 Strategic Research and Development Issues (R & D)

The R & D manager is responsible for; R & D intensity and technological

competence, R & D mix and impact of technological discontinuity on strategy.

B-1) R & D intensity is spending on R & D as a percentage of sales revenue. This

spending helps the firm to gain more market share through doing research in
developing the products/services (technological competence) and making use of that
innovative technology in day-to-day operations. Moreover, R & D is responsible for
technology transfer which is process of taking new technology from the laboratory to
the market place. If the company didn’t take advantage for that technology transfer, it
will lose its competitive advantage (like Xerox).

B-2) R & D mix includes basic, product and process R & D. Basic R & D is working
on the oriental problems and it is measured by research publications. Product R& D
has to do with marketing and product packaging improvements and its success is
measured by the number of successful new products produced and total sales.
R & D process (engineering) is concerned with engineering, concentrating on quality
control and the development of design specifications and improved production
equipment and it is measured by reductions in unit manufacturing coasts and in
product defects.
R & D mix should be balanced with the strategy planned for each product’s life cycle.

B-3) technological discontinuity is displacement of one technology by another to

improve performance. There is a relationship between product performance and
research effort/ expenditure and it is described in S-shaped curve as follows:

Mature technology

New technology

In the early development, there will be excessive research expenditure and efforts but
as technology matures, research efforts should be directed to another technology with
more potential.