Cambridge AS A Level Business Studies/ ZIMSEC Advanced Level Business Studies/ Business Enterprise Skills Notes: Intellectual Property

  • Capital is one of the four factors of production
  • Intellectual capital is part of capital
  • To reiterate, creating a business (enterprise) involves combining the four factors of production
  • These factors are also known as resources
  • These resources include capital, land, labour and entrepreneurship
  • It is important to note that the word capital does have many meanings
  • When we are using it in the context of resources we are referring to “equipment” or all the man-made aids to production
  • This includes things like tractors, robots, other machinery, money used to start a business etc
  • These days an important form of capital is in the form of intellectual capital
  • Intellectual capital can be defined as the collective knowledge and intelligence of the individuals in an organization or society
  • This knowledge can be used to:
    • Produce and enhance wealth
    • Gain a competitive advantage over your competitors
    • Spot new business opportunities
    • Solve emerging and existing problems
  • Sometimes intellectual capital is used to develop patentable ideas
  • Those who wish to use these ideas are then required to pay royalties if they want to use them
  • For example companies such as ARM do not actually produce commercial products
  • They focus on Research and Development and patent their ideas
  • Companies from all over the world then produce computer processors based on ARM’s techniques
  • Sometimes intellectual capital is of such importance that it becomes a state secret
  • For example, Boeing and Lockheed Martin produce fighter planes and missiles for the US government using classified intellectual capital
  • Another example of the manifestation of intellectual property are fashion designs

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