AO3: the importance of research and development for a business
research and development ( R&D ): is the systematic process of discovering new knowledge about products, processes and markets and then applying the knowledge to make new and improved products, processes and services to fulfil market needs.
research : focuses on creating new knowledge and new products. It is a prerequisite to development
development: is about adapting existing ideas and products to create commercially viable products. its primary function is to improve new commercially viable product, helping to increase the firm's future earning potential
importance for :
longevity and competitiveness of a business
essential part of innovation - commercialisation of a business idea that appeals to consumers
survive in the long term with competitive rivalry
market leaders often use R&D expenditure as a barrier to entry so that they can continue to dominate the industry
advantages :
can help to gain a first-mover advantage or achieve a competitive advantages in which premium price can be charge and can enhance a firm's corporate image ( brand perception as an innovator )
discovery of more efficient production methods can help to cut prices and improve a firm's productivity rate
can prolong a product life cycle
disadvantages :
there is an opportunity cost of spending large sums of money on R&D while there is no guarantee that the R&D expenditure will be recouped due to the high failure rate of product lunches
can be very time consuming
AO2 : the importance of developing goods and services that address customer's unmet need
many product ideas fail to get commercialise because :
legal and administrative barriers which discourage R&D expenditure
the amount of money needed to fund successful R&D is often unaffordable
market for the product might be too small to justify the amount of R&D expenditure
the product does not meet the needs or desires of the market, could be due to lack of market research
prototype: trial products prior to final development of a product for launching on the market
AO2: types on innovations
innovation : the successful commercial creation of a new business idea, which adds value to the organization. It strived to create or fulfil existing needs and desires that are not currently being satisfied
4 types of innovation :
production innovation : R&D that focuses on creating new products or improving existing ones
process innovation : focuses on new or significantly improved methods of production or work practices
position innovation :focuses on changing customer's perception of an existing product
paradigm innovation : change in the concept of the product ( extreme form of innovation ) often associated with radical and extensive innovations that involve high risks to the business
AO2: the differenced between adaptive creativity and innovative creativity
adaptive creativity : adjusting and improving something that already exist
innovative creativity: creating a new product or process
- whilst innovative creativity can create huge competitive advantages for a business, radical changes do not always work better than incremental changes. especially if such changes cause huge disruptions, anxieties and uncertainty for employees
AO3 : how pace of change in an industry, organisational culture and ethical considerations may influence research and development practices and strategies in an organisation
change in an industry can influence R&D practices :
create demand for new products
customers might turn away from rival brands if the firm is high innovative and sells products that are appealing to buyer
since the life cycle of many product is short, innovation can ensure the business embraces change and survives the impacts of external environment
unethical business practices mean that govenemnets need to protect the intellectual property rights of inventors and innovation
patent: gives exclusive rights to the registered owner to use an invention for a finite period of time
copyrights: protect the published works of creator by creating legal rights to these creations
registered trademark: a sign or symbol that enables a firm to distinguish its products from those of other traders ( brands and logo ) once registered these trademarks are the exclusive property of the trademark holder for a finite period of time
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