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Meaning, Importance and Benefit of Research and Development

Research and development (R&D) personnel can play an integral part in strategy implementation. Strategies such as product development, market penetration and

Concentric diversification requires that new products be successfully developed and that old products be significantly improved. But the level of management support for

R&D is often constrained by resource availability. These individuals are generally charged with the following responsibilities:

  1. Developing new products
  2. Improving old products significantly
  3. Adapt the local market and local taste
  4. Mass production at lower cost which ultimately resulted at a higher profit.
  5. Technology to use raw material to improve the product and process sound designing of technology.
  6. Well formulated R&D policies.
  7. Match market opportunities with internal capabilities.


Develop research and development internally or outsource

The most critical question is whether a firm should develop research and development internally or outsource to external agencies.

The following guidelines help in this decision-

  • If the rate of technical progress is slow, the rate of market growth is moderate, and there are significant barriers to possible new entrants, then in-house R&D is the preferred solution. It is because if R&D is successful, then company can enjoy monopoly. In this case company can exploit the benefit for a long time.
  • If technology is changing fast or rapid and the market is growing slowly. In this situation company should outsource research and development work. In this situation effort in R&D may be very risky, because it may lead to the development of an ultimately obsolete technology or one for which there is no market.
  • If technology is changing slowly but the market is growing quickly, then there is not enough time for in-house development. Even in this situation, company has to outsource the research and development work. The prescribed approach is to obtain R&D work done exclusive or non-exclusive basis from an outside firm.
  • If both technical progress and market growth are fast, R&D expertise should be obtained through acquisition of a well-established firm in the industry.

How can R&D policies, enhance

Strategy implementation efforts

R&D policies can enhance strategy implementation efforts to:

  1. Robotics process vs. manual type process development
  2. Amount to be spent— High, average, or low amount of money on R&D
  3. Manage with basic research or stress on applied research
  4. Manage with Researchers of university or private sector researchers
  5. R&D within the firm or to contract R&D to outside firms
  6. Actual emphasis on product or process improvements.
  7. Making the company leaders or followers in R&D.

There must be effective interactions between R&D departments and other functional departments in implementing different types of generic business strategies. Conflicts between marketing, finance, accounting, R&D, and information systems departments can be minimized with clear policies and objectives.

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