Week 5 – Peer Task (Team of 2 members) submitted and prepared by

Team A:
Sally Alkot
Oyelade Tomilola

Question 1:
As per Choong (2008) and based on the case study presented for Skandia, the hidden values that can be
systematically treated as Intellectual Capital (IC) as well as Invisible Assets (IA) are classified under three
elements; Human, Customer, and Structural.

Talking about the first element (Human), considering the training and development of employees and increasing
the employees’ competencies and enhancing their skills, have a great impact on knowledge sharing and
mastering critical skills. Employees, clients, suppliers, guests and stakeholders are a representation of the
human resource and they are the source of knowledge and experience.

Considering the Customer element, Skandia produced several types of reports that include analysis and ratios
that could be used to measure the value of customers and their growth rate.

Finally, the most critical element of this case study is the consideration of the Structural element, the packing of
different non-material values and several attempts to develop the skills and competencies of customers.

Question 2:
Intellectual Capital (IC) is important to Assurance and Financial Services (AFS) because it increases the
company value by implementing innovative approaches that are renewed rapidly, on the other hand, it makes
the business and its related operation more efficient and effective. This is also important to AFS because it
demonstrates to the investors that the company value is dynamic and it is not limited to the financial ratios only,
but it is also linked to the IC.

A: Organizational sustainability and innovation create an impact on company value. When the market value of
the company is high, new customers are engaged and the increase of interaction between companies and
customers is observed, this leads to value creation and addition. (Bucklew et al., 1999).

B: Reduction in costs and increase of investments with high profits, in addition to the recycling of structural
capital and organizational capital, this leads to efficiency in operations and productivity (Bucklew et al. 1999
and Edvinsson, 1997).

Question 3:
The Intellectual Capital (IC) is measured at Skandia AFS using the below frameworks:
A. Human Capital Ratio such as knowledge level, competency base, people, ideas and Return On
Investment for training and development.
B. Structural Capital Ratio such as Information Technology System, organization infrastructure, Research
and Development, Replacement costs of IT, culture and processes.
C. Customer Capital Ratios such as customer database, partners and alliances.
Question 4:
The mission and the function of the Director of Intellectual Capital at Skandia AFS is to identify and improve
the visibility of intangible and non-material items and components that are not recognized by the IFRS
standards. This position aims to capture, pack, cultivate, develop such items to transfer it to users through
training and knowledge development and networking.

AFS opted for the implementation of the Intellectual Capital concept as they believed that they may lose
valuable experiences and knowledge due to the recycling of applied experiences, international transfer of skills,
and change of speed in learning. Intellectual Capital in invisible, intangible and non-material assets to the
company, hence it does not have any book value as per the IFRS accounting systems and standards.

References
Bucklew, M., and L, Edvinsson (1999), ‘The Foundation for Performance Measurement’, Intellectual capital at
Skandia.

Edvinsson, L. (1997), ‘Developing intellectual capital at Skandia’. Elsevier 30 (3), pp. 366–373.

UNICAF VLE Material. Intellectual Capital at Skandia. Week 5 – Knowledge Management, Intellectual Capital
and Social Networks. Case: Intellectual Capital at Skandia. [Online]. Available at: https://vle-
usw.unicaf.org/mod/resource/view.php?id=100623. (Accessed on 26 December 2019)

KeongChoong, K. (2008), ‘Intellectual capital: definitions, categorization and reporting models’. Journal of
Intellectual Capital. 9 (4), pp. 609–638. [Online]. Available at: https://vle-
usw.unicaf.org/pluginfile.php/134760/mod_folder/content/0/Article%201%20-%20Intellectual%20Capital%20-
%20definitions%20categorization%20and%20reporting%20models.pdf?forcedownload=1. (Accessed on 27
December 2019)