The Interaction Between The Tangible And Intangible Economics Essay

The Int seasonction Between The Tangible And In indubitable economics EssayIntroductionAssets is one of the most controversial concept in pecuniary accounting. The historical accounting scientist ar trying to render a satiscircumstanceory definition of the pluss, but so far, an authoritative, academics and practitioners atomic number 18 accepted definition, has non yet appeared. The imagings formed from past transactions or events by first steps owned or controlled, and the resource be expected to bring economic interests to endeavours which is called summations. classify according to different criteria, assets prat be change integrity into different categories. In accordance with the length of the consumption period, set up be divided into menstruation assets and long-term assets according to the detail form, Long-term assets posterior also be further classified, according to whether the physical form, shadower be divided into transparent and in veridical ass ets.Tangible AssetsTangible ResourcesFinancial Firms property account and immediate payment equivalentsFirms capacity to raise equityFirms borrowing capacityPhysical advance(a) plan and facilitiesFavorable manufacturing locationsState of the art machinery and equipmentTechnological Trade secrets ripe production physical processesPatents copyrights trademarksOrganizational Effective strategic planning process splendid evaluation and control systemsSource (Strategic Brand Management 2003)Assets that are relatively easy to identify are called perceptible resources. they include the physical and financial assets that an organization recitations to create mensurate for its customers. Among them are financial resources (e.g. a firms cash and accounts receivables as well as its ability to borrow funds) physical resources (e.g. the companys prove equipment and machinery as well as its proximity to customers and suppliers) many firms are purpose that hightech .computerized training has dual Benefits it develops to a greater extent effective employees and reduces cost at the sweetred time ( J.B. 1991)A literal asset is the physical form of assets, including obstinate assets and current assets, patent assets consist primarily of housing, machinery, equipment, and opposite forms of assets. Narrow sense impression of tangible assets usually refers to fixed assets and liquidity. Gen whilelized tangible asset including funds, resources, products, equipment, apparatus, plant, force-out education, including all the factors of production. Generally speaking, the tangible asset is the assets of a certain kind of form. (Jobber. 2012)Existing assets to the specific veridical and product form, including the production of tangible assets and non-produced tangible assets. Production of tangible assets is the production activities to create assets tangible non-produced assets are rude(a) assets without production achieved. Production of tangible assets, including tangible fixed assets, inventory (stock) and reputed items . Tangible fixed assets, that is including residential, houses and buildings, machinery and equipment, raw materials and supplies, on the move, that is finished goods, and resell the goods Non-production of tangible assets include land resource, uncultivated biological resources and water resources.(Wilson. 2005) Tangible assets can be further divided into physical and financial assets. Physical asset is the appraise in use of the property or material. Financial asset is the currency and securities.The apprize of the tangible assets created by its physical nature, that is, given the abide by of tangible assets by tangible, physical and visual factors. The grade of the tangible assets from its material characteristics, their property rights are impalpable, but it comes from their material characteristics. impalpable AssetsIntangible Resources world Experience and capabilities of employeesTrustManagerial skillsFirm spec ific practices and proceduresInnovation technical and scientific skillsInnovation capacitiesReputation Brand nameReputation with customers for feel and reliabilityReputation with suppliers for fairness, non-zero-sumrelationshipsSource (Strategic Brand Management 2003)Much more difficult for competitors and for that matter . A firms own managers to account for or pursue are impalpable resources .which are typically embedded in unique routines and practices that have evolved and accumulated over time .these include humanity resources (e.g. get and capability of employees, trust ,effectiveness of work teams, managerial skills ),innovation resources (e.g., Technical and scientific expertise ,ideas and reputation resources (e.g. print name ,reputation with suppliers for fairness and with customers for reliability ,and product select . a firms culture may also be a resource that provides war-ridden returns. (.Barney.1991)Intangible assets refer to enterprises for the productio n of goods or rendering of services, for term of a contract to new(prenominal)s, or for administrative purposes and holds a long-term, non-monetary asset without physical form.Generalized nonphysical assets including financial assets, long-term equity enthronisations, patents, trademarks, etc., because they do not have a material entity, but the performance of some kind of legal rights or engine room.Intangible assets including patents, technology, greases, copyrights and royalties, the use of the land . Intangible assets can be divided into identifiable and non-identifiable nonphysical assets. Identifiable intangible asset assets, that is including patents, proprietary technology, tell ons, land use rights and concessions,. Intangible assets following conditions are satisfied at the same(p) time, in order to be recognized .The intangible assets related to the economic benefits are standardizedly to flow to the enterprise the cost of the intangible asset can be measured re liably.