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R & D Strategy - Functional Strategies

   Posted On :  26.06.2018 09:53 pm

New technologies may make the business obsolete like the way Photostat technology rooted out the carbon paper technology.

R & D Strategy
 
New technologies may make the business obsolete like the way Photostat technology rooted out the carbon paper technology. Software and pharmaceutical companies need good R & D strategies for survival itself.
 
Motorola recently announced that it had figured out how to combine silicon and gallium arsenide in one semiconductor chip. The company said this discovery will greatly reduce manufacturing process costs and result in smaller, faster products. The discovery is expected to yield products by the end of 2003 and may lead to cell phones as small as shirt buttons. Intel and Microsoft are continuing to increase their expenditures on research and development. Intel spent just over $4 billion on R&D in 2001, nearly 15 percent of sales, while Microsoft spent $4.8 billion, up 37 percent from two years earlier. Both companies expect to increase R&D spending an additional $500 million in 2002. Intel is developing more powerful and smaller chips to power computers, while Microsoft is improving its Windows XP operating system. In India we can take the example of companies like Dr. Reddy’s Laboratories who are spending huge amounts for developing new drugs and vaccine.
 
But the disadvantage of R & D strategy is the high costs and time involved, also the risk associated with. According to a finding an average of 30 to 35 percent of new products fail after being put on the market, so innovation strategies –those that focus heavily on developing new products-can be very risky. For this reason, many organizations use imitation strategies, that is, they rapidly copy new competitive products that are doing well.
 
A number of Japanese electronics companies were quite successful in copying American technology and, by avoiding many R&D costs, improved their competitive positions significantly.   
Tags : Strategic Management - Strategy Formulation
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