Learning ObjectivesBy the end of the lesson you should be able to:1. Understand the importance of innovation and research and development to the competitiveness of larger business.2. Recognise costs and risks of innovation and research and development3. Analyse the implications of innovation to finance, marketing and human resources.
Discussion PointInnovation: The launch of a new product or process, an What is meant by innovation?invention, onto the market for commercial gain Finish the following sentences:The strategy of innovation has implications for other The strategy of innovation has implications for….functional areas.The risk risk of heavy investment in R&D alsohas potential The of heavy investment in R&D also has….rewards.
What is research and development (R&D)? R&D is the scientific research and technological development of a new product or process.Questions Answers1. Along with product development 1. Improve existing products or what could R&D also improve? production process.2. What does R&D enable a firm to 2. Competitive advantage with a USP have? and greater efficiency.3. Draw a product life cycle – where 3. At the start of the PLC. does R&S appear? 4. Money only flow in one direction for4. What are some of the downsides R&D so firms may want to keep this of R&D? to a minimum.5. Looking back at your PLC, what 5. Can prevent products going into decline once they have matured in else can R&D help to prevent? the PLC.
The process of R&DWrite a description based on your cue card. Place the card in the correct order in process of R&D. You must be able to justify your reasons. Idea Generation Idea Screening Concept Testing Development of idea Business Analysis Product Development Test Marketing
Using the following key words/ term, sum up the purpose and cost of R&D….New Products or Processes Costs Maintain Market Share Position Opportunity CostCompetitive Advantage
Discussion Point1. List the companies that you associate with the word ‘innovation’.2. What industries are these companies in?3. What are the characteristics of this company? Decide - To which company would you award a trophy to as ‘top innovator of the year’?
What are the risks and rewards ofR&D and launching new innovation? Risks RewardsHeavy time and resource Develop USP leading tocommitment with no competitive advantage.guarantee of success. Charge premium pricesCompetitors reactions. Improvements in efficiencyLoss of business direction. and production process.Company image/ reputation Reputation of beingdamaged. innovative.
What is the impact on marketing, finance and human resources? Marketing Finance Human ResourcesMay act to inform the Setting an monitoring Oversee R&D workforceR&D department of a budgets for R&D. needs/ issues.potential niche orcustomer opinion – Costing new products. Increase or reducemarket-led. staffing numbers. Work with marketing toPlay major role in develop pricingpromoting or getting structures/ profit.the product to theconsumer.
Test Yourself!1. What is meant by the term innovation?2. Why are patents often associated with investment in R&D?3. Explain one benefit of investment in R&D.4. If R&D is high risk then why do firms undertake it?
Re-cap Learning ObjectivesYou should now be able to:1. Understand the importance of innovation and research and development to the competitiveness of larger business.2. Recognise costs and risks of innovation and research and development3. Analyse the implications of innovation to finance, marketing and human resources.