In: Accounting
Discuss using examples of how intangible assets can be used to create competitive advantage in firms. 400 words
When talking about intangible assets, it involves more of knowledge. World wide all industries are shifting from mere production to areas that involves skills and knowledge. For example service sector industries or even manufacturing industries invest a lot in research and development of their products all showing the importance of knowledge in companies.
Although it's hard to quantify intangible assets, they add a lot to value of companies nd give them a competitive edge in business. Intangible assets can include copyrights, patents, trademark, government license etc. They can also include business methodology, Goodwill and brand name which is important in these days of window shopping
To give examples on how intangible assets give competitive edge for firm, we can start with assets like patens and copyrights. They are mainly knowledge and skills of the firm, the inventions they make or they artwork they produce. Firm can safeguard their inventions using these tangible assets and stop their competitive firm from using them. This can save them from using their inventions for unauthorized commercial use by competitors.
Another set of intangible assets are Goodwill and brand name. A company's reputation is often measured by their Goodwill and brand recognition. They help companies to stay ahead of their competitors. A good brand image promotes sales, builds trust and attract loyal customers.
So to conclude with, having intangible assets definitely give firms a competitive edge because their products are safeguarded from usage by competitors atleast for a certain period in come cases