Question

Discuss the major R&D approaches for implementing strategies.

Discuss guidelines used to determine whether a firm should conduct R&D internally or externally.

Answer 1

The 3 major R&D approaches for implementing strategies would be as follows:

1.       First to market new technological products – this can be both on the consumer as well as the industrial products front. All companies in every industry are relying that this new product would fuel profitability and growth.

2.       Innovative imitation of successful tried and tested product – Improvement of an existing product with additional features and advantages works well in a tried and tested market. The upside for the same is immense as the demand of the product is certainly there.

3.       Low cost producer of similar but less expensive products – Any R&D in this space gives players the Cost leadership advantage. Companies spend their time and effort to achieve this cost leadership in order to leverage it as a Competitive advantage and pass on the same cost advantage to customers and gain a wider market share.

Most successful companies use and R&D strategy that ties the external opportunities to its core internal strengths with a broader objective in mind. A good R&D policy matches the opportunities in the market with the internal capabilities, acting as a check to all ideas generated. There should be constant interactions between R&D departments and other functional units in arriving at different types of generic business strategies. Conflicts should be reduced by establishing clear policies. Hence, the guidelines are totally dependent on the strategy the firms wants to implement, the R&D policy sways in that direction.

For Example, for a cosmetic manufacturer looking to achieve concentric diversification, would look for an external R&D activity to add face wash for the customer over and above the other make-up items. Similarly, a plastic container manufacturer looking to achieve market penetration, would internally look to develop a biodegradable container to increase adoption.