Introduction to Intellectual Property
“Strategic Management of Intellectual Property” is an article by Markus Reitzig that addresses the significance of intellectual property management in maintaining a competitive edge. Intellectual property includes all an organization’s external and internal creations that support operational processes (Reitzig, 2004). Examples of intellectual property include patents, trademarks, copyrights, and IP rights. IP management is the most significant intellectual property since it is important in promoting a functional business unit. However, each of the categories of intellectual property is significant in maintaining operational balance in an organization (Reitzig, 2004). Therefore, the major assertions in the article, including the importance of intellectual property rights, the advantages of patents and trademarks, and factors to consider in the management of intellectual property, are discussed.
The Importance of Intellectual Property Rights
Intellectual property rights can assist a company in attaining a competitive edge in different ways. The first strategy is that they provide a momentary technical advantage. This digital upgrade enables the organization to enjoy leads, which can improve economies of scale. Intellectual property rights also protect brand names and contribute to forming an industry standard (Reitzig, 2004). This factor enables the organization to maintain quality and benefit from being unique from other companies (Reitzig, 2004). Additionally, Patent and trademark combinations can help maintain IP-based economic benefits, such as becoming pioneers in establishing a specific product.
The Advantages of Optimizing on Patents
IP rights have been used to shape the structure of various industries, resulting in significant productivity and profitability. Patents are examples of intellectual property that promote various developments, including brand differentiation and incumbency advantage. When facing competition against companies with similar core products, executive management must consider concerns, including concept development, information, and timeline, as they correspond to Intellectual property rights (Reitzig, 2004). This consideration ensures that product differentiation is enhanced to distinguish products from different brands (Reitzig, 2004). Additionally, Companies frequently use intellectual property rights to maintain incumbency advantage. For instance, switching costs enhance consumer loyalty, which promotes business success.
The Advantages of Optimizing on Trademarks
Trademarks can also be used by companies to legally rebrand products to reduce the number of profitable opportunities for competitors. This strategy helps raise the entry barrier, resulting in a monopoly that accelerates profitability. The author gives an example of Henkel KGaA, a home care product company that uses trademarks to protect the variety of their detergents and realize consumers’ preferences (Reitzig, 2004). This strategy enables them to maximize profitable products, which helps secure sales. IP rights, such as trademarks, also help companies maintain their suppliers by controlling some of the features in different market segments (Reitzig, 2004). This strategy reduces competition as the number of suppliers is limited.
Trademarks can also be used by companies to legally rebrand products to reduce the number of profitable opportunities for competitors. This strategy helps raise the entry barrier, resulting in a monopoly that accelerates profitability. The author gives an example of Henkel KGaA, a home care product company that uses trademarks to protect the variety of their detergents and realize consumers’ preferences (Reitzig, 2004). This strategy enables them to maximize profitable products, which helps secure sales. IP rights, such as trademarks, also help companies maintain their suppliers by controlling some of the features in different market segments (Reitzig, 2004). This strategy reduces competition as the number of suppliers is limited.
Factors to Consider in Strategic Management or Intellectual Property
Companies must maintain a proper organizational design to ensure that information retrieved from their IP departments helps identify potential strategic partnerships, lucrative market openings, and threats to the company to influence informed decision-making. The first consideration should be the hierarchy of governance that ensures work is divided appropriately to enhance service delivery (Reitzig, 2004). Licensing is also a pertinent issue that ensures a company’s rights on properties are guaranteed. Additionally, technology forecasting ensures that the organization is aligned and aware of developments that could enable them to tap into opportunities as they arise.
Conclusion
The rising significance of intellectual property impacts organizational executives since they must not delegate IP-related issues to functional organizational units. Instead, they must address the issue strategically by focusing on threats to establishing functional Intellectual Property management. The key is approaching intellectual property as any other viable component confronting their organizations. The reason is that there are various advantages of maintaining functional IP management, including providing technological lead, strengthening a brand, brand differentiation, incumbency advantage and achieving an IP-based competitive edge. However, its viability depends on a functional organizational design based on a systematic hierarchy of leadership, licensure, and forecasting. The author affirms that companies are yet to achieve this potential as specific metrics such as sustainable organizational designs are disregarded.
Reference
Reitzig, M. (2004). Strategic management of intellectual property. MIT Sloan Management Review, 45(3), 35. Web.