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Chapter 9: RESEARCH AND DEVELOPMENT - Coggle Diagram
Chapter 9: RESEARCH AND DEVELOPMENT
What is R&D?
Stages of R&D
Basic Research
Study the water-repellent properties of lotus leaves
Apply nano water-resistant material to fabric.
Create prototypes, test, and prepare for production.
Applied Research
Product Development
Research & Development
Use science to improve quality of life
Creates new knowledge
8.8 EVALUATING R&D PROJECTS
Benefit measurement models
a group of well-informed
and experienced managers
the form of a quantitative or qualitative model
mathematical, scoring, decision-trees.
Financial/economic models
Financial and economic models are the most popular project selection tool
LIMITATION:
financial formulas and their inherent short-term bias
imited accurate future financial data
Portfolio selection models
Find those ideas that ‘fit’ with
the business strategy and attempt to balance the product portfolio
Newness
Time of introduction
Markets
Comparison of Success Rates
Low success rate -> No R&D at all
Medium success rate -> R&D by one firm and pre-emption
High success rate -> R&D by both firms
8.5 STRATEGIC PRESSURES ON R&D
Emerging Technologies
New to the company, with potential long-term significance.
Represents future-oriented investments for product evolution.
Complementary Technologies
Essential additional technology in produt development.
Helps enable core product features.
Core Technologies
Dominates R&D labs and strategic thinking.
Central to all or most of the company's products.
Peripheral Technologies
Not incorporated into the product but beneficial to business.
Adds features that enhance the product.
Classifying R&D
Basic research
Broad application & new knowledge
Applied research
Uses existing scientific principles to solve specific problems.
Development
Uses known scientific principles
Centers on product-related activities
Technical service
Providing a service to existing products and processes
Improving cost and performance
8.7 ALLOCATION OF FUNDS TO R&D
Setting the R&D budget
Influences on R&D budget
Availability of funds
Annual budgets
Long-term strategic technological needs
Short-term performance fluctuations
Methods for budgeting
Combination of different methods
Managerial judgment
Negotiation
Key factors in fund allocation
Competitors' expenditure
Company’s long-term growth objectives
Need for stability
Distortions from large projects
A fixed relationship to profits
Undesirable approach
R&D as a luxury
Role of R&D
Investment perspective
Ignoring future benefits
Impact on business
Turning around poor profits
New product development
Internal customer–contractor relationship
Large multinational companies
Individual business units
Payment for research
Reference to previous levels of expenditure
Previous levels of expenditure
Previous year’s expenditure
Allowance for inflation
Method usage
Commonly used method
Used with other methods
A fixed relationship to turnover
R&D expenditure
Constant percentage basis
Turnover
Stable figure
Growth with company size
Costing of an agreed programme
R&D manager
Managing research projects
Funding challenges
Total exceeds available budget
Negotiations required
8.6. WHICH BUSINESS TO SUPPORT AND HOW?
The R&D strategic decision-making process:
Corporate Strategy
Business Strategies
Allocation of Resources to R&D
Research and Technology Strategy.
Two forms of activity for a R&D department:
Growth
Competitive:
Coca-Cola
launched a sugar-free version of Coca-Cola to compete with Pepsi.
Survival:
Nokia
developed basic phones after losing its smartphone market share to sustain its business.
Maintenance
Technology Mastery:
Apple
developed
the M1 chip
to optimize the performance of Mac computers, surpassing other computers that use Intel chips.
Break the Mould:
Tesla
introduced electric vehicles and energy storage technology, disrupting the traditional automotive industry.
8.4. R&D management and its link with business strategy
Risk
Organisational culture and attitude
Decision-Making
Planning reduces risk but doesn’t eliminate it.
Ensures decisions are based on systematic analysis
Capability analysis
Strengths and weaknesses of company
Future capabilities
Comparative technological cost-effectiveness
Technology life cycles
Diminishing returns
New technology branch
Promising rewards
Environmental Forecasts
Technology changes
Economic factors
Social factors
Political factors
Integration of R&D
Defend, support and expand existing businesses
Drive new businesses
Broaden and deepen technological capability
