The Impact of Short Term Investing / Financing on New Product Development
I am currently carrying out an investigation on the impact of short term financing and short term capital investment.
B2B industrial markets are facing constant pressure for product innovation. The fast paced advances in technology over the past decade have accelerated the innovation process and most companies are under pressure. On one hand they have this market pressure and on the other hand they face the dilemma of risk averse investors who can be fearful of these fast paced advances in technology and unwilling to invest on a long term basis. As a result, investments are being granted on shorter terms, requiring returns on capital finance faster than the technology becoming obsolete, putting many investments at risk.
This realistic scenario is challenging the selection of projects to take to market, new product development and market launch strategy, and is pushing firms to change their attitude and decision making process related to these things.
B2B companies are also seeking to have a more well defined scope before initiating any investment; one that guarantees a return on investment in the short term through the involvement of customers. These customers at times may be used to partly finance product development whilst providing a reassurance of sales, shortening market acceptance and thus faster returns for amortisation of capital finance.
What are the implications of this scenario on the performance of the launched product, the internal dynamics within the firm, the managerial behaviour of different business functions, the customer relationships, market reputation, the role the skill of employees plays in the success of the product and market launch, the growing dilemmas for more effective and thus costly marketing eroding available financing, the capacity of sustaining current technology portfolio on the market and the risk of being unable to sustain newly launched products from a capacity and financing standpoint.
I would appreciate your views and opinions on this matter. Specifically how do you think this way of financing affects the decision making and strategy of related business functions? What risks and threats do you think this way of financing presents to the organisation and such investors?
Thank you for your participation and contribution.