What Are Tangible And Intangible Resources Marketing Essay

Technology today is evolving at lightning speed, and update all the time. As soon as Samsung Galaxy S III¼ˆi9300¼‰released at May 2012, Apple also released iphone 5 at September 2012. Within 4 months, two world famous brand released their high end products in same field. Touch screen, high resolution camera inside, applications like icloud, internet surfing can be everywhere… So user-friendly, things we have never think about before, they all come true now, and it is just simply in your hand. The age when a computer was still a big beige box on the desk and that was what everybody cared about, their emphasis today is on sleeker designs, smaller form factors, and movable. (Risley, 2008)

Nowadays, new technology achievements are based on more and more resources available, which includes the tangible and intangible resources. As we can tell from above, tangible resources can be the material used on a cellphone, make it much lighter, looks nicer, more touchable, and make it possible to put a camera with flashlights inside; intangible resources would be intellectual property such as technics needed for limitless internet surfing , icloud’s applicability, employee and customer relationship and so on. The purpose of this report is to evaluate the role of this two resources for competing in fast paced technology markets.

What are Tangible and Intangible Resources

Tangible resources refer to the fixed and current assets of an organisation that have a fixed long-run capacity (Wernerfelt, 1989). The book value of these assets is assessed through conventional accounting mechanisms and this value is usually reflected in the balance sheet valuation of companies. Examples include plant, equipment, land, other capital goods and stocks, debtors and bank deposits. In technology market, Intel’s semiconductor fabrication facilities is one example of a tangible resource.

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Intangible resources is also absolutely necessary. A variety of such assets has been identified, including trademarks, patents, copyright, registered designs, contracts, trade secrets, networks, databases and brand and company reputation (Hall, 1992; Williams, 1992). Firms possessing intangible assets can leverage their value by using them in house, renting them (e.g. A license on a patent) or selling them (selling a brand and its inherent reputation) (Fahy, 2001). Like it was when IBM purchased by Lenovo, they sell the brand also, that is why after the purchase, we can not see IBM this brand in market anymore.

Fast-paced Technology in Cell Phone Market

The cell phone market is developing rapidly. It is one of those changes growing in technology and popularity both on and off the net – that is the reason for choosing this market to do this report.

But as rapid as technology is, the market never seems to be fast enough.

In November 2007, Google announced Android, a new Linux-based operating system for mobile. In the second quarter of 2008 , Yahoo! launched what it calls onePlace, a mobile bookmarking tool that allows better control of information. October 2008, the first commercially available phone to run Google’s Android – HTC Dream released.

Do not want to be left in the dust, Microsoft made a deal with a handset makers for its software in February 2011 as well. It was Nokia, who brought a platform for Microsoft’s Silverlight, and also brought it to the mobile platform. This cooperation let Nokia turned into a Windows Phone. What’s more, a brand new Windows Phone 8 (WP8) from Nokia come to us at 5th September this year as well. These days, been unsatisfied with its own sales report, HTC turned its half to Microsoft and published WP 8X at 19th this month, too. Running the sames Windows system, HTC played another show of combination between web company and cell phone manufacturers after its cooperation with Google and Nokia with Microsoft, a tough competition is on going.

Fast paced as mobile phone market is, the keep updating technology is not only the hardware, but also should be with the software inside. Any given firm may need a competitive advantage or many kinds of advantages to over another firm such as a superior production system, a lower level of wages and salaries, an ability to deliver better customer service and so on (Fahy, 2001). While a competitive advantage, then, is an advantage one firm has over a competitor or group of competitors in a given market, strategic group pr industry (Kay, 1993).

From the combination and competition between Google-Android-HTC, Microsoft-Windows-Nokia, Microsoft-Windows-HTC we could say, no matter for web companies or cell phone manufacturers, in this moment, if want to survive in the fast paced market, must have a competitive advantage or advantages, which would based on all the latest technology. It is on both software and hardware. For Google and Microsoft, they were looking for a mobile phone have popularity in consuming group and able to produce high technology products (e.g. like HTC and Nokia), and get along with their software, make the ultimate product more valuable rather than just a programme in computer or a ”unsmart telephone”. It actually made good use of tangible resource (e.g. a real “phone”) and intangible resources (e.g. Software / operation platform), to meet public’s demands and be more user-friendly, thereby formed a competitive advantage to achieve win-win stage in this rat race market.