( Ghemawat.1991)Role of intangible AssetsUse of intangible assets as protection for loans (such as trademarks, patents, copyrights, equity pledge registration as security for loans), commercial registration, increase dedicateing, equity participation, apportionholders funded immaterial property, license to use, transfer, lease contract, reasoning by elimination auctionIncrease brand awareness, show the strength of enterprises, enhance cohesion, brand image(Jorissen. 2007)The enterprises operating intangible assets with world-wide standards, and thusly enter the internationalist market Protection of intellectual property rights claims is based requires companies to crack slash on counterfeit products, infringement and litigation .Through the evaluation of Intangible assets, the parentage of the inventory can be completed to provide the management information to operators thus reasonable allocation of resources.Project financing, joint venture, merger, acquisition, att ract enthronization, investment funds in intangible assets, investment, Intangible assets is the core attraction of foreign investment such as commercial brand, corporate profitability, sales, channels, personnel , etc.Intangible assets capital to invest in shares can bring many benefits for the enterprise. prototypic of all, can ease the difficulties of registered capital and increase investment. Some people postulate to start a business, because of lack of funds to run the new company, can use intangible assets as part of the of registered capital to be registered, specially in some high tech enterprise, especially The physical body of enterprises registered capital is similarly low, giving the marketing difficulties, want to increase the registered capital, but the lack of funds, then can use the immaterial property investment shares to overcome this difficulty.( Gregory 2003)In the era of the industrial economy, the economic growth is mainly dependent on the plant, equipme nt, funds, and in the era of fellowship economy, patents, proprietary technology, trademarks, free grace, information, computer software and other Intangible assets of innovation and sustainable tuition of economic growth calculate a decisive role.Intangible assets unlike land, buildings, machinery and equipment as a specific physical form in front of people, but in the era of cognition economy, it does play a role can not be ignored for the sustainable development of enterprises.In the era of fellowship economy, the process of economic internationalization in further exacerbated, it should be recognized that at that place is a process of continuous improvement of the status and role of intangible assets, when the more and more competitive market, the more complex the business activities, intangible assets continues to increase, go its status and role of the more trend in the core, so that the number of high-tech enterprises are facing the danger instance to be suspend beca use of the loss of Intangible assets and can not sell their products.( Wilson, D. 2005)Role of intangible assets in Fast-paced Technology MarketIn the day-to-day purchasing behavior, pull up stakes you conf utilise with a wide variety, all kinds of brand? And do not know how to make your decisions? What are the determinists to help you to choose goods finally? Of course, we want to buy the most cost-effective products, imagine that, we can not get them to try one by one, we will proceed from amaze to choose reputable manufacturers and the well-known brands. In our selection process, in fact these Intangible assets play a role in the process. It has a tight appeal and influence, sometimes forcing us to make not integrally clear-sighted choice, wonderful role of the brand is to be able to win the goodwill of consumers to obtain the trust of consumers, which products sold, win opportunities to make goods in an invincible bunk in the competition for a long time.