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Business Plan Strategy
for Research and Development

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The market should be analyzed to determine the factors which affect your customers and their purchasing habits . If factors other than the price of the product influence the buying decision research and development work is probably necessary. This R&D effort can range from tweaking or adding features to the existing product to completely redesigning next generation replacements or totally different products.

Also if the business is operating in a highly competitive market it may be more likely that an R&D plan will be required. The level of competition suggests potential slight variations or updates to the basic item. The beneficial gradation favoring competitors could be reduced or eliminated by developmental expenditures.

If the company operates in a fast-changing or high tech industry - research and development is also more likely . Just keeping up with the latest versions may be a routine mandatory step to remain competitive. It also hints at the need for medium and long range research and development strategies if a longer term presence is desired.

On the other hand, if the firm exists in a stable environment in which new products or product enhancements are a primary determining factor on purchasing behavior - a formal R&D program may be of secondary importance.

The Research and Development Strategy for a business plan needs to address two major questions:

  • What are the critical products, technologies or areas where the company must maintain or expand a competitive edge to remain in the market long term?

  • What investments are needed to secure this competitive edge considering the market, trends, the competition and the operating environment of the business?

Quality Considerations
of Research and Development

Certain industries are regulated or closely monitored by the government or some other entity for compliance to quality regulations or standards . These include pharmaceuticals, food, automobiles and components, utilities and aeronautics.

A certain amount of R&D may be necessary to meet the tightening of standards, such as the car industry's miles per gallon requirements. Safety standards might be of paramount importance to airlines with regard to maintenance due to the high costs of not using state of the art techniques. Tens of millions of dollars are in jeopardy due to lawsuits arising from the failure to keep up with what is currently used by the industry in general - not to mention the negative publicity if a major incident occurs.

Or in the auto business - suppliers have to maintain ISO9000 or similar standards just to stay in the business.

Research and development strategy
must take your business into the future



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