Research and development practice questions.

A pharmaceutical firm files a patent on a newly developed drug. Outline the main benefit this patent provides to the firm.

• It permanently prevents any competitor from ever producing a similar drug
• It grants exclusive rights to exploit the invention and recoup R&D costs
• It guarantees the drug will be commercially successful in the market
• It removes the firm's obligation to conduct clinical safety trials

Answer: It grants exclusive rights to exploit the invention and recoup R&D costs

A patent gives time-limited legal protection (typically ~20 years) so the innovator can earn returns on costly R&D before competitors imitate; it is neither permanent nor a guarantee of success.

Which of the following is the best example of a disruptive innovation?

• Adding a slightly larger screen to next year's smartphone model
• Streaming services replacing the traditional DVD-rental business model
• Releasing an existing chocolate bar in a new flavour
• Improving the fuel efficiency of an existing car engine by 3%

Answer: Streaming services replacing the traditional DVD-rental business model

Disruptive innovation creates a new market or value network that displaces established firms and products, as streaming did to DVD rental; the others are minor incremental improvements to existing offerings.

Explain why R&D spending is often concentrated in industries such as pharmaceuticals, aerospace and technology.

• These industries face no competition, so they can afford to waste money
• These industries depend on rapid innovation to stay competitive
• Governments legally require a fixed R&D budget in every industry
• These products never need improvement once launched

Answer: These industries depend on rapid innovation to stay competitive

High-tech, fast-moving sectors depend on continuous innovation to differentiate products and sustain competitive advantage, justifying large R&D budgets relative to industries with stable, mature products.

A business protects the confidential recipe of its beverage rather than patenting it. Determine the main reason a firm may prefer a trade secret over a patent.

• A trade secret is cheaper to register with the government each year
• A patent is disclosed and expires; a trade secret can last indefinitely
• A trade secret automatically prevents employees from ever leaving the firm
• A patent offers no legal protection at all

Answer: A patent is disclosed and expires; a trade secret can last indefinitely

Patents require public disclosure and lapse after a fixed term; a trade secret has no expiry and is never revealed, so firms with recipes or processes hard to reverse-engineer often prefer secrecy.

Which intellectual property protection is most appropriate for a firm's distinctive brand name and logo?

• Patent
• Copyright
• Trademark
• Trade secret

Answer: Trademark

Trademarks protect brand identifiers such as names, logos and slogans; patents cover inventions, copyright covers original creative works, and trade secrets cover confidential business information.

Which of the following shows how strong R&D activity can support a firm's sustainability?

• By ignoring environmental regulations to cut production costs
• By developing energy-efficient products and cleaner processes
• By increasing packaging waste to make products look larger
• By abandoning innovation to keep older, cheaper technologies

Answer: By developing energy-efficient products and cleaner processes

R&D drives eco-innovation, such as lower-emission designs and resource-efficient processes, directly linking innovation to the sustainability concept central to the syllabus.