the possible negative impacts of introducing an untested production process to
Winter’s Dawn and Winter’s Blast.
In your answer you should address
 A short-term challenge that it might involve
 A long-term problem that would arise for the business if the production process is
unsuccessful
A


The short-term challenges may involve retraining staff to work the new processes. This
will raise HR expenses (Explain), reducing profitability in the short term (Fully explain).
If the production process is unsuccessful, then scarce business resources may have
been wasted. These resources could have been used more effectively in other areas of the
business (Explain), and this may reduce growth in the long term, or even affect the
future survival of the business (Fully explain).
Q
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Evaluate the strategies that Sarah could introduce to make the design side of her company
more innovative.
In your answer you should
 Explain two strategies she could implement that would encourage workers to develop
new ideas
 Fully explain the impact of these strategies on the company by explaining one positive
and one negative impact of each strategy on the performance of the business
 Draw a justified conclusion as to which strategy would be more effective
A
Strategy 1
Give workers greater freedom and resources to explore new ideas. This will encourage them
to follow ideas that interest them.
 A positive impact may be workers developing new ideas that can be put into practice.
This could create new products (Explain), and may increase revenue in the longer term
(Fully explain).
 Another positive impact of allowing workers greater freedom in their work is that it will
increase motivation, because they feel more valued. This, in turn, may increase
productivity (Fully explain). [only one positive impact needed]
 A negative impact is that profitability could fall if ideas do not relate to the firm’s market
objectives (Explain). This means that the firm’s direction may become confused and lack
focus (Fully explain).
Strategy 2
Encourage interdepartmental innovation discussion. People sharing views may lead to new
ideas.
 A positive impact of interdepartmental discussion is that it would allow the sharing of
ideas; this will allow the creation of products that may not have happened previously
(Explain). This may improve revenue in the longer term (Fully explain).
 A negative impact is that some workers may feel the meetings are unnecessary, and this
might reduce motivation (Explain). This will raise staff expenses (Fully explain).
Conclusion
Sharing ideas would be the better strategy, because it would allow managers to monitor
innovative ideas and be involved in the idea generation process.
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