Business 5.8

Question 1

Benefits of R&D

Answer 1

• Lower costs. Possible if process innovation as better manufacturing lower costs of production, increasing profits.
• Product development and diversification through IPs.
• Brand image. Either improve image or gain customer loyalty and price leadership through their reputation of innovators.
• Allow first mover advantage.

Question 2

Disadvantages of R&D

Answer 2

• High failure risks. Investments in capital costs may not meet consumer needs.
• Costly, time consuming when these elements could be spent on other aspects of an organisation.
• Lower short-term profits. Not recommended if business is already facing immediate short-term cash flow problems.
• Corporate espionage. Competitor copying unless IPs registered.
• Competitors may lead more successful products.

Question 3

The importance of developing goods and services that address customers’ unmet needs

Answer 3

Unmet need is a gap in the market. If gap filled, business earn profits for meeting a previously unmet need. Think first mover advantage!

Consider how this all links to a market oriented (respond to human need) and product oriented market (focused on advancing product with no defined need, that may contribute to the market, e.g. vaccine).

Question 4

Why do businesses want Intellectual property protection

Answer 4

• USP. Entice consumers and investors. Perhaps the exclusive supplier of product.
• Market share. Control competing market.
• Valuable assets. (Remember U3.4?)
• Protect investments in R&D. Costly to R&D, thus, need to ensure it’s not copied.
• Reduce threat of competition.

Question 5

What are copyrights

Question 6

What is a patent

Answer 6

Patent is a licence or grant that gives an inventor the exclusive right to make, use or sell a product for a specific period of time.

Allows business to monopolise market for awhile. Aid business in covering from costly R&D.

Question 7

What is a Trademark

Answer 7

Trademarkis a symbol, word or phrase that is recognisable and associated with the business.

Customer can quickly recognise business’s product and trust its quality because of its trademark.

Question 8

What is Incremental innovation

Answer 8

Minor adaptations that happens steadily over long periods. Thus, fewer risks involved.

→ Regular, minimal updates of a game.

→ Steady improvements of a food manufacturers on packaging and flavours.

Question 9

What is Disruptive innovation

Answer 9

Involves creation of a new industry or market as something completely new is designed. Radical changes. Usually in a short period of time.

→ Bicycle sharing apps.

Consider also how this might impact on an international scale.