5.6 Research and Development

Question 1

What is the definition of “research and development”?

Answer 1

“Refers to the work a business conducts for the innovation, introduction and improvement of its products and procedures. It is a series of investigative activities to improve existing products and procedures or to lead to the development of new products and procedures”

An ongoing effort to develop or improve products and services.

Question 2

What are the 4 types of innovation?

Answer 2

• Product innovation
• Process innovation
• Position innovation
• Paradigm innovation

Question 3

What is the definition of “product innovation”?

Answer 3

Is about R&D that focuses on creating new products or improving existing ones

Question 4

What is the definition of “process innovation”?

Answer 4

Is about R&D that focuses on new or significantly improved methods of production or work practices.
(Refers to changes in the way that production takes place)

Question 5

What is the definition of “position innovation”?

Answer 5

Is about R&D that focuses on changing customer perceptions of an existing product

Question 6

What is the definition of “paradigm innovation”?

Answer 6

Refers to a change in the concept of a product, so it is an extreme form of innovation

Question 7

What is the definition of “innovation”?

Answer 7

Practical application of new inventions into marketable products or services

Question 8

What is the definition of an “invention”?

Answer 8

Formulation of new ideas for products and processes

Question 9

What is the definition of “intellectual property”?

Answer 9

Creations of the mind, such as inventions, in literary and artistic works
(designs.. symbols.. names and images used in commerce)

Question 10

What is the definition of “intellectual property rights”?

Answer 10

The rights given to the person over the creations of their mind

Question 11

What is the definition of “copyright”?

Answer 11

Provide legal protection for artists and authors

Question 12

What is the definition of a “trademark”?

Answer 12

A sign or logo that represents a business or a product belonging to that business

Question 13

What is the definition of a “patent”?

Answer 13

The legal right to be the exclusive producer or user of a newly invented process or products, for a finite period of time

Question 14

What are some advantages of R&D?

Answer 14

• Can lead to improved performance of an organization
• Can lead to higher sales growth
• Value added likely to improve
• There is a possibility of increased market value
• It can give a business first mover advantage

Question 15

What are some disadvantages of R&D?

Answer 15

• Might not meed consumer needs
• Not all R&D is found to be useful
• Very expensive
• Takes a lot of time
  –> changing market trends could impact success…

Question 16

What are some factors affecting R&D?

Answer 16

• Organisation revenue/ profit
  → Usually higher revenue/ profits allow firms to invest more into R&D
• Market
  → Some markets are technology based where only the most innovative companies survive, therefore in these markets firms must practise more R&D
• Level of competition
  → The greater the level of competition, the more the incentive to invest in R&D to try and gain a competitive advantage over others
• Effectiveness in the past
  → If a firm has historically seen high returns on new inventions, they may decide to spend more on R&D
• Consumer profile
  → A firm with an ageing consumer profile may want to invest more into R&D to attempt to meet the needs of younger generations (many people don’t switch household brands anymore once older..)