8/9/2019 Slides Courses 1&2

1/32

Understanding economic changeThe new normal?!

1stCourse

8/9/2019 Slides Courses 1&2

2/32

The secret to higher

GDPper person isworking smarter,

not harder.

8/9/2019 Slides Courses 1&2

3/32

What is different now, at present?!

intangible activities and realities, competences and jobs associated with them, exchanges and transactions they determine, value and wealth that they create

The new type of economy that is emerging is more abouta shift of mindset relating to building and extractingvalue.

inducedtransformationsin production andtrade

8/9/2019 Slides Courses 1&2

4/32

The intangible economy The bicycle dilemma

Easy to practice Difficult to explain

8/9/2019 Slides Courses 1&2

5/32

The central relationshipAgricultural economy

ManMan

--

NatureNature

Industrial economy

ManMan

--

MachinesMachines Intangible economy

ManMan--

Ideas/ImagesIdeas/Images

alue creation ! intangible content

8/9/2019 Slides Courses 1&2

6/32

Three dimensions

"upply# Intangible assets $ntermediate production factors used by businesses to generate

value added and create artifacts

%emand# Intangible artifacts &inal consumption products

Transformation process# "ervice activities ' intangibleactivities

(conomic system# Dematerialization logic )ew rules of#

business organi*ation

competition

valuation

8/9/2019 Slides Courses 1&2

7/32

%(+T(-$$/T$0) 01$2

The $ntangible (conomy

IntangibleAssets:3Patents3Licenses3Brands3Knowhow

3!or"orate c#lt#re3$#man ca"ital3%e"#tation3!lients

IntangibleActi&ities:3%esearch'De&elo"ment3Programming

Ad&ertising Intermediation To#rism !ons#lting (ntertainment !omm#nications

Artifacts: Pro)ects *oftware %e"orts Ads +inancial "rod#cts

To#rs *t#dies *hows, mo&ies Transmissions

8/9/2019 Slides Courses 1&2

8/32

$ntangible ssets

Wide recognition of importance in#! ggregate economic growth

! 2orporate performance and survival

4ersistent disagreements on#

! "cope and definition! aluation

8/9/2019 Slides Courses 1&2

9/32

ccounting definition#identifiable 5separable6 non3monetary sources of probable

future economic benefits to an entity that# lac7 physical substance, have been ac8uired or developed internally from identifiable

costs, have a finite life, have mar7et value apart from the entity, and are owned or controlled by the firm as a result of past

transactions or events.

+anagement definition#non3physical sources of value 5claims to future benefits6,

generated by innovation 5discovery6, uni8ue organi*ationaldesigns, or human resources practices

8/9/2019 Slides Courses 1&2

10/32

$ntangible ssets ccounting approach

..or management approach

Tangible assets Intangibleassets

Tangibleassets

Intangible assets

8/9/2019 Slides Courses 1&2

11/32

Taxonomy of $ntangiblessets

9rands! 4roduct

! 2ompany

$ntellectual 4roperty# patents, trademar7s, 7now3how

4ublishing rights

icenses :uman capital

2orporate culture

$nformation

-elationships with customers and suppliers

infotainment

8/9/2019 Slides Courses 1&2

12/32

$ntangible ssets Which scope and perimeter ?

Brands

IntellectualProperty

Human capital

Know-how

Corporate

culture Suppliers

PublishingRights

Licenses

Accountingdefinition

Firm perimeter

Clients

8/9/2019 Slides Courses 1&2

13/32

highl- heterogeneo#s3 between categories butalso within a given category

re&en#egenerating ca"acit-of an intangibleasset is much more#ncertainthan that of aphysical investment

diffic#lt to se"arate often interact with each other do not follow the classical "rogressi&ede"reciation r#les

raise the iss#e of ownershi"

8/9/2019 Slides Courses 1&2

14/32

8/9/2019 Slides Courses 1&2

15/32

$aluation3 business circumstances 3

2ompany sale, merger or ac8uisition;

"ale, purchase or licensing of separable

assets; awsuits involving $4 infringements;

Tax liability calculations;

2orporate alliances;

-

8/9/2019 Slides Courses 1&2

16/32

+ar7et 2apitali*ation methods 5+2+63 difference between acompany=s mar7et capitali*ation and its stoc7holders= e8uity asthe value of its intangible assets Tobin>s 8 ratio 3 stoc7 mar7et value of the firm divided by the

replacement cost of its assets; -eturn on ssets methods 5-06 3average pre3tax earnings of

a company for a period of time are divided by the averagetangible assets of the company. ( 3 adjusting the firm>s disclosed profit with charges

related to intangibles. 2hanges in ( provide an indication of

whether the firm>s intellectual capital is productive or not %iscounted 2ash &low 5%2&6 method3 determines the economic

value of an asset by loo7ing at its cash generating potential.

