How does globalization affect product development?
The increase in technological innovation has shortened product life cycles. Technological advances are both creative and destructive. An innovation can make a product obsolete (out of date) overnight, but it can also make a host of new products possible. The product must now satisfy needs of consumers in a cost-effective manner → connection between R&D, marketing, and manufacturing.
- Location of R&D
The rate of new-product development seems to be greater in countries where more money is spent on basic and applied research and development. New technologies are discovered and then commercialized. If the underlying demand is strong and consumers are wealthy, potential markets for new products are constantly being created. Finally, with intense competition innovation is stimulated as the firms try to beat their competitors and reap potentially enormous first-mover advantages that result from successful innovation.
- Integrating R&D, marketing, and production
New-product development has a high failure rate and the reason could often be development of technology for which demand is limited, a failure to properly commercialize promising technology and the inability to manufacture a new product cost effectively.
Firms can reduce such mistakes by insisting on tight cross-functional coordination and integration among three core functions involved in the development of new products; R&D, marketing, and production. This can help a company ensure that:
1. Product development projects are driven by customer needs.
2. New products are designed for ease of manufacture.
3. Development costs are kept in check.
4. Time to market is minimized.
- Cross-functional teams
The objective is to take a product development project from the initial concept development to market introduction. The team must be lead by a project manager and should be composed of at least one member from each key function. Also, the team should physically be in one location if possible.
- Building global R&D capabilities
Establishment of a global network of R&D centers → fundamental research is undertaken at basic research centers around the globe, located in regions or cities where valuable scientific knowledge is being created and where there is a pool of skilled labor existing.