1. IT question: Almost every organization, from high-tech firms (such as Apple,
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Question
1. IT question: Almost every organization, from high-tech firms (such as Apple, IBM, Microsoft, and Google) to small businesses, relies on information systems for everyday tasks. For your initial post, imagine you are composing an email to your manager. Using business email format, explain how an organization uses information systems. Include examples from the place you work or from an organization you have researched
2. Finance question: The year 2008 ushered in one of the most challenging economic periods in U.S. history. The effects of prolonged unemployment and reduced asset values for homes and personal wealth continue to affect people’s potential to realize their personal wealth objectives.Identify two concerns that individuals should address in developing their own personal financial plan related to lessons learned from the risks identified during the recent U.S. financial crisis. What approaches should be included in a personal financial plan to address and minimize future risks with respect to these concerns?2.
Explanation / Answer
Answer: From the point of view of economics, IT changes both the relative costs of capital and the costs of information. Information systems technology can be viewed as a factor of production that can be substituted for traditional capital and labor. As the cost of information technology decreases, it is substituted for labor, which historically has been a rising cost. Hence, information technology should result in a decline in the number of middle managers and clerical workers as information technology substitutes for their labor (Laudon, 1990).
As the cost of information technology decreases, it also substitutes for other forms of capital, such as buildings and machinery, which remain relatively expensive. Hence, over time we should expect managers to increase their investments in IT because of its declining cost relative to other capital investments.
IT also obviously affects the cost and quality of information and changes the economics of information. Information technology helps firms contract in size because it can reduce transaction costs—the costs incurred when a firm buys on the marketplace what it cannot make itself. According to transaction cost theory , firms and individuals seek to economize on transaction costs, much as they do on production costs.
Information technology, by reducing the costs of acquiring and analyzing information, permits organizations to reduce agency costs because it becomes easier for managers to oversee a greater number of employees.
Answer:
From the financial point of view the relevant dimension are return and risk. Take another decision situation in which the firm is considering a financing proposal. The aspects along which such a proposal is examined are cost and risk. Since cost is the inverse of return, here too the basic dimensions are return and risk. In general, we find that these are the two basic dimensions of financial analysis.
What is the relationship between return, risk and market value of equity? Higher the return, ceteris paribus, higher the market value; higher the risk, ceteris paribus, lower the market value. Exhibit 11.4 shows the schematic diagram of how decisions, return, risk, and market value are related.
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