Research and development

Research and development

The phrase research and development (also R and D or, more often, R&D), according to the Organization for Economic Co-operation and Development, refers to "creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of (hu)man, culture and society, and the use of this stock of knowledge to devise new applications [sic] " OECD [http://lysander.sourceoecd.org/vl=5134145/cl=23/nw=1/rpsv/factbook/070101.htm OECD Factbook 2008: Economic, Environmental and Social Statistics] .]

R&D

New product design and development is more than often a crucial factor in the survival of a company. In an industry that is fast changing, firms must continually revise their design and range of products. This is necessary due to continuous technology change and development as well as other competitors and the changing preference of customers.A system driven by marketing is one that puts the customer needs first, and only produces goods that are known to sell. Market research is carried out, which establishes what is needed. If the development is technology driven then it is a matter of selling what it is possible to make. The product range is developed so that production processes are as efficient as possible and the products are technically superior, hence possessing a natural advantage in the market place.

R&D has a special economic significance apart from its conventional association with scientific and technological development. R&D investment generally reflects a government's or organization's willingness to forgo current operations or profit to improve future performance or returns, and its abilities to conduct research and development.

In 2006, the world's four largest spenders of R&D were the United States (US$343 billion), the EU (US$231 billion), Japan (US$130 billion), and China (US$115 billion). In terms of percentage of GDP, the order of these spenders for 2006 was China (US$115 billion of US$2,668 billion GDP), Japan, United States, EU with approximate percentages of 4.3, 3.2, 2.6, and 1.8 respectively. The top spenders in terms of percentage of GDP were China, Sweden, Finland, Japan, South Korea, Switzerland, Iceland, United States, followed by 9 other countries, and then the EU. [http://www.oecd.org/dataoecd/49/45/24236156.pdf]

In general, R&D activities are conducted by specialized units or centers belonging to companies, universities and state agencies. In the context of commerce, "research and development" normally refers to future-oriented, longer-term activities in science or technology, using similar techniques to scientific research without predetermined outcomes and with broad forecasts of commercial yield.

Statistics on organizations devoted to "R&D" may express the state of an industry, the degree of competition or the lure of progress. Some common measures include: budgets, numbers of patents or on rates of peer-reviewed publications.

Bank ratios are one of the best measures, because they are continuously maintained, public and reflect risk.

In the U.S., a typical ratio of research and development for an industrial company is about 3.5% of revenues. A high technology company such as a computer manufacturer might spend 7%. Although Allergan (a biotech company) tops the spending table 43.4% investment, anything over 15% is remarkable and usually gains a reputation for being a high technology company. Companies in this category include pharmaceutical companies such as Merck & Co. (14.1%) or Novartis (15.1%), and engineering companies like Ericsson (24.9%).All figures [http://www.innovation.gov.uk/rd_scoreboard/ UK R&D Scoreboard] as of 2006.]

Such companies are often seen as poor credit risks because their spending ratios are so unusual.

Generally such firms prosper only in markets whose customers have extreme needs, such as medicine, scientific instruments, safety-critical mechanisms (aircraft) or high technology military armaments. The extreme needs justify the high risk of failure and consequently high gross margins from 60% to 90% of revenues. That is, gross profits will be as much as 90% of the sales cost, with manufacturing costing only 10% of the product price, because so many individual projects yield no exploitable product. Most industrial companies get only 40% revenues.

On a technical level, high tech organisations explore ways to re-purpose and repackage advanced technologies as a way of amortizing the high overhead. They often reuse advanced manufacturing processes, expensive safety certifications, specialized embedded software, computer-aided design software, electronic designs and mechanical subsystems.

Pharmaceuticals

Research often refers to basic experimental research; development refers to the exploitation of discoveries. Research involves the identification of possible chemical compounds or theoretical mechanisms. In the United States, universities are the main provider of research level products. In the United States, corporations buy licences from universities or hire scientists directly when economically solid research level products emerge and the development phase of drug delivery is almost entirely managed by private enterprise. Development is concerned with proof of concept, safety testing, and determining ideal levels and delivery mechanisms. Development often occurs in phases that are defined by drug safety regulators in the country of interest. In the United States, the development phase can cost between $10 to $200 million and approximately one in ten compounds identified by basic research pass all development phases and reach market.

