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What is 'Research and Development - R&D'
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International Journal of Business Research and Development

The goal is substitution of strategic imports and development of exports. Basic research has as its objective a fuller knowledge or understanding of the subject under study, rather than a practical application thereof. As applied to the industrial sector, basic research is defined as research that advances scientific knowledge but does not have specific commercial objectives, although such investigation may be in the fields of present or potential interest to the company.

Applied research is directed towards gaining knowledge or understanding necessary for determining the means by which a recognized and specific need may be met. In industry, applied research includes investigations directed to the discovery of new specific knowledge having specific commercial objectives with respect to products, processes, or services.

Development is the systematic utilization of the knowledge or understanding gained from research toward the production of useful materials, devices, systems, or methods, including design and development of prototypes and processes. At this point, it is important to differentiate development from engineering, which can be defined as utilization of state-of-the-art knowledge for the design and production of marketable goods and services. In other words, research creates knowledge, and development develops and builds prototypes and proves their feasibility.

Engineering then converts these prototypes into products or services that can be offered to the marketplace or into processes that can be used to produce commercial products and services. In modem industrial practice, the distinction between R research and D development is not always clear. Some companies, such as E. Other companies prefer to conduct little or no research and instead develop new products from the results of research generated by others that may be generally available in the public domain or acquired legally.

The Japanese consumer electronics industry initially utilized the results of American and European research creatively and effectively to enter the international marketplace through new low-cost, high-quality products, which were developed, designed, and manufactured in a relatively short time.

As technology became harder to acquire, many Japanese companies switched from development to research. In many cases, technology required for industrial purposes is available in the marketplace, usually for a price.

The following influencing factors should be considered: If a technology can be safeguarded as proprietary, and protected by patents , trade secrets, nondisclosure agreements, etc.

In fact, a valid patent grants a company a temporary monopoly for 20 years to use the technology as it sees fit, usually to maximize sales and profits. Typical examples are the pharmaceutical companies and some high-tech materials producers. Similarly, GE developed man-made industrial diamonds in its research laboratory in the early s. Although the original patents have expired, GE is still the world's leading supplier.

Its major competitor, De Beers, acquired a GE license in the late s and still produces diamonds with the GE process. In this case, the secret of commercial success is staying ahead of the competition by developing continuously improved software packages, supported by a strong marketing effort.

MapInfo, a new venture founded in , developed the first software program for displaying maps and related databases on a personal computer. They are still the world leader, thanks to the improved and expanded versions of the original mapping system and to a broad spectrum of application packages issued regularly since first commercialization.

On the other hand, if the market is growing very fast and competitors are rushing in, the "window of opportunity" may close before the technology has been developed by the new entrant. In this case, it is better to acquire the technology and related know-how, in order to enter the market before it is too late.

For instance, in December America Online acquired Netscape, the company with the most expertise in Internet browser software, in order to be able to compete effectively with Microsoft, Yahoo!

On the other hand, acquiring technology entails a much lower risk, since the product, process, or service, can be seen and tested before the contract is signed. This is the reason why rapidly industrializing countries represent a major fast-growing market for technology available from the more advanced nations. In the past such countries acquired older, obsolescent versions of technology, but now they demand the latest, in order to be competitive in the global marketplace. Regardless of whether the technology is acquired or developed, there is always the risk that it will soon become obsolete and be displaced by a superior technology.

This risk cannot be entirely removed, but it can be considerably reduced by careful technology forecasting and planning. If market growth is slow, and no winner has emerged among the various competing technologies, it may be wiser to monitor these technologies through "technology gatekeepers" and be ready to jump in as the winner emerges. For instance, in the development of nonimpact magnetic printers, several technologies were researched and developed: In the meantime IBM, Xerox, Honeywell, and several Japanese companies had developed successful printers using the other technologies listed above.

For a successful product line with a relatively long life, acquisition of technology is more costly, but less risky, than technology development. Normally, royalties are paid in the form of a relatively low initial payment as "earnest money," and as periodic payments tied to sales.

These payments continue throughout the period of validity of the licensing agreement. Since these royalties may amount to 2 to 5 percent of sales, this creates an undue burden of continuing higher cost to the licensee, everything else being equal.

