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RESEARCH & RESEARCH & DEVELOPMENTDEVELOPMENT

Mustafa METEMustafa METE

20105030492010503049

Industrial Engineering Industrial Engineering DepartmentDepartment

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ContentsContents

Definition of R&DDefinition of R&D OverviewOverview PharmaceuticalsPharmaceuticals BusinessBusiness R&D allianceR&D alliance R&D ReorientationR&D Reorientation

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What is R&D?What is R&D?

Research and development is often Research and development is often scientific or towards developing scientific or towards developing particular technologies and is particular technologies and is frequently carried out as corporate or frequently carried out as corporate or governmental activity.governmental activity.

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The phrase research and development (also The phrase research and development (also R and D or, more often, R&D), according to R and D or, more often, R&D), according to the Organization for Economic Co-operation the Organization for Economic Co-operation

and Development,refers to:and Development,refers to: Creative work Creative work

undertaken on a undertaken on a systematic basis in systematic basis in order to increase the order to increase the stock of knowledgestock of knowledge

Including knowledge of Including knowledge of man man

Culture and society Culture and society The use of this stock of The use of this stock of

knowledge to devise knowledge to devise new applications.new applications.

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OverviewOverview New product design and development is New product design and development is

more often than not a crucial factor in the more often than not a crucial factor in the survival of a company.survival of a company.

In an industry that is changing fast,firms In an industry that is changing fast,firms must continually revise their design and must continually revise their design and range of products.range of products.

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A system driven by A system driven by marketing is one marketing is one that puts the that puts the customer needs customer needs first,and only first,and only produces goods that produces goods that are known to sell.are known to sell.

Market research is Market research is carried out,which carried out,which establishes what is establishes what is needed. needed.

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R&D investment generally reflectsR&D investment generally reflects

A government’s or A government’s or organization’s organization’s willingness to forgo willingness to forgo current operations ,current operations ,

Profit to improve Profit to improve future performance future performance or returns ,or returns ,

Its abilities to Its abilities to conduct research conduct research and development.and development.

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In the context of commerce,”R&D” In the context of commerce,”R&D” normally refers tonormally refers to Future-oriented ,Future-oriented , Longer-term Longer-term

activities in science activities in science or technology ,or technology ,

Using similar Using similar techniques to techniques to scientific research scientific research without without predetermined predetermined outcomes ,outcomes ,

With broad forecasts With broad forecasts of commercial yield.of commercial yield.

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Statistics on organizations devoted to “R&D” Statistics on organizations devoted to “R&D” may express the state of an industry, the may express the state of an industry, the

degree of competition or the lure of degree of competition or the lure of progress.progress.

Some common Some common measures include:measures include:

Budgets ,Budgets , Numbers of Numbers of

patents or on rates patents or on rates of peer-reviewed of peer-reviewed publications.publications.

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The top eight spenders in terms of The top eight spenders in terms of percentage of GDP werepercentage of GDP were

Israel (4.53 %)Israel (4.53 %) Sweden (3.73 %)Sweden (3.73 %) Finland (3.45 %)Finland (3.45 %) Japan (3.39 %)Japan (3.39 %) South Korea (3.23 %)South Korea (3.23 %) Switzerland (2.9 %)Switzerland (2.9 %) Iceland (2.78 %)Iceland (2.78 %) United States (2.62 %)United States (2.62 %)

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In the U.S., a typical ratio of research and In the U.S., a typical ratio of research and development for an industrial company is development for an industrial company is about 3.5% of revenues.about 3.5% of revenues.

A high technology company such as a A high technology company such as a computer manufacturer might spend computer manufacturer might spend 7%.7%.

Although Allergan (a biotech company) Although Allergan (a biotech company) tops the spending table 43.4% tops the spending table 43.4% investment anything over 15% is investment anything over 15% is remarkable and usually gains a remarkable and usually gains a reputation for being a high technology reputation for being a high technology company.company.

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Generally such firms prosper only in markets Generally such firms prosper only in markets whose customers have extreme needs, such whose customers have extreme needs, such

as :as : MedicineMedicine Scientific instrumentsScientific instruments Safety-critical mechanisms (aircraft) or Safety-critical mechanisms (aircraft) or

high technology military armaments.high technology military armaments.

