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Value Drivers of Intangible Assets
Author: Jennifer BurnsThe traditional industrial production factors that are based on financial capital and manual work no longer can be regarded as the major creators of the economic value of a company. The intangible potential for the future that takes form of experienced workers and productive business relations with suppliers, customers, and partners is now the major driver of a companys economic value. Going even further then this, in modern dynamic and global environment, intangible assets signify the ability of a company to innovate and create value in the long run. The reason for this is rooted in the economic shift from production to service economy as well as to increasing value of intellectual property. The global trend towards outsourcing allows companies to allocate their production resources in geographic areas where the labor is highly skilled, whereas the cost of this labor is relatively low.
Thus, companies do not consider the cost principle only, but the scope of their evaluation includes such intangible assets as experience and personal skills of workers. Another key issue is the focus of companies on organic growth. The shift signifies the increasing interest of companies in the notions that can stimulate growth in the long run. Thus, the focus is shifted to such intangible assets as marketing and innovative competence, since intangible assets signify the ability of a company to innovate and grow. Consequently, the share of intangible assets in companys market value not only doubled within the last decade, but the gap between the book and market value of a company will continue to increase. Thus, there is a distinct need to include intangible assets into the financial reporting.
Article Source: http://www.articlesbase.com/strategic-planning-articles/value-drivers-of-intangible-assets-105684.html
About the Author:Jennifer Burns is a professional freelance academic writer at Custom-Writing.org, essay service. Jennifer specializes in academic paper and paper proofreading.
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Keywords:
intangible value assets companies company