R&D
The research
and development (R&D, also called research and technical development or
research and technological development, RTD in Europe) is a specific group of
activities within a business.
The activities
that are classified as R&D differ from company to company, but there are
two primary models. In one model, the primary function of an R&D group is
to develop new products;
The first
model of R&D is generally staffed by engineers while the second model may
be staffed with industrial scientists. R&D activities are carried out by
corporate (businesses) or governmental entities. R&D is a form of applied
research.
MEASURING & COMPARING R&D ACTIVITY
The big profit in R&D tend to produce certain types of
product-things, like precision scientific instruments, medicines, high tech
weapons systems, navigation and safety devices for aircraft, etc. whereas,
typically, a manufacturing company might make a profit of 40% on its sales, the
profits of these R&D intensive companies can range from 60% to as high as
90%. In other words, manufacturing costs
represent only 10% of the price that the Customer pays for the product, the remaining 90% being profitable.
One might ask how these companies can justify figures like these. The explanations
lies in the fact that, for them, R&D carries a high risk of failure. A
large part of the time and money that they invest in R&D does not create any unprofitable products at all.
So, the high profits of a handful of successful products serve to offset
the cost of numerous spenders projects.
Cycle of Research and Development
By: Miguel Valencia Topete
