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The importance of the ISO10668 standard in the process of brand valuation

  • 21 July 2011
  • Articles

In an economy based on knowledge and innovation, in the market brands take on a character which is distinct from the products or services of a company and contributes significantly to its economic value.
However, a brand is an intangible asset the economic value of which is, in general, difficult to quantify. Currently there are several evaluation tools and methodologies that adopt different criteria, resulting in non-uniform procedures. To address the need for standardisation of the methodologies which will be used in the evaluation of the brand, the ISO10668 standard was created recently, the result of the reflection of professionals and organisations the focus of which is to create guidelines and to establish an international standard (http://www.iso.org/) David Haigh, CEO of Brand Finance, said that the rule is not mandatory; however it serves to clarify concepts, defining a set of principles and criteria of good practices that result in the investment of monetary value. The brand valuation, the subject of this standard, must focus mainly on the analysis of intellectual property, the behavior factor of brand marketing and the application of financial evaluation methods, through market analysis, cost or profitability of the product / service. More explicit than the profitability analysis by discounting the flows or Royalty Relief, the standard is the most appropriate, since it is internationally recognised as an evaluation method. The credibility of the brand valuation process can help make small and large companies to better define their strategy in the following cases: • Development of strategies for brand management; • Sales and acquisitions; • Granting of licenses; • Search for financing and credit operations; • Setting the royalty rate to be applied in transfer prices • Seizure of property; • Search for partnerships; • Support in conflict situations. More than a question of prestige, the valuation of intangible assets allows the company to establish an intellectual property strategy and a suitable economic use thereof. As an important additional factor for the company, the new Accounting System (NAC), in Portugal, includes for the first time, the inclusion of brand and / or patent valuation in the analysis of the accounts of the company which owns intangible assets, in force since financial year 2010. However, the valuation of assets can not be performed by the entity which acquired the right, but by an external entity which is independent of the company. In Portugal, some companies follow the recommendations of ISO10668 in the brand valuation process, including Clarke, Modet & C ° which as well as following all the evaluation procedures and methods of this standard, also takes an active part in international meetings to discuss this subject.

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The importance of the ISO10668 standard in the process of brand valuationThe importance of the ISO10668 standard in the process of brand valuation