Management Patents Are a Source of Protection Essay

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Management

Patents are a source of protection for intellectual property in any industry. The value in a patent is that it allows a company that has developed a product or proprietary technique to enjoy monopoly power over that, thus enabling the company to recoup its investment in the development of the proprietary product or technique. Patents are published as a matter of public record, and this is not deemed harmful because of the strength of law protecting patents. The typical response of competitors to patents is that they either build on the patent in a meaningful way, so as to receive their own patent for a new product that may be built on the original product. Alternatively, a competitor may develop a similar product that performs the same function as the one covered by patent, and receive its own patent on the new product. Patents typically can only be held for a specific time period, after which they become public domain (Morah, 2015).

The value of a patent can be evaluated a few different ways, but the best is probably to understand what cash flows that patent might accrue. So the usefulness of the product in question, how long the patent protection lasts, and what the overall market is for that product are all factors that contribute to the value of any given patent (Morah, 2015). Any individual patent has to be taken into consideration on its own merits.

The role that patents play in mature industries is not usually that strong. In such industries, the pace of technological change is relatively slow, and firms have relatively fixed market share, as there are few new customers and the cash flows are predictable. A new patent can be critical in shaking up a mature industry, sparking a new growth cycle. This occurred with the first patent for a cellular phone, for example. The telephone hardware industry was mature at the time, but cell phones knocked that industry into a growth phase that has lasted for a few decades. But overall, mature industries are not protected by patents. Companies earn profits in mature industries by virtue of their established market position, and by way of other forms of intellectual property, such as trademarks.

In industries that are characterized by a rapid pace of technological change, the role that patents play in value is different. Patents are necessary to provide temporary competitive advantage for companies in such industries. However, the economic shelf life of a patent can be very low, such as with smartphones. Technological changes are frequent, rapid and sometimes there is a considerable amount of leapfrogging in this type of industry, so a patent might only have economic value for a short period. That value can be significant, but technology is often replaced quite quickly -- something state of the art today is obsolete in a year. So patents are important, but their value can be fairly ephemeral. Pharmaceuticals cannot be lumped into consumer electronics because drugs receive 20 years of patent protection and it is difficult for competitors to leapfrog drug technology because of the high costs and intensive regulatory process for new drug development. It is just not comparable, in part because the economic life of drug patents is pretty much the full length of the patent, whereas in electronics that life might be a matter of months. But in any type of company, patents play an important role because they give the company that develops technology the exclusive economic rights over that technology for a given period of time, allowing companies to recoup their research and development costs.

Unit 3 Discussion Board 2

The online education industry experienced a strong period of growth through the early part of the 2000s, driven by easier and cheaper Internet access, increased demand from employers for college education, and improved technology for the delivery of education online. The industry peaked in 2010. CECO recorded revenue of over $2 billion in that year, and profit of $157.8 million. This peak was driven in part by the economic downturn that sent many people out of the workforce and back to college to enhance their career potential. The industry has faced declining revenue since that time.

The Five Forces model can help to explain why firms in the online education industry have struggled. First, the bargaining power of buyers has increased. There are many options within the industry, and the industry competes directly against offline education at more traditional universities.

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So buyers have many options, and are apt to shop around, especially where the programs themselves are not well-differentiated. The barriers to entry have come down significantly in recent years, which is a key factor in the threat of new entrants. New entrants proliferated in the 2000s, so while existing players were growing in terms of revenue, many of the early industry leaders were simultaneously seeing market share downturns. Traditional universities are also entering distance education, particularly as the cost of the technology that underpins the industry has come down -- they already have the educational infrastructure. Several non-profit entities have entered the industry as well in recent years, and cutting out profit margins allows them to undercut on price (Waldron, 2013).

The bargaining power of suppliers is still fairly low, especially as the core technology and the educators are relatively affordable for firms that are hiring. The intensity of rivalry is high, which is characteristic of a declining industry with overcapacity, as companies in the industry have to fight for whatever share is left. Lastly, the threat of substitutes is high -- as noted this industry competes against traditional private and state-run colleges. So the conditions for profit in this industry are not great. The numbers bear this out: CECO hasn't turned a profit since FY 2011, and other firms in the industry such as Apollo and DeVry, while still profitable, have seen sharp declines in revenues and profits in the past few years. Nobody is doing well in this industry and the outlook is relatively poor as there seems to be little way of breaking the competitive pressure.

Unit 3 Discussion Board 3

Utilizing innovation to create competitive advantage is kind of a dumb question -- when you have an innovation, you are doing something nobody else does. If that something has value, then it will give you competitive advantage.

But that's the easy part - where companies are consistently challenged is to nurture innovation. There are three major ways to do this. The first is that you need to hire creative people. If your people aren't the sort of thinkers who come up with innovations, nothing else you do will matter. So companies need to have a sense of what an innovative thinker looks like, first and foremost. But just as important is creating a company that inherently attracts that person. This means offering the right perks, pay, benefits and working environment. The best thinkers like to see a pathway to success, and that their innovations will be rewarded. So creating the right environment is essential.

The organizational culture has to support innovation as well. Some companies have a way of stifling ideas, while others have a way of bringing out the best in people. It is not necessarily easy, but a company that genuinely values innovation and actively encourages it is more likely to enjoy competitive advantage from its innovations (Cadigan, 2015).

Lastly, the company has to remove barriers to innovation. Getting the ideas is just the first step; the company still has to turn innovation into competitive advantage. That means removing structural barriers to innovation, and in many cases providing specific resources to bring innovations to market, be those resources time or money or something else. Companies that allow people with great ideas to run with those ideas, and help them to do so, are much more likely to see the results of that policy in competitive advantages down the road.

Individual Project

This is a really vague question -- with so many wishy-washy terms it is hard to know what the question is really asking. The value chain is Michael Porter's idea of the different activities that a firm will typically undertake to add value (QuickMBA, 2010). These five activities are in inbound logistics, operations, outbound logistics, marketing & sales and service. The idea is that value can be extracted from each of these activities. The more activities in which a company enjoys a competitive advantage over its rivals, the more likely it is to be profitable.

I didn't know there were different methods of analyzing the value chain. That's a funny concept. Normally, you first look at your own value chain to understand what you do, and where you think you are adding value. Look at it from the customer's perspective, too. But the value chain is comparative as well, so you have to look at what your competitors are doing. The idea is that you.....

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