Welcome back. We've just finished with marketing and sales budget discussion. Now, we start the sessions about research and development budget. R&D budget is very interesting because there are many different things to analyze. R&D is related to long-run goals, competition, judgment, and financial capabilities. Budgeting R&D leads to discussions about decisions such as which products and services to receive funding, which products should have green light, which business units to receive R&D resources. These are examples of what subjects you may have to discuss when developing an R&D budgeting. Before going through the topics of R&D budgeting, let's talk about some major topics relate to it. First, R&D is a key driver for the company because it's related to the future revenues. Companies that don't invest in R&D will eventually have some impact on their competitiveness. Second, we tend to think R&D is mostly connected to new products, new services. However, a lot of R&D investments go through processes and the outcomes of these investments may not be visible for most of the people. Anyway, processes are directly connected to production, manufacturing, and service delivery. So, we can see the connection with the former discussions regarding production and manufacturing budget. Third, there is a time lapse between revenue and the budgeted expenses the company did in the past and those expenses were planned in the R&D budget. So, the point here is that we should be aware of the connection between today's profits and yesterday's R&D budget. Don't overlook disconnection. Otherwise, you tend to be too short-time oriented in R&D budget. Fourth, typically, in R&D budgeting process, a central question emerges. What would be a recommended level of R&D funding? Well, there is no direct answer to this question because many factors have influence. For example, risk in development. Remember, the success is not a certainty. The other factor could be the objective of the company regarding strategic positioning or product or service lifecycle. Market risk; the R&D project may be a success but market success is another story. Technological status of the industry; the technology may still present some uncertainty. Each of these issues can be drilled down to more specific factors. For this course purpose, we won't go into such depth. We'll briefly discuss these issues in this course because you probably have to address them when developing the R&D budget and those who direct work in R&D area will be concentrated in the program. Well, this is it for an introduction video on R&D budget. In the next video, we will go into more details. See you.