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Decision Analysis and Strategic Management of Research and Development: A comparison between applications in electronics and ethical pharmaceuticals
Author(s) -
Thomas Howard
Publication year - 1985
Publication title -
randd management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.253
H-Index - 102
eISSN - 1467-9310
pISSN - 0033-6807
DOI - 10.1111/j.1467-9310.1985.tb00027.x
Subject(s) - cash flow , relation (database) , electronics , discounted cash flow , discounting , preference , process (computing) , function (biology) , business , product (mathematics) , computer science , risk analysis (engineering) , economics , engineering , finance , mathematics , geometry , database , evolutionary biology , electrical engineering , biology , microeconomics , operating system
The process of strategic management of research and development is contrasted through the application of decision analysis in the evaluation of R&D projects—one in an electronics company, and one in a pharmaceutical company. Issues considered include the different character of applied R&D in each industry resulting from, for example, the shorter product lifecycles that apply to the electronics industry compared to the much longer lifecycles in the pharmaceutical industry. The difference of time horizon between the two industries suggests that different decision criteria might be adopted in project evaluation. Decision‐makers in both industries express a need for flexible decision and performance criteria in relation to strategy dialogue about alternative project‐options. Implementation problems encountered include: long term discounting, the nature of the preference function for long‐term cash flow streams, issues in making assessments of uncertainty in relation to long‐term future time horizons, and the management of research portfolios.