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CHAPTER 8 • IMPLEMENTING STRATEGIES: MARKETING, FINANCE/ACCOUNTING, R&D, AND MIS ISSUES  277

                 Many firms wrestle with the decision to acquire R&D expertise from external firms or
              to develop R&D expertise internally. The following guidelines can be used to help make
              this decision:

              1.  If the rate of technical progress is slow, the rate of market growth is moderate, and
                  there are significant barriers to possible new entrants, then in-house R&D is the
                  preferred solution. The reason is that R&D, if successful, will result in a temporary
                  product or process monopoly that the company can exploit.
              2.  If technology is changing rapidly and the market is growing slowly, then a major
                  effort in R&D may be very risky, because it may lead to the development of an
                  ultimately obsolete technology or one for which there is no market.
              3.  If technology is changing slowly but the market is growing quickly, there
                  generally is not enough time for in-house development. The prescribed approach
                  is to obtain R&D expertise on an exclusive or nonexclusive basis from an outside
                  firm.
              4.  If both technical progress and market growth are fast, R&D expertise should be
                  obtained through acquisition of a well-established firm in the industry. 16
                 There are at least three major R&D approaches for implementing strategies. The first
              strategy is to be the first firm to market new technological products. This is a glamorous
              and exciting strategy but also a dangerous one. Firms such as 3M and General Electric
              have been successful with this approach, but many other pioneering firms have fallen, with
              rival firms seizing the initiative.
                 A second R&D approach is to be an innovative imitator of successful products, thus
              minimizing the risks and costs of start-up. This approach entails allowing a pioneer firm to
              develop the first version of the new product and to demonstrate that a market exists. Then,
              laggard firms develop a similar product. This strategy requires excellent R&D personnel
              and an excellent marketing department.
                 A third R&D strategy is to be a low-cost producer by mass-producing products simi-
              lar to but less expensive than products recently introduced. As a new product is accepted
              by customers, price becomes increasingly important in the buying decision. Also, mass
              marketing replaces personal selling as the dominant selling strategy. This R&D strategy,
              requires substantial investment in plant and equipment but fewer expenditures in R&D
              than the two approaches described previously.
                 R&D activities among U.S. firms need to be more closely aligned to business
              objectives. There needs to be expanded communication between R&D managers and
              strategists. Corporations are experimenting with various methods to achieve this
              improved communication climate, including different roles and reporting arrangements
              for managers and new methods to reduce the time it takes research ideas to become
              reality.
                 Perhaps the most current trend in R&D management has been lifting the veil of
              secrecy whereby firms, even major competitors, are joining forces to develop new prod-
              ucts. Collaboration is on the rise due to new competitive pressures, rising research costs,
              increasing regulatory issues, and accelerated product development schedules. Companies
              not only are working more closely with each other on R&D, but they are also turning to
              consortia at universities for their R&D needs. More than 600 research consortia are now in
              operation in the United States. Lifting of R&D secrecy among many firms through collab-
              oration has allowed the marketing of new technologies and products even before they are
              available for sale. For example, some firms are collaborating on the efficient design of
              solar panels to power homes and businesses.



              Management Information Systems (MIS) Issues

              Firms that gather, assimilate, and evaluate external and internal information most effec-
              tively are gaining competitive advantages over other firms. Having an effective
              management information system (MIS) may be the most important factor in differentiating
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