In general, technology leverage will be low when the influence of raw material and distribution costs and economic growth is high. Discuss some of the strategic pressures on R;D. Scholefield developed a model using the concept of technology leverage. This is the case for the financial services industry.
This will provide a guide to what a firm in a particular industry probably an annual budgetary basis. Many companies now report R;D expenditure in their annual reports. Other companies spend very little on R;D but huge amounts on sales and marketing.
The management of research and development needs to be fully integrated with the strategic management process of the business. Question 7 What is meant by technology leverage?
It is unusual for unlimited funds o be available, and hence business functions usually compete with other departments for funds. A great deal depends on the culture of the organisation and the industry within which it is operating see Chapters 3 and 6.
In smaller organisations the activities are less diverse and may include only a few of these operations. In many mature and established industries, the cost of raw materials is much more of an influence on the competitive performance of the business than are technology developments.
Pilkington, for example, spends proportionally large sums on R;D -many say too much — especially when one considers its more recent performance Financial Times, The growth of scientific and technological areas of interest to the firm pressurises research management to fund a wider number of areas, represented by the upward curve.
High-volume, bulk commodity products would fall within this scenario. What should be the level of expenditure on R;D for a firm? This will enhance and support the products that marketing and sales offer and provide the company with a technical body of knowledge that can be used for future development.
One of the most useful guides is to look at industry average expenditure. For a while it seemed that technology was capable of almost anything.
For example,the price paid for commodities like coffee, cocoa and sugar can dramatically influence profits in many food industries. To help put these activities in context, Figure 9.
In virtually all R;D functions there is a trade-off between concentrating resources in the pursuit of a strategic knowledge competence and spreading resources over a wider area to allow for the building of a more general knowledge base.Tutorial 5 Prebared by T.
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