Research and Development

Management (PBSA 1133)

Abdul Halim bin Johar @ Mazahar

PBS142008

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Question 1

a) Please refer to the attached Ms Project Documents

b) Please refer to the attached Ms Project Documents
c) The project duration is 1824 days. Please refer to the attached Ms Project Documents
d) Activities that are on critical path are:
a. R& D Management
b. Milestone: Completion of proposal for approval
c. Appointment of project team
d. Procurement of materials
e. Training on equipment and software
f. Data collections
g. Data analysis
h. Data interpretation
i. Report and Documentation
j. Milestone: Completion of research project
k. Viability of evaluation
l. Risk evaluation
m. Protecting IP
n. Communication Result
o. Milestone: Completion of product development
p. Selection of business model
q. Estimating development cost
r. Milestone: Completion of product development
s. Milestone: Completion of R&D Management

Please find the attached Network Diagram for reference. Critical path is shown in the
connecting RED box.

Question 2:

A. US-based retailer Walmart is setting up a research centre in Bangalore, India to

develop the technologies and solutions for its global business e-commerce business.
Walmartlab as it is called will hire up to 100 developers. The focus is on technologies
and solutions that are in the areas of machine learning, social analytics and big data
infrastructures. The new technologies are designed to eliminate the boundaries
between brick-and-mortar stores and its online store.

Bangalore being the technological hub of India, provides the right environment for
any technology companies to innovate. Indian educational institutions were offering
good courses in computer engineering and the country was creating computer

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 professionals on a par with the rest of the world. Companies can have access to these
talent pool that can communicate in English well, thus making it easier to build a
team. Wages can be considered quite low in comparison to the one paid in US or
Europe, thus reducing the cost of product development.

B. Walmart is the largest retailer company in the world, with 200 million visits to its
store across 28 countries. In order to stay competitive in the market, they would need
to innovate and come out with products that can appeal to their consumers. Bangalore
provides the right kind of environment which is abundance of talent at a cheaper cost.
Any cost saving it can gather from its R&D can be translated into a cheaper product
cost, making them having the competitive advantage when it comes to retail market.

C. Initially, Walmart entered the partnership in hopes of achieving liberalization of

market in India. This is however not happening as expected by the management of
Walmart. It reflects back with some of their international market foray such as
Germany and Japan, whereby they are having difficulty to achieve the same result that
they achieved in the US. Having entered into international market is not an easy feat.
It requires the additional finesse and charm to tackle foreign authority. No country is
the same and each has their own requirements and culture that most corporate need to
anticipate. That is why in the first place, Walmart enter into partnership with Bharti
with the hope of minimizing this risk. However, their practice was question, as there
was a probe by Indian government that question the legality of investment made by
Walmart into Bharti.

D. Associated Risk
a. Setting up R&D Centre in Bangalore
i. Project risk – With any IT project, there always a risk of project
overrun and over budget. This risk can be minimized with adopting the
right project management framework such as Prince2 or PMP
ii. Human capital risk – While Bangalore may provide the kind of talent
pool, it may not be in sync to the value that Walmart is preaching.
There is a need to have a local partner that can understand Walmart
values, and translate that into the recruitment process, so only right
candidate can be hired.

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 b. Walmart-Bhatia partnership
i. Political and economic risk – Political climate can affect foreign
investment. While India can be considered as one of the largest
democratic countries in the world, it does have its own share of
political turmoil. The recent demonetization exercises undertaken
shows that the government is not reluctant to take drastic measures that
can greatly impact the economy. While the intention may be good, but
it affected the economy that people do not have the time to react to the
policy change. Income gap is also an issue in India, where bulk of the
economy is owned by a small majority of population. While the
government is seriously trying to address this gap, however, the
success is not there yet. The tension rise between India and Pakistan is
also a concern. There have been various incidents of terrorist attacks as
well as direct clashes between two countries that can heightened this
risk of operating in the country.

E. Walmart is a big retailer in the US. Its presence is unrivalled in the US, where their
dominance is very much envied. However, despite of their commanding lead in the
US, they have not been very successful in the market such as Germany, Japan and
India. This may due to the fact that they are bringing their own culture into the
country that they are trying to penetrate. The case mentioned about retailing is all
about local experience. While the effort to partner with Bharti may be one of the
reason how they would like to minimize this risk of failure and to have a local brand a
part of their offering, the market liberalization is not there, which compounded the
problem that they are facing. India retail market is still subject to regulation on
foreign ownership. Culturally as well, the Indian market is very much different from
US market. It can be quite hard for Walmart to appeal to local customer tastes, which
they have experienced in China. The American retailer has struggled to understand
Chinese consumers and Chinese culture. Chinese consumers, unlike those in the U.S.,
differ widely from city to city in their needs. Walmart therefore struggles to find the
right product mix to offer in the 117 cities and 25 provinces in which it operates. This
makes it challenging to sell a core set of products nationwide. Walmart has also
suffered from troubled relationships with politicians—both local and national. The
company has had its fair share of run-ins with the law. On one occasion the Chinese

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 government fined Walmart for violating local and national laws and even forced it to
close stores temporarily for purported product violations.

