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Q.

Many reputed companies abroad spent nearly 10% of their revenue (quite significant) towards Research & Development. Why?

Asked by Good Citizen, 07 Jun '10 03:30 pm
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Answers (4)

 
1.

(1)Science is the integral part of life in Europe and America. Due to this scientific spirit, we are enjoying all the modern day comforts.
(2)Hence it is not surprising that companies there spend a large part of their budget on R&D to improve the existing products and develop the new ones.
(3)Further, competition today is so fierce that it is a survival game for all. It is either perform or perish situation. Before, the competition was mainly between Europe and Americans. However, today, Asia has joined them in almost all fields. Especially countries like South Korea, Japan, China, Singapore, Hong Kong and India are in no holds barred competition with the West in almost all fields. You must be aware that due to this competition, almost all major companies around the world have opened their R&D in India which has a great talent pool in addition to having the advantage of low cost. You can say that it is a sort of brain harvesting.
(4)You might have seen that every year mobile, ele ...more
Answered by Tony Fernandez, 07 Jun '10 05:05 pm

 
  
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2.

Customers taste changes day by day and therefore company need more creativity and greater market share which may fetch higher profit .The level of competition, production processes and methods are rapidly increasing. Therefore R&D is of special importance in the field of marketing where companies keep an eye on competitors and customers in order to keep pace with modern trends and analyze the needs, demands and desires of their customers. Therefore, Companies are forced to spend substantial fund on R&D from their revenue.
Answered by uv dabholkar, 07 Jun '10 03:49 pm

 
  
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3.

For any global player, spending on Rand D is big necessity to survive in an increasingly competitive market and retain the reputation the comapnies are enjoying. Without innovating the products, no manufacturer can hope to survive the onslaught of the competitors. So R and D is for product innovation using the latest cutting edge technology, with a view to cutting cost as well as to ensure a steady oprofit also. R and D spending can be termed as a survival tactics. Let us the Electronics industry, for example. The most changes in the shortest span ot time is seen best in this field. As, the former CEO of the Sony Corporation said in the early eighties, the Comapnies are making their own products obsolete to beat competition. The case in point is the Sony walkman.The first to buy the walkman as sson as it was launched by Sony, were the National Panasonic, Sharp and Hitachi..to dissect out and make an autopsy of the produc to see what they should sdo to improve on the model just relea ...more
Answered by thampy chacko, 07 Jun '10 04:44 pm

 
  
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4.

To develop new n affordable products.
Answered by Damodar Biswal, 07 Jun '10 04:10 pm

 
  
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