Transcript 5.6 Innovation - JoannePugsley

5.6 Innovation
HL Only
Chapter 35
Research & Development (R&D)
• Research and development is the
scientific research and technical
development of new products and
processes.
– Inventions: discovery of new ideas for
products or processes
– Innovation: practical application of new
inventions into marketable products
• Product innovation
• Process innovation
Examples of Product Innovation
Process Innovation
• A new manufacturing process
– Glass manufacturing
• A new service process
– TCBY self-serve
– Drive-thru windows
– Superstores
– Debit cards
Benefits of R&D Spending Country
• Creation of high-tech jobs
• Creation of high-added-value products that may
then be manufactured in the country of
development
• Prestige – a country linked to scientific and
technological breakthroughs
• Attraction of investment by multi-national
corporations
Benefits of R&D Spending Companies
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Competitive advantage over competitors
Customer loyalty
High, premium prices when first to market
Publicity
Lower costs
R&D Limitations
• Does not always lead to new products – there is
still no cure for the common cold
• It is expensive and has an opportunity cost –
what else could be done with the money?
• Competing R&D may lead to other competitive
products – Toshiba HD-DVD vs Sony Blu-ray
• Ethical issues may out weigh commercial
benefits – genetically modified food crops, stem
cell research
Current R&D projects in NC?
• Do you know of current R&D projects the
NC government (or Charlotte) is trying to
encourage?
Intellectual Property
• Intellectual property refers to the creations of
the mind such as
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Inventions
Literature
Artistic works such as paintings, theatre, dance
Symbols, names, and images used in business
• Intellectual property rights is the legal
possession and use of the intellectual property
Value of Intellectual Property
• Intellectual property cannot be destroyed so
rights last as long as the law allows
• Can increase sales because of distinctiveness
• Be sold or licensed to produce a revenue stream
• Becomes a key part of branding
• Is seen as an ASSET and can be placed on the
balance sheet with value.
Trademarks
• Protect registered words, letters, or
symbols connected with a company or
product.
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Patents
• Provides originators the exclusive right to
make, use, or sell the item for 17 years.
Medicine
Schering-Plough patented Claritin
now sold as generic Loratadine
Sporting Equipment
Callaway Big Bertha Iron Golf Clubs
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Crazy Patents
• Patent #4233942
Animal Ear Protection
• This invention provides a
device for protecting the
ears of animals,
especially long-haired
dogs, from becoming
soiled by the animal's
food while the animal is
eating.
Crazy Patents
• Patent #5971829
Motorized Ice Cream
Cone
• Rotates the ice cream
in the cone so you
don’t have to.
Crazy Patents
• Patent #4455816
Tricycle Lawnmower
• Allows you to mow
the grass while riding
a tricycle bike. As
you pedal it turns the
mower blade.
Patents to Expire Soon (2012)
• Pharmaceuticals lose patents every year.
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Singular
Lipitor
Plavix
Advair
Asthma/Allergy drug
Cholesterol lowering drug
Anti-Blood clotting drug
Asthma/COPD drug
Other drugs that have gone “off patent”
Loratadine (Claritin) – allergy medicine
Lansoprazole (Prevacid) – heartburn medication
Ibuprofen (Advil) – analgesic
Copyrights
• Protects the creative
works of artists,
authors, and
composers.
• In the United States,
originators are protected
during their lifetime plus 70
years to publish and exhibit
their works.
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Fair Use
• Allows infringement of copyright law
with limited use of copyrighted
material under certain situations.
• Fairy Use Tale
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Factors Affecting Innovation
• The nature of the industry
– Pharmaceutical products, defense, computer software and hardware,
motor vehicles see more need for innovation than hotels and hair dressors
• R&D budgets of competitors
– It may be necessary to keep up with competitors or stay ahead of them
• Business expectations
– If future business profits are optimistic, it is more likely a company will feel
that funds will be available for R&D.
• Culture of the business
– Attitude of management determines whether it is important to invest in
long-term or short-term research
• Government policy
– Issues grants/tax incentives to business and university research programs
• Finance is needed
– Many firms do not have the cash reserves or financing which will limit R&D
ability of the company.