Therefore, in order to increase the success rate when venturing internationally, social
and political considerations would need to be given higher priority.

Question 3:

A. The decision for Coca Cola to stick to trade secret rather than parent was made in
1880. It needed desperately to protect what it had just developed; yet patent protection
would only provide security for 17 years. This is the number that defined the statutory
period of protection for any patent filed in the US. Thus, they have decided to stick to
trade secret, which is a plan, process, formula, or any other valuable information not
patented but which gives its possessor a competitive trade advantage as long as it is
kept secret. This decision is made due to the fact that with trade secret protection
period can be indefinite period of time. It is also inexpensive and easy to obtain. There
will be no disclosure is required into the public. In term of scope, there is no
limitation applies to the proprietary information. Generally, trade secret is enforceable
throughout the world and it can be license, thus the owner would be able to collect
royalties.

Trade secret however does have its own disadvantage. Coca cola would really need to
ensure the information be kept secret, to ensure it will not be leaked to external party.
While certainly they can bring to authority that their trade secret has been unlawfully
release into the public domain, this protection will not be useful once the information
is release to the domain. Any attempt after that to enforce patent will no longer be
possible. And the external party would be able to patent those information, once they
get their hand on it. As extra caution is required to ensure accidental leakage into the
public is not happening, its add up to the cost of ensuring this kind of risk will not
happen.

After weighing into all these factors, Coca Cola decided to proceed with keeping the
recipe a trade secret rather than filing a patent. This strategy has been quite successful,
as they have been enjoying the number one position carbonated soft drink market with
a revenue that reached USD48billion in 2012. Had Coca-Cola instead chosen to

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 obtain patent protection back in 1880, the recipe would have been disclosed a mere 17
years later, rather than almost 100 years later.

B. Below is the strength and weakness of patent in protecting R&D Invention

a. Strength
i. Patent provides some kind of insurance for the organization to
minimize their risk during the process of product or service
development. It will prevent others from copying their invention, thus
providing the advantage when the product is being introduced to the
public.
ii. Having the assurance that the product will not be copied by the
competitors will improve the financial standing of the company in the
eyes of investors. For publicly traded company or company that is
trying to access the capital market, patent is considered to be an
important asset. Investor would weight into these patents before
making an investment decision or continue with providing the right
fund for the company to continue operate.
iii. Patents as an asset can be sold like any other asset. One example is
Blackberry. When Blackberry was facing stiff competitions from the
emergence of iOS and Android based phone, Blackberry has to put up
some of their patents on the market, in order to get money to cover
their operating cost.
b. Weakness
i. Like in the previous Coca Cola case, patent has a limited duration in
which then the patent will expire. Once the patent is expired, the
company is no longer having the advantage, and competitors may start
to introduce functionality that was patented previously.
ii. When company is patenting their idea, this application will be made
available to the public for scrutiny. While it may be disclosed fully, the
exposure will allow competitors to understand to certain extend your
product development direction, thus making sure that their product
development would take into account the new direction set by the
competitors.
iii. Protection can only be applicable to the country where the patents is
being filed. Therefore, patent that is filed in US may not be applicable
in Malaysian market. Companies with a big budget would normally try
to file their patent into many countries that they feel they may have the

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 advantage. Certainly, this will be out of reach of small organization. It
created some kind of gap among companies that is competing.
iv. As companies require to ensure their patent is protected across various
geographical location, cost of management of patent can escalate.

Telecommunication is one of the example where the discussion about patent has
create quite a stir. The recent spat between Apple and Samsung, with both parties are
countersuing each other over patent issues has shown how patent is becoming a tool
that organization used at extra length to ensure that have the edge over their
competitor.

Apple iPhone can be considered a technological wonder when it was first introduced.
Nowadays, it is jam packed with various functionalities that were unheard off
previously. It is now basically can be used for all sort of functionalities, from GPS to
Internet access and various other functions. Nokia is one of the victim of Apple
iPhone when iPhone started to gobble Nokia market share, in which resulted their
eventual demise at the hand of Microsoft. Nokia has been claiming that whatever
features that Apple provided now will not be possible without its invention, which
were made many years ago and after billion dollars of R&D budget. And Apple has
been paying Nokia royalties over some of these patents. However, some of these
patents is expiring by end of 2016. This is going to hit Nokia a lot, as it may give an
impact to their bottom line.