The business environment is becoming tough due to increased competition. It has led to different challenges for the large corporations. The companies have to work consciously in devising strategies to form and sustain competitive advantage. The successful companies adopt well-defined strategies in each operation of the business. Similar is the case in devising strategies for managing intangible assets of the firm. This paper discusses some of the challenges associated with managing intangible assets at Du Pont. Directly coming to the topic, below is the discussion about intangible assets (Hussi and Ahonen, 2002).
Intangible Assets
Whenever we speak of the term intangible assets, it means that it is the company’s asset that has no physical existence like goodwill, patents and brand name. Corporate reputation is also now considered to be an intangible asset. Assets having the below-mentioned characteristics are regarded as intangible (Hussi and Ahonen, 2002).
Identifiable: when it is separable, and the future economic benefits from the asset can be easily determined.
Control may be wielded: if the company has a great power to acquire the future economic benefits.
Future economic benefits are expected to accrue from that place: if the use of such assets is generating the income and savings on return.
It is observed that an accountant is always interested in intangible assets, but the company’s CEO is interested in both the intangible assets and intangible resources because he/she has to maximize the company’s net value. Intangible resources include human capital, information capital and the structured capital (Hussi and Ahonen, 2002). In short intangible is split into two categories:
Intangible assets
Intangible resources
Du Pont is an American company founded in 1802. It is involved in the manufacturing of the chemicals. The business is involved in the production of polymers, gun powder, normal nylon, neoprene and M5 fiber. Du Pont developed Freon gasses which are used as refrigerants. The company is striving for the production of environment-friendly products and chemicals. Moreover, it is on 8th number in revenues generation among the competitors. The operations of the firm are expanded all over the globe. However, for summarizing the concept the scope of this paper will be limited to four countries only (Teece, 2000).
Du Pont Research and Development Department
Intangible Resource - Human Capital
The driving force behind the success of Du Pont is their consistency of aggressive spending in the scientific research. They believe in thorough research before coming up with any product idea as it is a chemical manufacturing company, so it has to focus more on the research. That is the main thing which drives innovation in their products. They spend the major portion of capital in researching the product and after complete analysis and experiments when it gets confirm that it is not harmful, and it is environment-friendly then they start production (Daley, 2006).
The success of the Du Pont in Turkey is primarily due to the human capital of the firm. The Research and development department is always in need of the hardworking and competent employees. They must be highly skillful and trained. They must have an experience. As it is a chemical manufacturing company and its consistency is based on the scientific research. They need highly qualified researchers who can come up with innovative solutions. So the strategy here is to acquire a large pool of qualified, professional and skillful employees. They are ready to pay them whatever they want. They use high technology equipment. So they need such employees who can operate them. According to the survey, it is found out that all the employees in Du Pont are highly professional and well aware of using all the sophisticated technology. They hire only those employees who are educated enough to operate them well. Because this all ultimately going to affect the company’s good will (Daley, 2006). It is surveyed that Du Pont invests approximately $1 billion in manufacturing, technical, marketing and engineering technologies (Teece, 2000)
Brand Equity
Du Pont is very much concerned about the preservation of the brand equity which is its intangible asset. Consumer perception, brand association, longevity, familiarity, brand awareness and reliability of the parent brand are the major elements of brand equity of Du Pont. Following are the six drivers through which Du Pont is preserving its brand equity (Hussi and Ahonen, 2002).
Trust
With trust, it gets the confidence of its customers.
There is a consistency in their products and services.
Integrity and authority drive the customer relations.
Authenticity: They do not lie to their customer. They provide with the best to their customers as it is advertised or commercialized.
Transparency: The Company has maintained a huge resource of all the necessary information required to ensure transparency. Anyone who wants to know about them, they can easily get information. They do not hide anything from their customers.
Affirmation: Strong accountability is there.
Listening: They love to hear from their customers. Moreover, the management never gets short tempered if anyone says something offensive about the products.
Responsiveness: They keep follow-up and do dignifying marketing. .