Roles that Tangible and Intangible Resources Play in Market

As mentioned above, a tangible resource is one that you can “reach out and touch.” (Osborne, 2001), they are also commonly called as tangible assets or physical assets. Hard currency, equipment and real estate are all examples of tangible resources. And they have the properties of ownership and their value is relatively easy to measure (Hall, 1989). It includes things that can be reproduced, such as plants and machinery, and those that cannot be reproduced, such as real estate and land. And due to it is easy to appraise, they are often used to determine a company’s value. For example, how how many buildings the company have, how many land is under their name. The other defining characteristic of tangible assets is that they are transparent (Grant, 1991a). For example, thought plant or land may be geographically immobile, each is relatively imitable and substitutable.

The most important point is that if there is an opportunity, more economical use of financial resources, inventory and fixed assets, that is, whether the same product with the same resources less physical resources or greater output. This is the value of the tangible resources. Companies in the corporate world, there are many different tangible assets and real market value. Real estate, office equipment, office furniture, computers, cash, accounts receivable and assets, if necessary, they can be traded, exchanged or used to pay off debts. The establishment of the market value of such assets, usually carry vary, depending on the economic and geographic factors. These types of assets are relatively easy to quantify, including financial statements.

The role of tangible assets. Savings or capital, it has the ability to generate future revenue streams of the definition of an asset. (Sherraden, 1991). Economic tangible assets, including savings, checking and other interest bearing accounts and real estate, such as housing or land. A large number of studies have noted the positive impact of the Asset Holdings, improve the social status and economic pressure to reduce (Green and White, 1994; Adams & Vosler, 1997). And also being a support for a economic act and organization’s running.

By contrast, resources like clusters of skills, coordination of diverse production skills and multiple streams of technologies (Hamel and Prahalad, 1990) are under the intangible resources. And the best resources are often intangible, hence the recent emphasis on softer aspects of corporate assets culture, technology, the transformational leader.

First of all, the brand is one of the most important intangible resource. For example, people nowadays usually follow the brand name to buy products, especially in cell phone market. And Apple, is no more just a company, but a “phenomenon” all over the world. It would rather say people are following this brand, than say it is the products that people loves.

For other small brands, those are not that world famous, or the brands have lower end consuming groups, the location for where they sell their products is very important. As we know, every Seven-11 sell the cheap, simple cell phones. Brands like Nokia, Samsung are also on the shelves. These brands sell their products in convenient stores, is not because of the brand name is not well known, the reason is they need the corresponding location to sell the simple original cell phone, who’s consumers come from the public, instead of a small group of people who used to go big shopping mall to pick a high technology mobile phone.

Another key part of intangible resource is patent. Patent is the world’s largest source of technical information. According to empirical statistical analysis, patent contains 90% -95% of the world’s scientific and technological information. Recently the communications industry’s patent litigation, patent bid comes one after another. Especially the smart phone patent infringement case between Apple and Samsung. As the California federal district court jury ruled Samsung infringed six of Apple’s patents, and $ 1.05 billion for compensation. It fully demonstrated the intellectual property’s fierce competition.

The role that intangible resources can be said is the concept of excess returns. Intangible assets and intellectual property to create value, their development of corporate earnings to exceed the return required by the market business assets (tangible and intangible). Intangible assets is usually a higher risk of monetary or tangible assets compared to demand a higher return. In order to produce an economic advantage. This may be a hole directly in mining, such as new or enhanced products from proprietary technology to reduce costs and indirect use, such as the increase in licensing revenue income (Swaim, 2006). Then can we raising barriers to competition, protecting or creating a strong market position.

Importance of Combine Tangible and Intangible Resources in Competitive Markets

So, if a firm combine its tangible and intangible resources with firm’s capabilities to create distinctive competencies, it will make the firm performs better than any competing firm.

With the acceleration of the global economic integration, enterprises who want to be successful in the increasingly fierce global competition, and keep their own market share, resource integration is very important. On the one hand, the resources integration is an important source of business performance. Through the effective integration of tangible and intangible resources, enterprises can give fully use these resources and create new resources, so then enhance business performance. On the other hand, the integration is also the main source of corporate competitiveness. Competitive advantage in the market are often belong to those enterprises that are good at resources integration instead of the companies who have a lot of resources but do not know how to dal with them, nor the companies who invested heavily in the development of something new. Whether the enterprise has the ability and if they are really good at the integration is an important basis to determine the competitive advantage. Different resource configurations can generate a completely different value for forms.

