Research and Development and Financial Performance of UK Manufacturing Firms

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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

business.

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 ...

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...their rivals, and provide very strong after-sales service to

customers. The deciding factor in whether or not R & D may improve the

financial performance of a UK manufacturing company could be many

things, which depends on the type of product they are producing, its

geographical location, the state of the economy, the firms flexibility

to produce new products, the skills and funding put into the R & D

process, the Corporate Culture, whether it encourages innovation and

creativity, or whether it promotes more traditional tayloristic

principles. Finally, the short term and long term objectives of the

firm also affect its financial performance, whether its plans are to

develop new products with short life cycles to continually adapt to

the changes in consumer needs, or whether to economize and focus on

long term survival.

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