Evaluate the importance of Research and Development (R&D) to PAIR's future success.

Mark scheme

Marking points from the official mark scheme (May/June 2025). The mark or mark type is shown in brackets.

1. A01 Knowledge and understanding
2. [1] Definition of R&D: The scientific research and technical development of new processes and products.
3. Benefit of R&D
4. [1] Increased sales.
5. [1] Competitive advantage.
6. [1] Greater control over prices.
7. Limitations of R&D
8. [1] Risk of failure.
9. [1] Cost.
10. [1] Impact on cash flow.
11. [1] Time taken to develop new products.
12. AO2 Application
13. Limited application, APP applies knowledge to PAIR once.
14. Developed application, APP + APP applies knowledge to PAIR twice.
15. [1] Contribution of KB1 series to growth of PAIR.
16. [1] Cost: 7% of revenue is $6.65m in 2024.
17. [1] New market opportunities from Delbot in hospitality industry.
18. [1] Competitive market for cleaning robots.
19. [1] Linking R&D to liquidity problems indicated by current ratio.
20. [1] PAIR's R&D spending is relatively more than the industry average.
21. AO3 Analysis
22. Limited analysis AN - candidate shows one link in the chain of analysis.
23. Developed analysis L2 AN - candidate shows two or more links in the chain of analysis.
24. [1] Development of new products opens up new market opportunities which may lead to an increase in sales AN and therefore increase profit L2 AN
25. [1] R&D can improve products sold by PAIR thus giving the business a competitive edge AN and therefore increase sales L2 AN
26. [1] R&D can improve brand image of PAIR and therefore justify an increased leasing charge to customers AN potentially resulting in higher profit L2 AN
27. [1] The short run impact of R&D is to cause cash outflows which will reduce PAIR's liquidity AN requiring financing which may cause an increase in gearing and risk L2 AN
28. AO4 Evaluation
29. Identification and/or development of factors that the success of R&D will depend on:
30. [1] Understanding of needs of customers.
31. [1] Marketing of new products to customers.
32. [1] Extent to which R&D results in PAIR being able to differentiate itself from competitors.
33. [1] Time taken to bring new products to market due to short life cycle of technology products.
34. [1] Ability of PAIR to finance the expenditure without causing liquidity problems.
35. [1] Competitor actions.
36. [1] Extent to which PAIR can protect its intellectual property with patents.
37. Identification and/or development of other influences on success
38. [1] The state of the economy.
39. [1] Financial health of the business.
40. [1] Supported judgement as to importance of R&D