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5.6. Research and Development (HL only)

  • Research and Development (HL only)
    • Technical process of generating new ideas, discoveries and inventions that can be commercialized or which can improve operations
    • Not limited to product design but also how product is made
    • Most expensive part of product development
    • May mean catering to unmet and unknown needs and demands
    • Advantages
      • Growth opportunities
      • Increased productivity
      • Competitive advantage
      • Customer loyalty
      • Creation of jobs
      • Improved quality of life for customers
    • Disadvantages
      • Expensive and time consuming
      • Requires skilled labor and capital
      • High failure rate
      • May be difficult to commercialize
  • Types of innovation
    • Process
      • Improvements to increase production
        • Enhance quality
        • Reduce time/effort
        • e.g. Ford’s production line , barcoding for inventory control
    • Product
      • Development of new products
        • Enhancement of existing products
        • May be radical or incremental
    • Positioning
      • Changing consumer perception about product/process
      • Promotion is only a part of this since customer and supplier relationships can also affect perception
    • Paradigm
      • Radical change in product or business process
      • May be creating a new product that satisfies an unknown need/demand or changing the way products are sold
      • e.g. cars replacing horses
  • Types of creativity
    • Adaptive
      • Improvements in current paradigms
      • Refines and improves
      • Normally less costly to follow
    • Innovative
      • Out of the box thinking
      • Radical change to the system
      • Risky and costly to follow