wider economic

• What does R&D stand for?

  Research and Development
• What is the purpose of R&D?

  To improve goods, services, and production methods
• How does a firm achieve competitive advantage?

  By having better products than competitors
• What are the ways a firm can gain competitive advantage?

  Price, quality, cost, or niche market
• What is a cost competitive advantage?

  Lowering average costs to create value
• What might a firm use to maintain a cost competitive advantage?

  Skilled workforce or effective technology
• Why is it hard to maintain a cost competitive advantage?

  Firms need to offer additional benefits
• What can R&D help increase for a firm?

  Market power
• How does R&D contribute to brand loyalty?

  By differentiating products from rivals
• What impact does technological change have on production?

  Improves efficiency and lowers production costs
• What has happened to mobile phone production costs?

  They have become cheaper to produce
• What is an example of market destruction due to technological change?

  VHS tapes replaced by DVDs and downloads
• What role do SMEs play in the market?

  Create jobs and stimulate innovation
• What is 'creative destruction' according to Schumpeter?

  New entrepreneurs challenge existing firms
• What does product innovation involve?

  Small changes in performance and features
• What does process innovation improve?

  The efficiency of production methods
• How can R&D contribute to economic growth?

  By increasing GDP and lowering unemployment
• What is a potential disadvantage of R&D funding?

  Opportunity cost to the government
• How might subsidies affect firms?

  They could become inefficient without incentives
• What does the product life cycle illustrate?

  The stages in the life of products
• What happens during the development and growth stages of the product life cycle?

  Sales and revenues are increasing
• What must a firm decide during the decline stage of a product?

  Whether to use an extension strategy or remove it
• What are extension strategies aimed at?

  Lengthening the useful life of a product
• What marketing techniques can improve sales?

  Advertising, packaging, pricing, and adding value
• What is an example of a brand that continuously improves its products?

  Microsoft
• What are the key benefits of R&D for firms?

  • Improves goods and services
  • Introduces new products
  • Enhances production methods
  • Increases market power
  • Creates brand loyalty
• What are the stages of the product life cycle?

  1. Development
  2. Growth
  3. Maturity
  4. Decline
• What are common extension strategies for products?

  • Increased advertising
  • Changing packaging
  • Adjusting pricing
  • Adding features or value