An essential component of competitive strategy is recognizing the role that Research and Development plays in the competitive success of a firm, and acting to ensure that technology decisions and policies contribute to the firm’s competitive advantage. A firm, which has a strong R&D programme, can influence all these factors positively and contribute to the competitive advantage of a firm. Competitive advantage views R&D activities as a way of improving a process, thus reducing costs, or providing customers with a best-of-class benefit.

The selection of R&D projects is the most important of all the R&D management activities. Unless an R&D department is working on the right R&D projects, all its efforts could come to naught. A R&D strategy is important because it helps an R&D organization select projects in terms of a broader outlook rather than just bit by bit.

When a R&D department has an overall strategy and has some strategic goals, it will more likely select projects that are in tune with its technical strengths, the capabilities of the company, and the demands of the marketplace. In order to develop a R&D strategy, certain prerequisites must be in place such as belief in R&D strategy as a tool to solve problems, establishing a dedicated strategic planning group within the R&D department and the top management commitment’s to the R&D strategy.

Some companies in India have made significant progress in developing a R&D strategy. Most companies, however, have barely started developing a R&D strategy. The immediate challenge facing most firms, therefore, has to do with first establishing the preconditions required for developing an R&D strategy. After doing this, they will then be able to meaningfully deal with issues as to what the R&D priorities should be and how R&D resources should be allocated.