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