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bengin The Intangible Evaluation The Service Version 2.0

bengin The Intangible Evaluation The Service Version 2.0. Draft, not for Distribution bengin - The Intangible Evaluation – The Service V2.0_e.ppt. Index. The new Business World The bengin.com approach The Benefit for the customers The MindSet: how does it work?

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bengin The Intangible Evaluation The Service Version 2.0

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  1. bengin The Intangible EvaluationThe ServiceVersion 2.0 Draft, not for Distribution bengin - The Intangible Evaluation – The Service V2.0_e.ppt

  2. Index • The new Business World • The bengin.com approach • The Benefit for the customers • The MindSet: how does it work? • Some examples from the market • More ways to use the analysis • Additional Types of analysis

  3. intangible Value to be Mapped tangible T old new Business Model Complexity of the new Business World rises and the Business Models have to reflect this

  4. E&Y KPMG PwC AA .... Root Oracle SAP SAS ... Customized Solution Form & Content Application Application B’ESystems MindWare SoftWare Business Theory Microsoft Operating System Basics Partner a Hardware Real Economy Partner .. Partner b We have developed new models for the classic and the new Business to deliver new solutions

  5. 1. Structure 2. Quantity 3. Direction 4. Optimization We developed the original know-how, the procedures and the instruments to analyze the new Business World and to find the needed Solutions.

  6. Intangible Value The Value Vector 2. Quantity Total Value I Tangible Value T We concentrate on the evaluation of the total assets of a company, because.... „YOU CANNOT MANAGE WHAT YOU CANNOT MEASURE“! The total value of a company is the sum of its Tangible and Intangible Assets. Only by managing the Tangible Assets (money based)and the Intangible Assets (Knowledge, Skills, Market Position, etc.) the company can achieve their goals successfully.

  7. Evaluating the Intangible, our customers can gain in various ways • Large, international companies, mid-sized companies and governamental Departments and Institution: • To analyze their current position and development over time • To plan internal changes • To plan mergers and acquisitions • To plan spin offs and oursoucing • To evaluate the market position (benchmark) • To evaluate the productivity of various Business Units • To evaluate new projects (integration in the company assets) • ........

  8. Investment companies and Venture Capitals: • To evaluate the potential of an investment (e.g. in a start up, etc) • To plan the future „exit strategy“ • ........ • Start up companies: • To explain (calibrate) their own potential to an Investor • To show the development over time of their own potential • ........ Evaluating the Intangible, our customers can gain in various ways

  9. How does the Mindset work?

  10. Intangible Value SMV at time 2 SMV at time 1 I2 I 1 Tangible Value BSV 2 BSV 1 Considering the Stock Market Value (SMV) as the Total Value and Balance Sheet Value (BSV) as the Tangible Value, then... • Example 1 (same company, 2 times): • The SMV at time 1 and at time 2 are the same. • The BSV 2 is though only half of the BSV 1. On the other hand the Intangible Value 2 is 30% higher the Intangible Value 1. Why? • Purchase of patents? • Introduction of a new product line? • Other? • The company invested money (Tangible • Value) to create the potential for the • future (Intangible Value)

  11. Intangible Value SMV 1 I 1 SMV 3 I 3 Tangible Value BSV 1 BSV 3 Considering the Stock Market Value (SMV) as the Total Value and Balance Sheet Value (BSV) as the Tangible Value, then... • Example 2 (same company, 2 times): • The SMV at time 1 and at time 2 are the same. • The Balance Value 3 increased by 20% compared to the Balance Value 1. On the other hand the Intangible Value 3 is less than half of the Intangible Value 1. Why? • Sale of a department? • Sale of patents? • Other? • The company transformed Intangible Assets into money based value (Tangible Assets)

  12. Intangible Value SMV 2 Int. 2 SMV 1 Int. 1 SMV 3 Int. 3 Tangible Value BSV 2 BSV 1 BSV 3 Considering the Stock Market Value (SMV) as the Total Value and Balance Sheet Value (BSV) as the Tangible Value, then... • If in example 1 it is NOT TRUE that..... • The company invested money (Tangible • Value) to create the potential for the • future (Intangible Value) • e.g. • Purchase of patents? • Introduction of a new product line? • If in example 2 it is NOT TRUE that..... • The company transformed the Intangible Assets into money based value (Tangible Assets) • e.g. • Sale of a department? • Sale of patents? • What happened then?

