Question

Suppose that you have created a new piece of technology. What are some economic considerations you would need to make in order for the product to enter the marketplace?

Answer 1

1. Technology created would be an intangible asset and would add to the revenue of the firm. So before the technology is released onto the market an analysis needs to be done as to the revenue generating capability of the technology and a discounted cash flow analysis has to be done to evaluate this. Also the technology must be formulated as such that nobody can copy it and so there must be a patent obtained for the technology to prevent copying of the same. The impact of the technology on the profit and loss account must thus be checked before it is developed and released on the market. The valuation of the technology will also determine the amount that will sit in the company's balance sheet as part of the intangible assets of the firm. These all have to be considered before launching the technology into the market.