🔬 Research and Development (R&D)
Definition: R&D is the systematic investigation aimed at developing new products, improving existing products, or finding more efficient production methods.
Why invest in R&D?
- Develop innovative products that create competitive advantage
- Improve existing products to maintain market share
- Find more efficient production methods (lower costs)
- Patents create barriers to entry
- Essential in fast-changing industries (tech, pharmaceuticals)
Risks of R&D
- Very expensive with no guaranteed return
- Long time horizons — years before products reach market
- Competitors may innovate faster
- High failure rate
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