Research and Development
Unit 5.8
Assessment Objective
What is Research? What is Development?
• Research - refers to investigating the unknown such as new products or
processes. It helps to improve our understanding about something
particular.
• Development – can also mean improving existing processes or products.
• Research and Development (R & D) – refers to the technological and
scientific research that helps to generate a flow of new commercial ideas
and processes. It involves activities undertaken to innovate and
introduce new goods and services or to improve existing ones to meet
the needs of customer, of which that may not be aware.
Purpose and importance of R & D
• Is to provide continual advancement and to launch new products to
satisfy customer needs in a profitable way.
• Often involves conducting extensive research into new products, their
designs, testing and development of prototypes. Prototypes are
designed, tested and developed with the hope of eventual
commercial production.
• However, the R&D are lengthy and drain the resources of a business.
Furthermore, due to the high risks involved, only the most promising
ones are considered for commercialization.
Purpose and importance of R &D
• R & D can be vital to an organization’s long-term survival and success.
• R &D often pays off the businesses that operate in sunrise industries (those that have rapid growth potential,
such as high-tech industries). First mover advantage.
Importance
• Growth opportunities – R&D and product innovation can be important sources of business growth and
evolution.
• Productivity gains – R&D and process innovations can help a business to increase its productivity and efficiency
levels.
• International Competitiveness – R&D can give t a business or country a competitive edge over its foreign
competitors.
• Brand switching – This occurs when consumers turn away from the products of a competitor, perhaps due to
the firm providing a more appealing or innovative products through R&D.
• Job creation – R&D and production innovation can help create employment to an industry.
• Social Benefits – Innovation can often improve the quality of life for many people. E.g. developments in laser
technology for correcting eyesight.
Limitations of R &D
• High costs – Investment in R &D can be highly expensive and requires
sufficient labour and financial resources, as well as a lot of time.
• High failure rate – Most new ideas fail to materialize. Even for the few
ideas that might work, most are not commercially feasible. Failure not
only leads to a loss of investment funds but can also demoralize the
workforce.
• Budgetary constraints – R&D is often held back by funding problems.
Even if an innovative idea is realistically achievable, budget constrains
can prevent the project from being undertaken.
The role of R &D in meeting the needs and
expectation of consumers
• Discovery of new production process – Henry ford discovery of mass
production applied to automobile industry or Online banking in early
21st century. Social media marketing and creativity in using
promotion.
• Successful exploitation of creative ideas - James Dyson vacuum
cleaner helping turn dyson into a multi-million-dollar business.
• Introduction of new products – coco chanel popularized the little
black dress which is popular today.
• Entering new markets – Ferrari has long faced the dilemma of wanting
to sell more cars without damaging its image of exclusivity.
Intellectual property protection
Intellectual property protection are the legal and exclusive ownership
claims to certain creations, inventions or piece of work. They act to
prevent other parites from replicating the ideas of the inventor or
creator.
Main types of IPR are
• Copyrights
• Patents
• Trademark
Copyrights
• Provide legal protection for artists and authors by preventing others
from using or replicating their published works without permission.
Government grant the permission to hold copyright for a finite period
of time. Copyright is famous for music, film, drama, art, photography
Patents
• A patent is the legal right to be the exclusive producer or user of a newly
invented process or product for a finite period of time. Patents existed as
far back as 1449, when a patent was granted in the UK for the process of
making stained glass windows. A patent is granted after the inventor has
registered and satisfied the conditions stipulated by government.
• Patents can be held by individuals or businesses as intangible assets. They
do not come free or charge , so patents applications are only submitted
for invention that are likely to be commercially profitable over a long
period of time.
• The main drawback or using patent is that the whole process is time
consuming and bureaucratic.
Trademark
• Trademark or sign, slogan, logo that represents a business or a
product belonging to that business. If the trademark is registered as a
patent office, it acts as a barrier to rivals wanting to imitate the
product name or symbol. Trademark that have been registered can,
but do not necessarily, carry the symbol next to the mark. However, it
is illegal to use this symbol for trademark has not been registered.
Innovation
• Innovation is the process of commercially pioneering new ideas and creations in
the production process. It stems from successful R&D in order to meet the deeds
of customers in a profitable way.
• Incremental Innovation- refers to minor improvements to products, services or
work processes. The majority of innovations are incremental in nature as they are
more affordable, low risk, and less disruptive.
• Disruptive innovation – refers to any major innovation that introduces a new good
or service designed to replace an existing one by radically altering the market. Such
innovations can possibly displace established market leaders and their products.
Example; VHS technology replaced by DVD and digital photography replaced film
photography. It tends to have high risk but can be a major source of competitive
advantage and can be important element of a firm’s long term survival strategy.
Summary notes