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Global Research & Development (R&D): Advantages & Role

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  • 0:03 Definition of Global R&D
  • 1:37 Advantages
  • 4:22 Role in the Global Economy
  • 4:59 Lesson Summary
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Lesson Transcript
Instructor: Elizabeth Wamicha

Elizabeth teaches undergraduate courses in Business and Information Technology for the last 7 years. She is currently on course to completing a Doctorate in Information Systems

This lesson provides a definition of the discipline of global research and development (R&D) and goes on to discuss its advantages and its role in the current global economy.

Definition of Global R&D

Global research and development is the discipline associated with designing research and development processes globally. This means that these processes span many countries, cultures, and languages. In most cases, the processes will also cut across multiple time zones. Therefore, managing these R&D processes requires a significant amount of planning and coordination. However, the benefits that can be accrued from well-organized global research and development initiatives are enormous and can significantly enable organizations to improve their innovation strategies.

In the industrial sector, R&D has been globalized for a long time. In the 1950s, IBM spearheaded these efforts by developing a research center in Europe. By the 1990s, global R&D had become even more sophisticated with greater access to the local markets and to information technology infrastructure. At the moment, there is no clear strategy that organizations use to develop their global R&D plans.

Regardless, in order to develop robust global R&D operations, it is critical to train various stakeholders, such as managers, researchers and scientists, and engineers. Training can span building skills in the area of communication so that teams are better equipped to communicate across cultures. Some of the tasks that are performed in global R&D include the establishment of R&D centers, R&D-related project management, R&D performance measurement, open innovation, and technology transfer.

Advantages

Let's talk about some advantages that organizations can accrue with the implementation of global R&D:

Cost Reduction

The business landscape has changed since the last century. This is mainly due to an exponential increase in global trade. In order for the current companies to remain competitive, they are forced to increase their spending on R&D. At the same time, R&D is expensive and large investments are required to implement it, especially if most of the R&D functions are carried out in one physical location. Globalization has encouraged companies to reduce the costs incurred in R&D by setting up R&D centers in strategic countries. The availability of highly qualified personnel in these strategic locations has made R&D diversification even more appealing and cost effective.

Market Requirements

Current markets made demands for products that are suited to their needs as closely as possible. For example, in India, customers in search of a mobile phone would want one that has Indian script. There is a much greater need now to localize and customize products to fit market demands. Companies such as Nokia have since developed a number of R&D centers in the U.S. to enable them to respond better and more efficiently to customers based in the U.S.

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