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On a technical level, high tech organizations On a technical level, high tech organizations explore ways to re-purpose and repackage explore ways to re-purpose and repackage

advanced technologies as a way of advanced technologies as a way of amortizing the high overhead.amortizing the high overhead.

They often reuse ,They often reuse , advanced manufacturing processes ,advanced manufacturing processes , expensive safety certifications ,expensive safety certifications , specialized embedded software ,specialized embedded software , computer-aided design software ,computer-aided design software , electronic designs ,electronic designs , mechanical subsystems.mechanical subsystems.

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PharmaceuticalsPharmaceuticals

Research often refers Research often refers to basic experimental to basic experimental research; research; development refers to development refers to the exploitation of the exploitation of discoveries.discoveries.

In the United States, In the United States, universities are the universities are the main provider of main provider of research level research level products.products.

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Development is Development is concerned with concerned with proof of concept , proof of concept , safety testing and safety testing and determining ideal determining ideal levels and delivery levels and delivery mechanisms.mechanisms.

Development Development often occurs in often occurs in phases that are phases that are defined by drug defined by drug safety regulators safety regulators in the country of in the country of interest.interest.

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BUSINESSBUSINESS

R&D is nowadays of R&D is nowadays of great importance in great importance in business as the business as the level of level of competition, competition, production production processes and processes and methods are rapidly methods are rapidly increasing.increasing.

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It is of special It is of special importance in the importance in the field of marketing field of marketing where companies where companies keep an eagle eye keep an eagle eye on competitors on competitors and customers in and customers in order to keep order to keep pace with modern pace with modern trends and trends and analyze the analyze the needs, demands needs, demands and desires of and desires of their customers.their customers.

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R&D AllianceR&D Alliance An R&D alliance is An R&D alliance is

a, mutually a, mutually beneficial formal beneficial formal relationship formed relationship formed between two or between two or more parties to more parties to pursue a set of pursue a set of agreed upon goals agreed upon goals while remaining while remaining independent independent organisations , organisations , where acquiring where acquiring new knowledge is a new knowledge is a goal by itself.goal by itself.

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Thanks to funding Thanks to funding from government from government organizations , like organizations , like the European the European Union’s Seventh Union’s Seventh Framework Framework Programme (FP7) Programme (FP7) and modern and modern advances in advances in technology , R&D technology , R&D alliances have now alliances have now become more become more efficient.efficient.

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R&D ReorientationR&D Reorientation Industrial sector is Industrial sector is

transforming from transforming from vertical integration to vertical integration to horizontal structure.horizontal structure.

The restructuring The restructuring trends of trends of manufacturing manufacturing predict the future of predict the future of R&D to be R&D to be focused,financially focused,financially independent, independent, universally expanded universally expanded and distributed.and distributed.

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Collaborative networks in a decentralized Collaborative networks in a decentralized environment are producing better results environment are producing better results because of flexibility and cost reduction.because of flexibility and cost reduction.

R&D is spreading across the globe for faster R&D is spreading across the globe for faster development and unique innovations.development and unique innovations.

Building block structure is getting popular Building block structure is getting popular in R&D because it is more manageable and in R&D because it is more manageable and focused.focused.

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Formation of Formation of horizontal horizontal collaborative collaborative network is network is challenging because challenging because it incorporatesit incorporates

the issues of the issues of adaptability ,adaptability ,

security ,security , cultural differences ,cultural differences , varying standards ,varying standards , trust ,trust , ownership.ownership.

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Firms can make Firms can make better investment better investment decisions if they can decisions if they can predict their predict their development cost.development cost.

This will directly add This will directly add to the bottom line of to the bottom line of the business.the business.

In a race to improve In a race to improve the productivity , the productivity , lower the cost and lower the cost and save time, firms save time, firms should not forget to should not forget to retain the expertise of retain the expertise of their core their core competencies.competencies.

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Companies are Companies are decentralizing their decentralizing their R&D units across R&D units across the globe to extract the globe to extract the time and the time and diversity benefits.diversity benefits.

R&D is an area R&D is an area where ‘ The World where ‘ The World is Flat ‘ theory is Flat ‘ theory applies perfectly.applies perfectly.

Never ending Never ending attempts should be attempts should be made to optimize made to optimize the development the development with minimal with minimal resources.resources.

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