However, as a matter of fact, most companies are not ideally positioned with competitively valuable resources. More likely, they have a mixed bag of resources – some good, some mediocre, and some outright liabilities. Besides, the enterprises who do not have a outstanding achievement, they are more often focus on the tangible resources like how many capital they have, how big is the enterprise’s size, or how many lands they own, and they lose sight of the intangible resources they have.

What’s more, the enterprises who do not have a outstanding achievement, they are more often focus on the tangible resources like how many capital they have, how big is the enterprise’s size, or how many lands they own, and they lose sight of the intangible resources they have.

In this new economic era, the intangible resources is a powerful potential competitiveness. The high technology industry led to an organization’s sustainable development. Technological achievements put the value of additional intangible resources to the different products, improve the function, simplify people’s life, make it easier, make people be fond of the product, and keening on it. For example, why people love iphone so much? It is not only because of the concise while adorable appearance, but also the function inside the box. So user friendly, and even though you change iphone 4 to 4s to 5, the contact list, your favourite music and all the setting you are used to are still there, can move on from one to another. From here people starts to love this little Apple, and if they want to buy a new Mp3, or , they would definitely choose Apple’s products. Because it is so easy! All the Apple products can be connected inside through iTunes. In this way, Apple is having more and more loyalty customers, expanding its market and turned the brand into a intangible property.

The revolution has changed, consider the intellectual property rights and values. The importance of intangible assets related to the transformation of the economic model. In the United States, since 1980, the average ratio of the market value of the book value has risen to slightly more than a multiple of more than 5. In 1970, intangible assets accounted for less than 20% of the market value of the majority of U.S. public companies. Now, they accounted for 90% (Swaim, 2006). This also occurs in the communications and IT industries, such as the Intel knowledge and creative labor, the value created by the patent, including the economic value and strategic value.

How does the T & I resources works in the competitive market?

Relative to tangible resources, intangible resources does not seem have a obvious material carriers and seemingly invisible, but they are the inherent potential to support the development of enterprises, to bring an unparalleled advantage. Organic combination of intangible resources and intangible resources, can provide important financial investment decision-making reference for corporate and investment institutions, then can the company get more investment. Enterprise’s tangible and intangible resources is the foundation and source of competitive advantage. In order to do better than competitors, and create more customer value, tangible resources are necessary, and are the basis for the survival and development of enterprises.

Tangible resources are the basis of the intangible resources, intangible resources continued growth within the power of competitive advantage, and both are a source of competitive advantage.

Take HTC for example. At beginning, with the funding capitals (tangible resources) HTC was just a cell phone producer for other brands. Through the producing period, HTC accumulated the skills, technology (intangible resources), strengthen its own brand. Thus attracted other companies to cooperate with it and get developing.

However, if we talk about the power of these two resources, especially the potential power, we have to say that intangible resources have a more important position in the fast paced competitive technology market. Intangible resources has become the key to win in enterprise competition and play an increasingly significant role. Competitors may have the physical resources in a short time but the long-term advantages of intangible resources is hard to beat. The data indicates that the worlds’ well-known industrial enterprises, their value of intangible resources generally exceed the value of physical resources, and even several times of physical resource. Become advantageous weapons of these enterprises in technology trade and occupy the international market share and expand their social impact. With the economic network, the development of the knowledge based, the value created by material production and distribution of goods continue to reduce some companies to put their core business to gradually shift the research and development, brand management, asset restructuring, property management and other value-added high, high-profit business areas, and that requires a lot of physical resources and repetitive work material production, logistics and distribution business outsourcing or commissioned out to those who specialized companies to complete. Use and management of enterprise intangible resources, emphasis on the development, develop the basic trend of the enterprise’s management in the new situation.

Conclusion

If competitors are able to counter with a substitute, prices are driven down to the point that the price equal the discounted future rents (Barney, 1986) resulting in zero economic profits. The Resources Based Value helps integrate how market forces determine the value of resources, they force managers to look inward and outward at the same time, make good use of tangible and intangible resources, and shape their advantages (Core Competency). Gary Hamel and C. K. Prahalad wrote that a core competency is “an area of specialized expertise that is the result of harmonizing complex streams of technology and work activity.” To have tangible and intangible resources work together is important, but it is the presence of these intangible assets that accounts for the significant difference that are observed between the balance sheet valuation and the stock market valuation of publicly quoted companies (Grant 1991a; Hall 1989,1992; Rumelt 1987). That is why when we get enough tangible assets, need to put more attention to the intangible part, cause that is where the potential power and distinct competitive advantage are.