  13. Intangible Value SMV 2 Int. 2 SMV 1 Int. 1 SMV 3 Int. 3 Tangible Value BSV 2 BSV 1 BSV 3 Considering the Stock Market Value (SMV) as the Total Value and Balance Sheet Value (BSV) as the Tangible Value, then... • What happened then? • Maybe the company is just loosing good • people: yes, there are less costs but.... • Maybe the company is spending too much • on marketing.... • Maybe the people are not receiving any • training: yes, there are less costs but • any know-how in the new technology... • If the combination of tangible and intangible assets cannot be explained by the company`s strategy, decisions, actions......then we must look deeper. The causes need to be discovered in order to better manage the company

  14. Considering the Stock Market Value (SMV) as the Total Value and Balance Sheet Value (BSV) as the Tangible Value, then... 1. Analyze the structure and development of the Intangible Assets Intangible Value Intangible Value I 1 Market Position ? SMV 1 Know how Skills R&D I 2 MP SMV 2 Rights KH Organ & support R O&S Meth. & QA M. & QA Tangible Value BSV 2 Tangible Value BSV 1 Balance difference

  15. Nr • Object • Index • „Time“ 1 • „Time“ 2 • 1 • Market Position • Market share • 20% • 20% • 2 • Market Position • Marketing costs • 200‘000 • 400‘000 • 3 • Know-How • Number of employees • 200 • 122 • 4 • Know-How • Number of trained employees • 100 • 85 • 5 • Know-How • R & D hours • 500 • 300 • 6 • Rights • Number of patents (Copy- rights, Design, etc) • 12 • 12 • 7 • O & S • Use of IT infrastructure (PC and Laptops/employee) • 80% • 75% • 8 • M & QA • Number of procedures/methodology • 6 • 6 • 20 • .... • .... • .... • .... Considering the Stock Market Value (SMV) as the Total Value and Balance Sheet Value (BSV) as the Tangible Value, then... 2. Identify the changes/problems

  16. Nr • Object • Index • „Time“ 1 • „Time“ 2 • Reasons • Actions needed? • 2 • Market Position • Marketing costs • 200‘000 • 400‘000 • Organized event to launch new products • no • 3 • Know-How • Number of employees • 200 • 122 • Reason not clear! • Yes, it need to be solved! • 5 • Know-How • R & D hours • 500 • 300 • People left – see Nr 3 • Consequence of Nr 3 Considering the Stock Market Value (SMV) as the Total Value and Balance Sheet Value (BSV) as the Tangible Value, then... 3. Discover the reasons

  17. Nr • Object • Index • Reasons • Actions needed? • Consequences within the next 6 to 12 months • 2 • Market Position • Marketing costs • Organized event to launch new products • no • - • 3 • Know-How • Number of employee • Reason not clear! • Yes, it need to be solved! • Decreasein R & D & production • Inability to deliver • Loss of customers • Decrease of Stock Exchange Value! • 5 • Know-How • R & D hours • People left – see Nr 3 • Consequence of Nr 3 • Corrected only by solving Nr 3 Considering the Stock Market Value (SMV) as the Total Value and Balance Sheet Value (BSV) as the Tangible Value, then... 4. Prevent problems today and avoid loosing money tomorrow!

  18. Considering the Stock Market Value (SMV) as the Total Value and Balance Sheet Value (BSV) as the Tangible Value, then... By analyzing only the Tangible Assets (money based) you would recognize the problemsTOO LATE. The Intangible Assets of today represent the Tangible Assets of tomorrow, therefore knowing them will help you manage the total assets of the company better. In this example: Knowingthe possible internal problems 6 to 12 months in advance will allow you to correct the problems before they effect the company Market Value!