There are also intangible costs involved in acquiring technology: Finally, the licensee is dependent upon the licensor for technological advances, or even for keeping up to date, and this may be dangerous. There are various possibilities: The advantages are that these institutions may already have experienced personnel in the disciplines to be researched, as well as the necessary laboratory and test equipment. The disadvantages are that the company will not benefit from the learning experience, and may become overly dependent on the contractor.

Also, the technology transfer may be difficult and there is always the possibility of leaks to competitors. In the case of universities, costs are usually lower and there is the additional benefit of identifying graduate students who may be hired later and researchers who may be employed as consultants when needed. The advantages are lower costs, since each company does not have to invest in similar equipment; a critical mass of researchers; and the interchange of information among the sponsors.

In some countries for example, Japan , this joint research is sponsored, if not imposed, by the government and the companies have no choice but to comply with the "directives" of MITI, the Ministry of Technology and Industry. The organizational positioning and the funding of these laboratories is often a controversial matter and is still evolving.

All that was needed was to have the "best" in terms of creativity and training scientists available, give them well-equipped research laboratories, plenty of money, maximum freedom to do their own research, and wait for the inevitable scientific discoveries. According to the director of research of Eastman Kodak Co.

In effect, technology management was not practiced. Unfortunately, this laissez-faire management approach produced few useful results. In some cases, the scientists met insurmountable technical barriers for instance, high-efficiency low-cost solar cells or made important discoveries unrelated to the firm's strategic and business thrust for instance, Nobel prizes in astrophysics and cosmology awarded to a telephone company.

Some laboratories were unable to transfer their new technologies to the company operations and, in frustration, turned to more receptive audiences, including competitors. The computer business unit of Xerox was interested only in mainframe computers and disdained the STAR as a toy. As a reaction to these problems, operations were encouraged to set up their own laboratories, mostly to do development for a specific business. GE, for instance, had two central laboratories: The mission of the other laboratories was to perform shorter term research and mostly development for the businesses to which they were organizationally responsible and from which they received funding.

The remaining one-third was obtained through contracts that had to be negotiated with the interested operations. Naturally, operations would fund contracts only for short- or medium-term results, usually less than three years, and would not renew the contract annually unless they were satisfied. This system worked relatively well until the economic crises of the s and the intensification of international competition.

Many large and medium-sized corporations, faced with staggering losses and major reductions in employment, questioned the need for, and the role of, the corporate laboratory, especially its funding. Most researchers were transferred to operations, where the climate was less benign, others resigned, moving to universities or starting their own businesses. The laboratory and section managers are now responsible for coupling with operations.

At the same time, the funding sources of the laboratory were reversed. Before , the corporation was contributing 67 percent of the budget in assessed funds, and contracts with operations amounted to the remaining 33 percent. Under the new president, Jack Welch, contract funds now amount to 75 percent and assessed funds to 25 percent.

In theory, assessed funds are for exploratory research and for new business development. Learn how investors analyze bio tech companies. Amazon is highly valued as a growth company primarily because it has broadened e-commerce and continued technological innovation. Learn about three important financial ratios that help understand Pfizer, Inc.

Analysts simplify the business of investing in pharma by studying key financial ratios and metrics. Know these metrics before you buy or sell pharma. Analyze Apple's recent tax history to determine how geographic sales mix, foreign profit reinvestment and tax credits are influencing tax rates versus peers. Discover which country spends the most on research and development, in both dollar terms and as a percentage of gross domestic Understand the difference between research and development and product development.

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The Business Research and Development and Innovation Survey, successor to the Survey of Industrial Research and Development, is the primary source of information on research and development performed or funded by businesses within the United buycoumadin.gq survey is conducted for the National Center for Science and Engineering .

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Research and development (R&D) is a valuable tool for growing and improving your business. R&D involves researching your market and your customer needs and developing new and improved products and services to fit these needs.

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Jun 29,  · Research and Development departments are common in many larger companies, especially those working with newer products or technologies subject to important shifts. While research and development. Research and development refers to the work a business conducts toward the innovation, introduction and improvement of its products and processes.

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Aug 24,  · Business research and development is the process of creating and testing new products that may eventually be sold. During this. International Journal of Business Research and Development (IJBRD) provides an international forum to disseminate new knowledge on all aspects of business research and development across disciplines, continents and countries.