Proposal to improve brand value evaluation model for selecting standard enterprise published by the Ministry of Economy, Trade and Industry of Japan

In this paper, we propose to improve the applicability of the brand value evaluation model given in the ‘Brand value society report’ published by the Ministry of Economy, Trade and Industry of Japan (the METI model). In the brand value evaluation technique, the METI model is based on publicly available financial data, so the transparency and availability of this technique are high.There is a need to select a standard enterprise in a type of business which the unit price index (Sales/Cost of sales) used for the brand value evaluation is the lowest.The unit price index of the enterprise used in the brand value evaluation is compared with that of the standard enterprise, and the brand value is calculated. However, businesses within our industry, such as telecommunications, may not have the same business operations nor cost structure.Therefore, even if the unit price index is compared, a proper calculation of brand value is difficult. We propose standard enterprise selection conditions to adjust the business domain, and cost structure.The weighted average model, which adjusts for the business domain more accurately, is proposed. The weighted average model gives a weighted average efficiency of the enterprise using the lowest unit price index, which corresponds to each business operation within the enterprise for the brand value evaluation. We examined the applicability of this proposal using an enterprise with several business operations.