THE GROWING IMPORTANCE OF

INTANGIBLES

PRESENTED BY-
DIWAKAR CHATURVEDI

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 INTRODUCTION…
 THE NEW BUSINESS ARE STRONGLY
BASED ON THE FOUNDATION OF
KNOWLEDGE AND INFORMATION.
 THEY HAVE GAINED MORE IMPROTANCE
AS A FACTOR OF PRODUCTION THAN
FINANCIAL CAPITAL AND HAVE REPLACED
ITS ENGINE FOR WEALTH CREATION.
 THE PRESENTATION HIGHLIGHTS THE FACT
OF KNOWLEDGE CAPITAL AS A SOURCE OF
COMPETITIVE ADVANTAGE. IT IS AN STUDY
TO BRING OUT THE GROWING OF
INTANGIBLES.
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 INDIA’S ECOMOMIC GROWTH IN THE
RECENT YEARS HAS BEEN DETERMINED BY
THE PERFORMANCE OF ITS KNOWLEDGE-
INTENSIVE INDUSTRIES LIKE INFORMATION
TECHNOLOGY AND PHARMACUTICALS.
 THE GLOBAL SENARIO IS DRASTICALLY
CHANGING THE MOVERS OF THE STOCK
MARKET ARE NO LONGER THE
TRADITIONAL BRICK & MORTAR
COMPANIES, AND THE NEW COMPAINIS
THAT ROCK THE MARKETS ARE
UNPREDICTABLE AND SHOW A LOT OF
VOLATILITY AND FLUCTUATION. 3
EMARGANCE OF NEW
ECOMOMY…
 NEW BUSINESSES ARE STRONGLY BASED
ON THE FOUNDATION OF KNOWLEDGE
AND INFORMATION.
 NEW COMPANIES ARE BEING CREATED &
THEY ARE MORE FLEXIBLE, MORE
ADAPTIVE AND MORE-FLUID IN
STRUCTURE.
 THESE COMPANIES BELIEVE IN
PRODUCING SMART PRODUCTS AND
SERVICES THAT FEATURE MASS
CUSTOMISATION, HAVING CUSTOMER
PATRICIPATION IN PRODUCT DESIGN AND
MANUFACTURE AND LINKING OF
SUPPLIERS, DISTRIBUTORS AND 4
OBJECTIVES OF THE
PRESENTATION…

 WHAT KNOWLEDGE CAPITAL IS,

 WHERE IT EXISTS AND
 HOW IT SHOULD BE MEASURED AND
REPORTED

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(1)WHAT IS KNOWLEDGE CAPITAL ?
• COMPANIES THAT MAKE THEIR PROFITS BY
CONVERTING KNOWLEDGE INTO VALUE
ARE CALLED KNOWLEDGE COMPANIES.
THEY USE THEIR KNOWLEDGE WORKERS
AS A MAJOR SOURCE OF COMPATITIVE
ADVANTAGE.
• EVERY KNOWLEDGE COMPANY HAS TO
CAPITALISE THE ASSET THAT CREATES
VALUE OR GERERATES INCOME FOR IT.
THIS ASSET IS TERMAD AS KNOWLEDGE
CAPITAL.
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THE MAIN COMPONENTS OF KNOWLEDGE
CAPITAL ARE…

• HUMAN CAPITAL
• STRUCTURAL CAPITAL
• CUSTOMER CAPITAL

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(2) WHERE DOES KNOWLEDGE CAPITAL
EXIST?
• THE KNOWLEDGE CAPITAL EXISTS IN THE
GAP BETWEEN MARDET VALUE AND BOOK
VALUE OF THE ORGANISATION.
• BOOK VALUE CONSIDERS THE TANGIBLE
ASSETS WHICH IS REVELALED IN THE
BALANCE SHEET.
• MARKET VALUE CONSIDERS NOT ONLY
THE TANGIBLE ASSETS BUT ALSO
REPRESENTS A PORTION OF THE
MARKET’S ASSESSMANT OF FUTURE
EARNINGS POTENTIAL.
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EXAMPLE…(SOURCE- JOURNAL OF
ACCOUNTING AND FINANCE APRIL- SEPTEMBER
2008 )
SECTOR BOOK VALUE MARKET BV:MV
VALUE

INFO TECH 1724661.64 10199600 0.17

PHARMA 635435 3075380 0.21

METALS 3463261 7111600 0.49

BANKING 6145451 10610500 0.58

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(3) HOW DO YOU MEASURE
KNOWLEDGE CAPITAL?
MEARUREMENT OF INTANGIBLE ASSETS
THERE ARE SOME IMETHODS
• DIRECT INTELLECTUAL CAPITAL METHODS
(DIC)
• MARKET CAPITALISATION METHOD (MCM)
• SCORE CARD METHODS (SC)

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CONCLUSION….
SO WE MAY EASILY SAY THAT WE
SHOULD KEEP PROPER ATTENTION
OVER THE INTANGIBLES IF WE WANT
TO GET THE COMPETITIVE
ADVANTAGE. WE SHOULD KNOW
HOW TO UTILIZE THEM OPTIMALY TO
CREAT WEALTH.

THANKS…
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