  19. Some example from the market

  20. Intangible Asset Stock Exchange Value 9000000000 12000000000 97 Jahr 1990 8000000000 97 10000000000 Jahr 1991 96 7000000000 Jahr 1992 96 8000000000 6000000000 Jahr 1993 98 5000000000 6000000000 Jahr 1994 98 99 4000000000 Jahr 1995 4000000000 Intangible Assets Jahr 1996 3000000000 2000000000 Jahr 1997 2000000000 Jahr 1998 1000000000 0 Jahr 1999 99 0 Jahr 1990 Jahr 1991 Jahr 1992 Jahr 1993 Jahr 1994 Jahr 1995 Jahr 1996 Jahr 1997 Jahr 1998 Jahr 1999 0 2E+0 4E+0 6E+0 9 9 9 Tangible Assets A betterworking instrument for showing overpriced papers: Example Coca Cola Amatil ....a year before the classic Market Analysis, the Intangible Assets Analysis of BE-Solution could foresee a change by Coca Cola.........

  21. Pointer of vector for five years 1'400 92 95 1'200 1'000 93 94 800 96 intangible axis [ i - Mio] 600 400 200 0 0 200 400 600 800 1'000 1'200 1'400 1'600 material axis [Mio sFr] It is possible to analyze the development of the company‘s asset. Example: a part of ABB The answer for the question – "What happens in the year 1996?" – is easy: Part of enterprise sold. It is after all a question of the quality of Management if this loss of intangible values is compensated by the price received for the sold enterprise.

  22. Intangible Value [i - Mia] Coca - Cola 80 75 70 65 60 55 IBM Microsoft 50 45 40 35 30 McDonald's 25 Ford 20 15 10 5 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 Tangible Value [Mia] Intagible assets or Shareholder Value Expectation? The Tangible Value and the Intangible Value together gives a complete picture about the company value and its development. The question remain: Are all Intangible Assets or part of it is only Shareholder Value Expectation?

  23. Valuepoints of 75 enterprises 10'000 Investors: Attention! 9'000 8'000 7'000 6'000 intangible Values 5'000 4'000 3'000 2'000 Management should use potential more effective 1'000 0 0 1'000 2'000 3'000 4'000 5'000 6'00 0 7'000 8'000 9'000 10'000 tangible Values A better model for new decisions Analyzing enterprises with the above mentioned instruments leads to fundamentally new decisions on the side of the managers as well as of the side of shareholders, which have nowadays a better/good working instrument for showing overpriced papers.

  24. More analysis

  25. More ways to use the analysis:Stock Market Value (SMV) as the Total Value and Balance Sheet Value (BSV) as the Tangible Value • To evaluate and decide if it is better to „Make“ or „Buy“ • To evaluate and decide for an acquisition (Tangible and • Intangible) • To evaluate productivity, e.g. the „transformation“ • of Intangible into Tangible • To Benchmark • To evaluate the benefits of a merge • ......... • This can be done at various levels: Whole Company, Business Unit, department,process or project.

  26. Additional types of analysis Turnover (Total value) vs. Total costs (Tangible) e.g. knowing the Total Value (Turnover) and the Tangible Value of a company (Total costs) it is possible to analyze what value is generated by the company (know how, etc.) To analyze productivity To analyze resource allocation (intangible ROI) To analyze Value Chain profitability To evaluate a possible spin off or merge To compare the values of different departments This can be done at various levels: Whole Company, Business Unit, department,process or project.

  27. Additional types of analysis Total costs (Total Value) vs. „Total costs minus Personal costs“ (Tangible) e.g. knowing the Total Value (Total costs) and the Tangible Value („All costminus Personal costs“) it is possible to analyze what value is generated by the people (know how, etc.) To analyze the productivity of employees To analyze the value of training To compare the values of different departments This can be done at various levels: Whole Company, Business Unit, department,process or project.

  28. Contact: Peter Bretscher Ingenieurbüro für Wirtschaftsentwicklung Alpsteinstrasse 4, CH-9034 Eggersriet peter.bretscher@bengin.com ++41 (0)79 650 49 04

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