( Riezebos.2003)I n the context of the era of fellowship economy, the value of Intangible assets can be much high than the tangible assets, because the value of the tangible assets, after(prenominal) all is limited, while the value of Intangible assets can be unlimited200 brand value rankings released by the coupled States in November 2003, Coca-Cola topped the brand value of up to $ 70.45 billion, which strong value of intangible assets is evident. No wonder the boss of the Coca-Cola Company said scour now, all the property of the Coca-Cola was burned, we still can dominate the world with this brand again. This is the brands equity and also is the power of intangible assets. This kind of self-confidence and competitive advantage also reflected in other international brands. For example, Intangible assets and tangible assets ratio of 70% versus 30% respectively in the world illustrious Microsoft, It can be predicted that the dimension of Intangible assets will continue to fly high in the fut ure of the companys new assets. The United States has been able to occupy a dominant position for a long in the world, relying on its flop economic force, In fact, that is expanding the tremendous power of intangible assets which included in enterprises and products. (Saudagaran. 2001) Intangible assets growth with the support of modern marketing tools and modern technology means, its speed can be much higher than the growth of the tangible assets of the enterprise, which means giving enterprises more excess profits.Let us opinion at the following data In the high-tech is widely used in the United States, the research and development expenses of non-financial firms as a persona of GDP, rose from an average of 2.2% in 1980-1989 to an average of 2.9% in 1990-1997, The proportion of investment in the world in tangible assets fell to 14.1%. At the same time, the S P500 index reflects the market value of the main American. The companies index from 135.76 points in 1980 raised to 1342 .62 points on November 20, 2000, an increase of nearly 1O times. This shows that intangible assets play an increasingly eventful role in the creation of enterprise value.The interaction betwixt the tangible and intangible assetsIn addition, activate tangible assets with intangible assets, is the best way for low-cost expansion, the greatest advantage is to avoid repeated investment and redundant development. It is crucial for the adjustment of economic structure, promote the virtuous disperse of the whole national economy.Haier as the number one of Chinese al-Qaida appliance brand, one of the features of the expansion is to make an activation of tangible assets with intangible assets, which is written into textbook as classic case of Harvard Business School. (Itami..1987) forrader Haier mergers Qingdao Red Star Electric Appliance Factory, total assets of 400 one thousand million Yuan, while total liabilities amounted over to 500 million, 133 million insolvent, and the debt ra tio up to 140%. After taken over by Haier convention, it was reorganized as Haier laundry Machine good deal, and directed to employees with a series of management concepts, these ideas like an invisible hand united the almost defeated team and heroic to an orderly, self-discipline, quick job status, burst out of powerful life and been modify enterprises to gain the extraordinary development made up the deficits and get surpluses in three months, profit $ 1.5 million in the fifth month, passed certification of the IS09001 international fictional character system in the Second year, won Chinese slipstream machine Top 10 Brands, consumers shopping preferred brand, etc market share has risen to 22% of 100 bounteous shopping malls in the province at the end of 1996, It rose to 28.31% the first half of 1997, five section higher than the second. The International market share is far ahead of other brand in China, the number of Automatic washing machines exported to Japan has been accounted 95% of total exports, accounting of 61% total imports of Japan On this basis, Haier Washing machine merger the Guangdong Shunde washing machine factory again as an investment holding company brand in May 1997, after that set up Shunde Haier Electric Company and resume production at bottom two months, created people are even saying so implike Haier speed September 1997 in cooperation with West Lake in Hangzhou, Haier take advantage of value of intangible assets, set up the Haier Holdings Electric Company Hangzhou without invest a penny and successfully developed a series of TV with Haier brand. (Field, A . 2005)In June 2001, the Haier Groups acquired global line of credit of 300 million U.S. dollars from the Bank of China, This is the bank of China the first and the only time to give China enterprise a global credit in China. With the global credit of Bank of China, Haier financing approval procedures will be greatly simplified, the domestic and foreign investment proje cts within 300 million US dollars will be more rapid and timely service In addition, the Bank of China branches and agencies around the world will give Haier Group worldwide localization financing to facilitate. Haier brand value there are 74.9 billion Yuan in 2006, equivalent to nearly $ 10 billion. The value created by a brand is far beyond than several times of peoples hard work. Haier could not successfully obtain such wholesale backup without such Brobdingnagian brand effect of Haier.Trends of Intangible assetsIntangible assets can bring huge profits for the enterprise, profit has a powerful bid and penetrating power, right here only cited one case to expand this. Lets look at the World Brand Lab recently denote 2008 World Brand 