Formulation of Functional Strategy
Marketing Strategy Formulation
Financial Strategy Formulation
Production Strategy Formulation
Logistics Strategy Formulation
Research and Development Strategy Formulation
Information Technology Strategy Formulation
Human Resource Strategy Formulation
R & D Strategy
• R&D people perform task that includes transferring complex technology,
adjusting processes to local raw materials, adapting processes to local
markets, and altering products to particular tastes and specifications.
• New product development and improvement in old products requires
significant resource availability which is always a constraint.
• Technological improvements that affect consumer and industrial products
and services shorten product life cycle.
• R&D strategy ties external opportunity to internal strengths and is linked
• R&D policies can enhance strategy implementation efforts of the
R & D Strategy
• R&D Strategy Emphasize
• Product and Process Improvements
• Stress Basic or Applied Research
• Be a Leader or Follower in R&D
• Develop Robotics or Manual-type Processes
• Spend High, Average, or Low Amount of Money on R&D
• Perform R&D within the firm or Contract it Outside the firm
• Use University Researchers or Private Sector Researchers
• There must be an effective integration between R&D departments and
other functional departments in implementing different types of generic
R & D Strategy (Externalvs Internal)
• If the rate of technological progress is slow, the rate of market growth is moderate, and
there is significant barriers to possible new entrants, then in house R&D is preferred. The
reason is that R&D, if successful, will result in a temporary product or process monopoly
that the company can exploit.
• If the rate of technological progress is rapid, the rate of market growth is slow, then the
major effort in R&D may be very risky because it may lead to development of obsolete
technology or one for which there is no market.
• If the technology is changing slowly but the market is growing quickly, there generally is not
enough time for in-house development. The prescribed approach is to obtain R&D
expertise on an exclusive or non exclusive basis from an outside firm.
• If both technological progress and market growth are fast, R&D expertise should be
obtained through acquisition of well established firm in the industry?
R & D Strategy: Implementation
• The first strategy is to be first firm to market new technological products. (Exiting and
• The second strategy is to be innovative imitator of successful products, thus minimizing the
risk and cost of startup. This strategy involves pioneer firms to develop first version of the
new product and to demonstrate that the market exists. Then laggard firms develop similar
products. Need excellent R&D personnel and excellent marketing department.
• The third R&D strategy is to be low cost producer by mass producing products similar to but
less expensive than products recently introduced. Price consideration is important in buying
decision. Mass marketing replaces personnel selling. This strategy requires more
investment in plant and equipment.
Research& Development Strategies
• LEVEL OF INNOVATION
• Pioneer (Leader) v. Copy Cat (Follower)
• Technological leadership fits well with differentiation
• A “follower” strategy makes sense with cost-leader strategies
• Are we better at finding applications and customer adaptations than actually
inventing something really new?
• Different types of R & D (basic, product, process)
• Where is the firm’s historic expertise / advantage?
• How competent are the R & D Personnel?
• ACQUISITION OF TECHNOLOGY
• Internally developed v. acquired from outside
• Technology “Scouts”
• Strategic Technology Alliances
• Acquire minority stake in promising high-tech ventures
Information Systems Strategies
WORKER PRODUCTIVITY & CONNECTIVITY
• Employees can be networked together across the globe
• Instant translation software for global firms
• “Follow the Sun Management”…pass projects on to the next team
SALES & INVENTORY MANAGEMENT
• Internet sales and development of customer databases
• Instant sales reports allow immediate inventory reorders
SHIPPING & TRACKING GOODS
• FEDEX PowerShip software…stores addresses, prints labels, etc.
• Tracking the progress of package shipment…FEDEX & UPS