8/9/2019 Slides Courses 1&2

17/32

The originals created by authors, composers,

scientists, architects, engineers, designers, software

writers, film studios, orchestras etc. 3 intangibles thathave no physical dimensions or spatial co3ordinates of

their own and have to be recorded and stored on

physical media such as paper, films, tapes, dis7s etc.

8/9/2019 Slides Courses 1&2

18/32

entities# over which ownership rights can be established of economic value to theirowner

intangible 3 no physical dimensions or co3ordinates inspace may be used to produce, even mass produce, copies can be traded and re3traded in the same way as material

goods. can also be instantaneously transmitted electronically.

ownership may be transferredto another economic unit is often legally recogni*ed through acopyright or patent

8/9/2019 Slides Courses 1&2

19/32

ll artifacts are joint products, combining intangiblecontent with physical support or a set of supports

The same content can now be easily and cheaply

replicated and associated with various physicalsupports The dissociation of content and support has led to

the proliferation of intangible artifacts in two ways# it has lifted capacity constraints limiting a large3scale

consumption of intangibles. the same content provides a source for a family of artifacts

8/9/2019 Slides Courses 1&2

20/32

$ntangibles rtifacts

2onsumption specificity#! )oint5always consumed with other

products, tangibles or intangibles6

! nondestr#cti&e5the same artifactcan be consumed repetitively eitherby a same consumer or by a

different one6! nons#btracti&e5or nonri&al6 5one>s

consumption does not reduce anyone

else>s consumption6

8/9/2019 Slides Courses 1&2

21/32

$ntangibles rtifacts

"haring#! +ulti3audience

! )etwor7 externalities

4urchase @ consumption

2onsumption @ purchase

4roduction olatility of valuation 3 pricing of

intangibles focuses on content

8/9/2019 Slides Courses 1&2

22/32

T-$&& %(T(-+$)T$0)"A"T(+

4ricing intangibles! +aterial support

! ccess

! Bse

! "ervices

! 9undling and unbundling

+oc#s on content . &olatilit- of &al#ation

4lanetary haggling

Toward real3time pricing ...and individuali*ation

?

8/9/2019 Slides Courses 1&2

23/32

bundance of accumulation

$nformation overload ! CinfoglutD

2onsumers ! new modes of consumption#

/apping

"urfing

9rowsing "uppliers ! renew their offerings

cannibali*ation

8/9/2019 Slides Courses 1&2

24/32

Wager economy

roducts

Abundance

!aunching "osts

robability of succes

Managing lo# probability of success

"ustomer!oyalty

$

- -

$

8/9/2019 Slides Courses 1&2

25/32

%emateriali*ation logic

E. $nterpenetration&rom segmentation to overlapping

%&ME &''I"E

!EI()*E +&*,

ENTE*TAINMENT

*&D)"E*

IN'&*MATI&N

"&N()ME*

8/9/2019 Slides Courses 1&2

26/32

%emateriali*ation logicE. $nterpenetration

2hanging boundaries of the firm

Employees(uppliers

"lients

Company

Employees

(uppliers

"lie

Company

Externalisation Internalisation

efore

No#

8/9/2019 Slides Courses 1&2

27/32

2hanging economic relationships! )ew lin7ages

! alue chain shift

%emateriali*ation logicE. $nterpenetration

roduction (er.ices(ub-contracting Intermediation

Monitoring

ProducerProducer istributoristributor

istributoristributor ConsumerConsumer

8/9/2019 Slides Courses 1&2

28/32

%emateriali*ation logicF. $ndeterminacy

"tructural ambivalence

$ndeterminacy! Wider range of choice of business strategies

Economies of scaleEconomies of scale

Increasing returnsIncreasing returns

"oncentration"oncentration

alue chain shiftalue chain shift

Mar0et rene#alMar0et rene#al

'ragmentation'ragmentation

8/9/2019 Slides Courses 1&2

29/32

%emateriali*ation logicF. $ndeterminacy

Economies of scale

rocessing

Distribution"oordination

Inno.ation

Differentiation

(conomies of scale and economies of s7ill

Economiesof s0ill

8/9/2019 Slides Courses 1&2

30/32

%emateriali*ation n unsettling logic

8/9/2019 Slides Courses 1&2

31/32

increase in com"etition3 need to define newstrategies to adapt to such changes

products 3 more complex, with higher /nowledgecontent

along the "rod#ction "rocess3 7nowledge3intensivephases of production have become more important. at the firm le&el new governance forms 3

organi*ation as networ7 ! within the firm and betweenthe firm and its environment

The relevant unit of analysis in the study of firms>competitiveness 3 the networ/ of which the firm is"art, rather than the single firm

8/9/2019 Slides Courses 1&2

32/32

01(T23%K (1T(%P%I*(D 3 main trends# its organi*ation is structured around process, not tas7; it has a flat organi*ational hierarchy;

the wor7 process is organi*ed on the basis of teams; customer satisfaction is the primary measure of business

performance; the structure of reward is based on team performance; the maximi*ation of contacts with suppliers and customers is an

integral part of the business process; information and continuous training of employees at all levels are

considered critical to business success.