5.8 - Research and Development (HL)

Question 1

Research and Development

Answer 1

The scientific research and technical development of new products and processes

May involve:

• Creating new products
• Updating products
• New methods of doing things
• Creation of new industries

Question 2

Why R & D is important

Answer 2

Advantages over competitors

• More desirable products

Meet customers’ unmet needs

• E.g. Through market research

Customer loyalty

• Brand image and publicity

Higher prices (less price sensitivity)

• E.g. allows premium price

Creates property rights

• Intangible assets, e.g. patents
• Could potentially sell these

Lower cost of production

• E.g. more efficient ways of production

Question 3

Incremental Innovation (Extension Strategies)

Answer 3

When the innovations are relatively small, and the updated product is a small improve on the previous version

E.g. new iPhone

Question 4

Disruptive Innovation

Answer 4

When the innovation much larger and can create a new product or market

E.g. the original iPhone
E.g. Netflix, digital cameras, Uber, 3D printing

Question 5

Intellectial Property Rights (IPR)

Answer 5

Legal rights assigned to the owners of works related to human creativity

Question 6

Patents

Answer 6

IPR relating to inventions
Stops anyone else making use of the invention

Question 7

Trademark

Answer 7

IPR relating to brand, image, logos, name
Stop anyong using these (™)

Question 8

Copyright

Answer 8

IPR relating to artists, writers, and musicians
Stops anyone using their work