What is Business Research and Development?

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  • Written By: Ken Black
  • Edited By: Andrew Jones
  • Last Modified Date: 22 September 2019
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Business research and development (R&D) refers to the process of developing and testing new products that eventually may be put on the market. This process is especially important to pharmaceutical companies, technology companies, and some types of industrial companies, but has implications for many other kinds of businesses as well. Those who are able to keep customers in the marketplace happy with fresh innovations and new ideas often find they have a leg up on the competition.

The importance of business research and development is difficult to overstate. Even during times when the economy is struggling, businesses understand that a good research and development strategy is vital to the continued success of the operation. Though it may seem easy to cut back on business research and development when sales slow, some CEOs believe that this is the very best time to spend more. New products mean new opportunities and more customers.


The innovation process is especially crucial in the pharmaceutical field, where business research and development is responsible for producing new drugs to fight cancer, heart disease and other ailments that threaten the lives or health of individuals. Millions of dollars may be spent on this research until a suitable drug is created. If one is found, the patent may last approximately 20 years, after which generics can be produced. The companies producing these generics have an advantage because all the research and development has been done by others. Thus, the name brand company has more incentive for further research and development, as it eventually loses market share, and must come up with new products.

This is not only true of pharmaceutical companies, but of many industrial companies as well. If Henry Ford had stopped his innovation with the Model T, there is very little chance that his company would have survived to present times. As the competition continues to build faster, more reliable, and more comfortable cars, others must follow suit or risk being left behind.

Though car companies, as one example, self fund the majority of their business research and development, there may be other sources of money available for some industries. Research and development funding may be offered by a government or private groups. For example, a government may offer grants for researching cancer drugs, cars that run on alternative fuels, and cheaper ways to explore outer space. In each case, while there may be a benefit to the company, the government may also feel that there is a benefit to society at large.

Technology companies also invest heavily in research and development. Take, for example, the constant tug of war between the two major software and computer giants, Microsoft® and Apple®. Both must continually offer customers new products, more stable platforms and higher computing speeds. To do this, research must be done into new software as well as new hardware to power the software.


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Discuss this Article

Post 4

Suntan12-I think that a SWOT analysis is important because it analyzes the strengths, weaknesses, the opportunities and threats which are what the acronym stands for.

A threat might mean a competitor putting out a new product that is similar to what the company already offers or it may mean that a competitor is opening a location in the area in which the business traditionally serves.

This can cut into the market share of the company so it is vital that they address this matter in their business strategy meeting regarding their SWOT analysis.

An opportunity can also mean an untapped market. For example, if a company offers pet grooming as a service, they might also consider a pet boarding business or selling a line of pet accessories. These would all niche markets or vertical marketing opportunities.

Post 3

Sunny27-I know that a lot of companies focus on surveys and focus groups in order to get a feel for what their customers are saying about their product or service.

For example, a company may even hire a mystery shopping company to send out a mystery shopper in order to determine the experience of a typical customer.

The findings can help adjust the business accordingly. If the findings were negative and the service was poor, and company may request another shop in order to confirm the findings.

If the findings are confirmed then a company may offer additional training to the staff or if the service level was particularly low, the company may fire the staff members.

Customer service is the most important aspect of any business so companies keep a strong eye on their customer’s perceptions and experiences.

If a customer has a bad experience they will tell eight to twenty people. Companies understand this and they also know that it takes a lifetime to build a reputation and a single moment to destroy it.

Post 2

BrickBack-I think that a lot of companies perform a business SWOT analysis in order to determine what their internal strengths are and their external weaknesses are.

Understanding the companies strength can help create a niche market that the company may not have thought of before. They may also be able to expand their product offerings to provide even more to their consumers.

For example, a well known bakery in South Florida know as “Cake Designs by Lucia” offers high end gourmet cakes but now provides cakes to high end supermarket bakeries as an additional option.

The company expanded their market and has created a definitive niche market in the upscale baking world.

A business SWOT also

sheds light on to the weaknesses of the company. This could be a cash flow problem, a staffing problem, or even a marketing problem with how the product or service is received.

A detailed SWOT analysis offers invaluable information to the business and the use of research and development software will help the company gain additional footing in the market.

Post 1

Many companies are eligible for a research and development credit otherwise known as an R&D credit.

The research and development tax credit involves companies whose scope of research involves improving or enhancing the product offering as well as those firms that provide technological products for the market.

The research and experimentation tax credit also bode well for biotechnology research and development. These types of firms can also receive research and development tax credit.

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