Research And Development And Financial Performance Of Uk Manufacturing Firms

1168 words - 5 pages

Research and Development and Financial Performance of UK Manufacturing Firms

UK manufacturing firms have many factors which influence their
financial performance. Research and Development could be a key factor
in determining a firms success, however it does not assure financial
improvement in all businesses due to the extensive variety of business
types. Research and Development can be defined as the scientific
investigation necessary to discover new products and the process of
bringing these products onto the market. A manufacturing firm, which
generally refers to a business that makes or processes raw or semi
processed materials into either a finished product or further
processed materials, by using large-scale mass production by means of
automation and production lines. Manufacturing firms tend to rely on
economies of scale to lower costs and allow bulk-buying benefits, from
this firms produce large volumes of products using specialised
machinery, which can then be sold at low prices to finance the

Research and Development can take many forms, for example, large
international pharmaceutical companies spend huge amounts of money on
Research and Development, this is because pharmaceutical companies
rely heavily on new products which can be patented, and then used as a
competitive advantage that allows premium pricing and increased
profits. It is estimated that only about one product in the
pharmaceutical industry is commercialised for every ten which are
developed and test-marketed. Therefore, the company will have massive
Research and Development costs to recover when it actually launches a
new product, and it will probably take several years before it will
have broken-even and covered all the Research and development costs.
However, Research and Development can also be used by small shops and
retailers, by means of questionnaires, staff suggestion boxes,
feedback forms and market research etc.. This low amount of Research
and Development is typically normal, as small shops rely more on
customer service, niche markets, and reasonable quality and price

Research and Development can often be a very risky process, since much
money can be spent on ideas that will never be commercialised. In
product oriented firms, such as manufacturing companies have many
factors which affect their financial performance. Research and
Development is a useful way of improving profits, if there is
significant funding, to employ scientists and researchers to produce
and develop the most technically advanced products to date, which can
then be marketed and turned into cash cows or stars. Also Research and
Development could develop new methods to produce existing products, to
lower average costs. However this depends on the skill of the
scientists and researchers, because...

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