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CS Professional · Strategic Management and Corporate Finance · Business Policy and Formulation of Functional Strategy

A pharmaceutical company allocates funds to R&D only to imitate and quickly launch generic versions of drugs first introduced by competitors, rather than pioneering new molecules. Which R&D strategy is the company following?

The company follows a defensive, or follower, R&D strategy. It lets rivals pioneer new drugs and then imitates them quickly with generic versions, instead of investing to be first to market, which is the hallmark of an offensive R&D strategy.

  1. AOffensive (first-to-market) R&D strategy
  2. BDefensive (follower or imitative) R&D strategyCorrect
  3. CProcess-improvement-only R&D strategy
  4. DBasic research strategy

Explanation

A firm that waits for competitors to innovate and then copies or improves on the product follows a defensive (follower) R&D strategy. An offensive strategy would aim to be the first to launch new products. The company in the case is not pioneering new molecules, so offensive is wrong.

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