Business

Research and development is nowadays of great importance in business as the level of competition, production processes and methods are rapidly increasing. It is of especial importance in the field of Marketing where companies keep an eagle eye on competitors and customers in order to keep pace with modern trends and analyze the needs, demands and desires of their customers.

R&D alliance

An R&D alliance is a mutually beneficial formal relationship formed between two or more parties to pursue a set of agreed upon goals while remaining independent organisations, where acquiring new knowledge is a goal by itself. The different parties agree to combine their knowledge to create new innovative products.

ee also

* Basic research
*
* Innovation
* List of business and finance abbreviations
* Research
* Science policy

Notes

External links

* [http://www.rdmag.com R&D Magazine] :
** [http://www.rdmag.com/awards.aspx R&D 100 Awards] .
* [http://www.energy.gov/news/6423.htm DOE Funded Research Projects Win 30 R&D Awards for 2008]
* [http://www.usatoday.com/money/companies/management/2008-05-18-texas-instruments-rich-templeton_N.htm USA Today May 2008 Q&A with Texas Instruments CEO about Bayh-Dole Act]


Wikimedia Foundation. 2010.

Look at other dictionaries:

  • Research and Development — Bei Forschung und Entwicklung (F+E, englisch research and development, R D) kann es sich je nach Betonung um einen Ausdruck für anwendungsorientierte Forschung oder aber um die zunächst sprachliche Zusammenfassung von Grundlagenforschung und… …   Deutsch Wikipedia

  • Research and development in Japan — Research and development are important to the Japanese economy.As its economy matured in the 1970s and 1980s, Japan gradually shifted away from dependence on foreign research. Japan s ability to conduct independent research and development became …   Wikipedia

  • Research and Development Establishment — Infobox Laboratory name = Research Development Establishment motto = logo = established = 9 Feb 1962 city = Pune, Maharashtra research field = type = director = B. Rajagopalan staff = budget = operating agency = DRDO affiliations = address =… …   Wikipedia

  • Research and Development in Advanced Communications Technologies in Europe — This article is about European research program, for alternate meanings, see RACE RACE or Research and Development in Advanced Communications Technologies in Europe, a program launched in 1988 by the Commission of the European Communities to pave …   Wikipedia

  • Defence Research and Development Organisation — Sanskrit: बलस्य मूलं विज्ञानम् Strength s Origin is in Science [1] Agency overvi …   Wikipedia

  • Defence Research and Development Canada — Defence Research and Development Canada, also Defence R D Canada or DRDC (Recherche développement pour la défense Canada, R D pour la défense Canada, ou RDDC in French), is an agency of the Department of National Defence (DND), whose purpose is… …   Wikipedia

  • Canadian industrial research and development organizations — Expenditures by Canadian corporations on research and development accounted for about 50% of all spending on scientific research and development in Canada in 2007. In the corporate sector research and development tends to focus on the creation or …   Wikipedia

  • Defence Research and Development Establishment — Defence Research Development Establishment Established 1973 Director Dr. R. Vijayaraghavan Address New Campus: Jhansi Road, Gwalior 474 002, Old Campus: Tansen Rd., Gwalior 474 002 Location Gwalio …   Wikipedia

  • List of federally funded research and development centers — Federally Funded Research and Development Centers (FFRDCs) conduct research for the United States Government. They are administered in accordance with U.S Code of Federal Regulations, Title 48, Part 35, Section 35.017 by universities and… …   Wikipedia

  • New York State Energy Research and Development Authority — The New York State Energy Research and Development Authority (NYSERDA), established in 1975, is a public benefit corporation, located in Albany, New York, with regional offices in NYC, Buffalo, and West Valley. NYSERDA offers information and… …   Wikipedia


Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.