To what extent is it necessary for companies to reinvest profits in research and development? In the past 20 years, intellectual property has been highly respected in the world. In other words, there has been a majority of companies that paid more and more attention with regard to the performance of department of research and development (R&D), and especially for technologic corporations that own the fast product-life-cycle. Despite the fact that some people will argue whether reinvesting more source in research and development is successful strategy or not, an important issue for management studies would be normally discussed to be to what extent companies have to reinvest in research and development. This essay will seek to …show more content…
According to Chen, C. H. and Shih, H. T. (2008), Whether the mission or vision of the both company is the same or not will be a vital factor. The reason totally affects the success of an acquisition. In addition, how to find out and to purchase the primary techniques is also an obvious problem. Clearly, this method has some strengths and weaknesses, thus below two will be evaluated as follows. Both methods have probably offered most corporations to solve the R&D problem. Similarly, all of them agree that the importance of R&D and utilizing new techniques in the company. Moreover, there are also the similar risks in both ways. Tassey (1997) stated that uncertainty of R&D is “ the inability to estimate the reward and risk.” On the other hand, one of their different points is the speed of exploiting new product. This would seem to be the way of cooperating other R&D institutions. The other one could be whether they can control the key techniques to persistently maintain core competitiveness of the enterprise or not. According to Porter (2004:164), “Technological change is one of the principal driver of competition. It plays a major role in industry structural.” technological As for that, organizing own R&D might be an appropriate way. Overall, how to keep the main technical knowledge is a very vital around growing energy and
• Analysis of the target company—is the company a strategic fit as far as size, geographic location, business mix, operational capacity, financial strength and availability for takeover.
Business demands a return on its research and development effort to be successful and repay those investors of time or money thus
Closed innovation implies that companies try to develop new products and processes based on the idea that the company itself has the best possible knowledge and resources for innovation. (CHRESBROUGH, 2003 p228)
Technology Strategies for New Product Development Rationalist approaches to technology strategy, such as that of Porter,1 view technological innovation as a relatively unproblematic aspect of corporate strategy. This article will attempt to show that the development of new products by a rm is a more complex, dynamic and uncertain activity than this, dependent for success on organizational as well as technological factors. It will be argued that strategies for technological innovation are, by implication, risk management systems. Here we are referring to the introduction of some means of control over the cost and direction of new technologies,
Increasing research and development can contribute to innovation and sustainability of business globally and in the U.S. in many ways. Increasing R&D companies can stay ahead of
In response to this problem, the purpose of this paper is to increase awareness of the possibilities of investments in research devolvement, along with success stories of companies who have seen success in taking on new technology, along with that discussing strategies that can help the business succeed before adapting technology and after adapting new
However, RLK’s competitors are downsizing and outsourcing R&D and exploiting on the cost advantages. If RLK decides to invest more money into R&D and should the new product stall on launch,
This course for juniors and seniors explores firm strategies related to innovation and technological change. We focus on how the success of technological innovations—new products, processes, and services—depends on the firm’s business model. Other key topics include intellectual property rights and the management of technological uncertainty through organizational arrangements such as corporate venturing, spinoffs, and alliances.
In the early 1970s the process of industrial innovation was commonly assumed as the “linear progression”, through development of technology in organizations, to marketplace, that became the “technology push model”. And in “mid 1960s- early 1970s period” appears 2ndgeneration of “Innovation model”, alluded to as "market pull innovation model”. In accordance with “simple sequential model”, the marketplace was new ideas as a source for controlling “R&D” that had a responsive role in innovation process. That is “demand pull” model. Individuals obtained this theory due to their restricted vision then. They considered science as the origin and cause of innovation. Consequently they believed that high investment leads to novel innovative product production (Balconi, Brusoni & Orsenigo 2010). Clearly, the one reason of innovation is scientific research. In the 20th century, several big companies, like “Ford, Philips, ICI and Western Electric”, put money on the research laboratory. They fed the quickly emerging markets for vehicles, industrial chemicals and electrical products for consumers with the “science and technology” assistance and structured efforts for “research and development” built steady innovation streams. The other main aspect is demand, where it can be easily understood. The needs of
These R&D labs usually concentrated on bringing out new technologies for self-commercialisation. This process can be viewed in the form of a funnel, where a large number of varied ideas and concepts can be trimmed down to few of those concepts and ideas that best meet the requirements of the company. (OECD, 2008) In recent times, companies have become more open with their innovation process, leading to revolution described as “Open Innovation” by Chesbrough (2003). This ‘open innovation’ model is a more dynamic model when compared the traditional model as there is much more interaction between knowledge assets outside the company as well as inside. Henry Chesbrough (2003) in his book “Open Innovation: New Imperative for creating and profiting from technology” defines open innovation as a concept in which companies must use ideas from inside as well as outside sources and find internal and external ways to reach the market in order to advance their technological capabilities. Open innovation combines these 3
Establishing various processes and inter department coordination is a cumbersome task (Jinhong Xie, X. Michael Song and Anne Stringfellow, 1998). The risk associated with new product development is very high as it is unclear that product will be accepted by the customer or not. Acquiring existing business reduce the risk associated with new product. The product is already accepted by the customer and company is well established brand name with a customer base. Instead of developing a new product, it is good to acquire existing business. Acquisition helps in extending market and taps the opportunity (Shelton, 1988). I feel that the decision to acquire an existing business was the right decision but selection of business was not wisely and implementation was also not managed rightly.
The predominant consensus is based on the grounds that there is no certainty that resulting innovations relative to R&D expenditure will cause a return on the investment (Goodacre & McGrath, 1997). Moreover, they are less easily identifiable and very difficult for external auditors and analysts to verify. Generally, when firms successfully develop an innovation they build on vast amounts of knowledge accumulated, both inside and outside the firm, over many years. Therefore, to reliably put an objective figure on the direct causes of expenditure to be capitalised upon will often be very difficult and ambiguous in practice. Furthermore, assessment of whether or not recorded values should be adjusted for impairment further stress the difficulty involved in measuring such costs. Nevertheless, it can be argued that such uncertainty in R&D is not significantly higher than the other engagements of most public companies in the development of portfolios of projects, or in the investments of real estates, stock or bonds (Lev and Zarowin, 1999; Deng & Lev, 2006).
The second stage is selection. It is well known fact that innovation is risky. In order not to fail, firm has to thoroughly assess the opportunities, so innovation will be held within the frame of company’s technological and marketing competences and will be coherent with overall business strategy (Tidd, J., Bessant, J., 2009). There are three components in this phase. The first component comes from previous stage and implies the analysis of opportunities, both marketing and technological, procurable for the firm. The second component includes the distinctive features company possesses, which are knowledge base, employees, equipment and experience (Prahalad, C., Hamel, G., 1990). The third component is suitability to the overall business strategy. This implies the fact that proposed innovation should be beneficial for firm’s performance, in other words, be in company’s competence base, otherwise it could lead to the failure (Cooper, R., 2000).
Companies live and breathe innovation; or, at the terribly least, notice it basic to their success. Such companies are those that others ought to emulate for they recognize that to do business, as Peter Drucker prompt in an exceedingly recent Harvard Business review article, “Every firm—not simply businesses—needs one core competence: innovation.”