500 Harvard University rank first Coca-Cola second in the world Citibank ranked third in the world Google ranked tail Mercedes-Benz the worlds fifth Wal-Mart the world rankings sixth Microsoft the world ranked seventh McDonald ranked eig hth in the world International business opportunities ranked ninth in the world Apple Computer the worlds tenth. These world-class brands, its brand value is amazing, Coca-Cola reached $ 55 billion, the highest IBM brand value of $ 59 billion, Googles $ 25.5 billion in 2005 alone. (Selam Nuri 2012).With the colossal use of friendship, technology and information in the social production and life, the human social economic form gradually changed from the agricultural and industrial to knowledge industries. (Gu. F. and Lev, B .2002).The 21st century is the era of the knowledge economy (Knowledge Economy), the knowledge economy is an economic form based on knowledge resources, its pregnant characteristics Knowledge intensive technology as the foundation of the knowledge industriousness or new and high technology industries, has become the core of the entire industry, it is the major driving force for a country to obtain a long-term competitive advantage and sustainable socio-econo mic growth boosters. The arrival of the knowledge economy is a result of the development of high-tech industries, on former information developed countries in the world, their computers, electronics, and aerospace and other high-tech industrial take and employment growth is the fastest. High-tech enterprise intangible assets accounted is bigger for the proportion of total assets in comparison with the traditional enterprise The high-tech enterprises are typical of knowledge and intellectual support enterprises, it has a high quality of intangible assets as a prerequisite, rich in scientific and technical content of its products are technically complex, a high degree of innovation, the victimize lifetime of the product guide the demand characteristics.Currently, many U.S. high technology enterprise intangible assets has more than 60% of total assets. In the Microsoft does not have raw materials, plant and equipment on a large scale, It has a main resource is the wisdom of the peop le, have the product is in the floppy disk and the floppy disk that contains knowledge. Although Microsoft does not have the characteristics of the traditional large enterprises on the surface, but its enterprise value is more than General Motors Corporation in the United States and other giant enterprises, become a real high-tech industry giant, the only one reason is that Microsoft has a huge amount of intangible assets.The economic benefits of Knowledge which created by intangible assets has be the main body of the economic benefits of high-tech enterprises. In summary, there is no new and high technology enterprise without these invisible assets. (Gunnar Hedlund.2012.)ConclusionThe assets are the most main(prenominal) economic resources of an enterprise. Under conventional economic conditions, tangible assets relative to intangible assets in a more scarce position, the knowledge contained in the companys products and technology content is not high, the core position in the c ompetition tangible assets rather than intangible assets In the era of knowledge economy, the role and status of intangible assets is rising, intangible assets play an increasingly important role in the economic development, competition among enterprises has evolved into a competition intangible assets such as knowledge, technology, management ability and innovation ability. Intangible assets of the enterprise is becoming a key element in the survival and development of enterprises, it is an important value source of enterprise. Especially in the high-tech enterprises, the watch crystal of the knowledge and wisdom of the patent, patented technology, goodwill, trademarks, research and development, franchise and other intangible assets have gradually become the most important resource kind of of tangible assets. For science and technology as the core of the high-tech enterprises, its asset structure is different from the general characteristics of enterprises that intangible assets in a big proportion of total assets, in other words, value creation of high-tech enterprises will mainly depend on intangible assets, thereby intangible assets has a more important meaning in the high-tech enterprises.( Keller.2003)A large number of foreign findings show that the intangible assets of the value of the enterprise to create an important role and can make a portentous contribution there is a strong correlation between the value of intangible assets and the companys market intangible assets information disclosure status will affect the development of the capital market, the investors investment income and business growth.Be seen from the to a higher place intangible assets so important for businesses this trend has been vividly interpreted by Larry Wright whos the famous Brand strategy experts in American. Owns the market more important than having the factory, and the only way to have a market is to have the brand as intangible as the core which is dominant in the ma rket.