Final answer:
The management team should focus on Research and Development (R & D), protection of intellectual property rights, and governmental incentives for innovation to improve the company's capacity for innovation. Fostering a proactive company culture is also essential.
Step-by-step explanation:
To enhance the company's competitive position by increasing the ability to innovate, the management team should focus on Research and Development (R & D), which is crucial for intentionally improving technology. The process of innovation involves modifying existing products, systems, or processes to improve them, potentially leading to a temporary market advantage and the ability to earn above-normal profits. Additionally, the management should be aware of the importance of protecting innovations through intellectual property rights and should consider exploring government policies that incentivize innovation, such as government assistance and cooperative ventures between universities and companies.
Recognizing that employees with initiative are valued, the management team should also promote a culture that supports proactive problem-solving and independent project development. This encourages individual contribution and teamwork, leading to a sustainable environment for innovation.