Many analysts believe that intellectual capital is at the heart of corporate value. It is the foundation for leading market positions and continued profitability. Intellectual property companies are held by the company's intellectual property [IP], including patents, trademarks, copyrights and trade secrets, as well as intangible assets that include at least reputation or goodwill, brand recognition, product design and market positioning.
The value of a company is closely related to the commercialization of products and solutions that are owned or licensed in the markets it serves, and the company's final position relative to its competitors in its market space. The company's growth prospects in its market segment often depend on product positioning, the lack of protection provided by its patent portfolio and brand recognition.
The strategic value of the company's products and underlying intellectual property is supported by strong brand and reputation assets that are relevant to the competitive environment in which it may operate. Therefore, the cornerstone of corporate value is the valuable intellectual capital package owned or licensed by the company, at least for patents, trademarks, copyrights, trade secrets, reputation, brand and market positioning.
The market value of intellectual capital is primarily equivalent to the present value of the future economic benefits of ownership or license in the owner's or licensee's operating environment. In other words, market value is driven by the expected cash income generated by the owner or licensee's future use of intellectual capital. Alternatively, market value may be driven by potential buyers [eg, system integrators or manufacturers] who may leak IP-related products, reputation, branding, and product positioning to help ensure greater market share. The expected cash income that potential buyers can achieve can represent revenue generated directly from the sale of IP-related products, systems, and solutions, or further include revenues indirectly derived from these products, systems, and solutions as a result of their merger. A larger business solution sold in the buyer's market space.
The key factors driving corporate value are the expected future income amount, the likelihood of achieving revenue, and the life and patterns of expected income streams. All of these factors are highly influenced by the company's intellectual capital, including patents, trademarks, copyrights, trade secrets, manufacturing techniques, product designs, drawings, specifications, supplier lists, product reliability, and related operational importance solutions and related cash flow.
Intellectual property, commercial tracking, market space product acceptance, brand recognition, and the low volatility of revenue or royalties have all had a significant impact on value. Clearly, the formation, protection and management of intellectual capital is critical to the successful promotion and protection of corporate value and must be the focus of senior corporate executives. Business-focused IP strategies and effective processes to capture corporate innovation and create intellectual property are key starting points.
Orignal From: Intellectual Capital - the foundation of corporate value
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