Intangible Resource - IT Capital
Du Pont in MEXICO is very much involved in maintaining their patents, computer software, and databases. These intangible assets are maintained by the professional and competent IT specialists. Du Pont is a huge organization, and it has many patents and hundreds of computer software. All software and the hardware solutions are innovative and an expensive resource of the company. It is a result of huge organizational spending and investment of time and effort by the capable resource persons. Therefore, this resource is prone to theft and illegal use. That is the rationale behind having a dedicated team of professionals managing this resource and protecting it from unauthorized use. The Management at Du Pont Mexico is taking steps for the management of their technological resource. They spend much capital in maintaining their software, keeping the backup, and database. In Mexico, they have hired a well-trained staff that is highly skilled and knows everything about this job. Their major duty is to maintain these patents and software as the company’s goodwill is based on it. This vital part of the job is performed by the human capital of the organization. Therefore, it is necessary to value the human workforce equally. If their employees are satisfied, then they try hard to do their work with more dedication. For this, they provide a good compensation package to their employees to keep them motivated. These compensation packages include (Daley, 2006)
Work life: They encourage their employees to balance their balance their work and personal responsibilities.
Learning and development: They encourage their employees to enhance their skills and capabilities as their career progress.
Benefits: They provide incentives and medical facilities to their employees.
Diversity: They strive to promote, create and support the inclusive culture that helps them in attracting the individuals from all over the globe.
Community outreach: They give equal importance to all the employees not considering from which community they belong.
Recognition: They recognized their employees by providing them with the awards and performance-based benefits at the end of the year.
So in sustaining the IT resources, they need to satisfy their employees so that they could work better and in these are the strategies which are adopted by them to motivate their employees who in return helps in maintain the goodwill of the company (Teece, 2000).
Intangible Resource – Organizational Capital
Organizational capital is one of the three components of the structural capital. There is no solid definition of it. However, it is the value addition to an enterprise which is derived from organization philosophy and system that helps the organization in delivering the excellence in the products and services. The elements that are involved in organizational capital include (Hussi and Ahonen, 2002):
Culture of organization
Structure of organization
Organizational learning
Du Pont Innovation – France
The Management at Du Pont values innovation and to foster it in their operations, they have established innovation centers. The company is using innovation centers to enter the competitive markets of different countries. In France, the company has formed an Innovation Centre to research on how to bring innovation in the products to suit the needs of the local customers. The primary logic behind this entire phenomenon is that this world is contemporary, and people want change. The innovation centers around the globe are established to take care of the contemporary needs of the customers. The innovation center in France provides a platform to various companies to work together to achieve and exploit synergies so that they can provide solutions to the complex problems of today’s world through collaboration. The world nowadays is facing harsh situations, so they need to work together and when different minds put dedicated efforts, they come up with the best (Kosur, 2015).
The Innovation Centre in France provides the facility of bringing their customers and the scientist at a platform so that they can share all the possible information about that product. So through innovation in their products, they can satisfy their customers in a way that adds value addition to the organization by retaining loyal customers.
Du Pont – the USA
In the USA, Du Pont is manufacturing the products which are environment-friendly and easy to use by their consumers. That is why they have developed the global consulting services and process technology consulting departments. These departments are involved in the production of the products having a less environmental footprint. The factor of the wellbeing of customers and the environment are dealt with by these centers. They offer their time-tested leadership in business and technology to clients seeking solutions for their problems and offer safe alternatives to their needs. They offer customized solutions across numerous areas of excellence such as employee training programs, workplace safety, environmental management, energy efficiency, process technology licensing, asset productivity and capital effectiveness. They are not just helping their clients by working on the strategies in these designated areas but also make strategies to bring innovation so that it adds value to the company (Kosur, 2015).
The company is facing challenges with the staffing strategies adopted for hiring a skilled workforce. The management is working continuously in liaison with the strategic human resource department to come up with strategies to hire outstanding talent. Du Pont is a market leader and always hires such employees that keep them updated with the new changing trends of the world. The company invests on their workforce by offering lucrative benefits and pay special attention to the development of the workforce by arranging training and seminars. These are the strategies adopted by the company for the satisfaction of their employees so that they put dedicated efforts to keep the company on the road to the success.
References
Daley, D. M. (2006). Strategic human resource management. Public Personnel Management. Current concerns, future challenges, 5, 120-134.
Hussi, T., & Ahonen, G. (2002). Managing intangible assets-a question of integration and delicate balance. Journal of intellectual capital, 3(3), 277-286.
Teece, D. J. (2000). Managing intellectual capital: organizational, strategic, and policy dimensions: organizational, strategic, and policy dimensions. OUP Oxford.
Kosur, J. (2015). The $130 billion Dow-DuPont merger faces several major challenges. Business Insider. Retrieved 21 February 2016, from http://www.businessinsider.com/dow-dupont-merger-faces-major-challenges-2015-12
