Internal Research and Development

Internal Research and Development

Internal Research and Development

When a firm decides to exploit its internal R & D resources to develop new products it has the advantage of being able to maintain maximum control over the project. Continuity is assured and its own staff are kept fully employed. Furthermore, all the subsequent profits earned by the project are retained.

On the other hand, the progress of the project is liable to be inhibited by any shortcomings which may exist among its own staff. If this occurs, there may be a long delay before any return on the investment can be seen. One also runs the risk that the development may not succeed and the investment will have been lost.

Using Specialists

An alternative approach is to bring in specialists to lead the research and development project. This will enable the firm to maintain its control over the undertaking. Existing staff is fully utilized and once more all resultant profits are retained by the company.

The trouble with this method is that the employment of specialists can sometimes have dubious effects. One's existing staff may not take kindly to the idea and morale may suffer. The research may take a long time and one can never be sure that the specialist's abilities are all that they are said to be.

Acquiring Licences

One can, of course, acquire licences to manufacture patented products from home or overseas producers. The big advantage is that products can be selected which are already proven both with regard to production and ONLINE MARKETING feasibility. Very often, one has the added advantage of technical and ONLINE MARKETING assistance on the part of the licenser.

The disadvantage of producing under licence is that some of the profit earned by the enterprise is lost to the company in the payment of royalties. Furthermore, the licence conditions may be such that one's own future development may be restricted. An additional danger is that of becoming too dependent upon the licenser and neglecting one's own R & D department.

Acquiring Other Companies

Time is the important advantage here. One receives immediately all the assets of the acquired company, its technical know-how, its products and its profits. Very often the resources of the acquired firm can be integrated successfully with one's own. When a company is taken over, its staff gets taken over as well and in some mergers this is not the least of the blessings.

However, firms which possess useful assets and good managerial staff are usually expensive to purchase. A further problem is that one inevitably acquires some facilities and some people which one does not want.


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