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Economics Of Information Versus Economics Of Things

The Economics of Information involves the non-physical things while the economics of things is simply the assets that can be seen and touched. In the book, Blown to Bits: How the New Economics of Information Transforms Strategy by Philip Evans and Thomas Wurster (2000) states that in the information-driven environment the contribution of information to GNP is increasing. Aside from that information has made a vastly disproportionate contribution to competitive advantage. Things exists in a location and are subject to diminishing returns. While information increases returns, can be reused at zero additional cost, and is located nowhere and everywhere (Evans and Wurster 2000):

When a thing is sold, the seller ceases to own it; when an idea, a tune, or a blueprint is sold, the seller still possesses it and could possibly sell it again. Information can be replicated at almost zero cost without limit; things can be replicated only through the expense of manufacture, Things wear out; their performance deteriorates with wear and tear; information never wears out, although it can become fashionable, obsolete, or simply untrue (2000: 15).

No.1

Intangible Assets refers to the identifiable asset that are non-monetary. These assets cannot be seen or physically measured. Intangible assets constitutes patents, copyrights, trademarks, and trade secrets (Cohen 2005). These assets are required for delivering exceptional performance in the critical internal processes (Kaplan & Norton 2001).

Kaplan and Norton argues that aside from the numbers that measures the company's tangible assets, today's businessmen should cope with the dynamic environment that seeks improve their knowledge-based assets:

Today's economy where intangible assets have become the major source of competitive advantage, calls for tools that describe knowledge-based assets and the value-creating strategies that these assets make possible. Lacking such tools, companies have encountered difficulties managing what they could not describe or measure (2001: 2).

A company should invest in this intangible assets to remain competitive. Human capital as a source of competitive intangibles should received investments in improving their efficiency. The company can develop knowledge-based strategies to narrow path to effective management. And decentralization of operations into teams could help in creating a more closer relationship to the clients.

Co-creating IT and Business Strategy

Response Structure No.2

The relationship between information technology and organizational strategy has been the focus of discussion for managers in the past decade (Schniederjans & Cao 2002). Managers and business executives have strongly voice the need for an IT strategy that will be 'linked to' or 'integrated with' the business strategy. The most popular understanding suggest that IT strategy has to be link back to the company's business plan or business strategy (Targett, et al 1999).

It should be stressed that the relationship of between information strategic orientation, operations management and environmental factors in an electronic commerce setting would improve business performance (Schniederjans & Cao 2002). Therefore alignment between IT strategy and organizational objectives is necessary.

Organizations have initiated change in traditional structures and cultures. Their focus should fill the need of the customers and redesign business lines. They also need to ensure the close alignment of IT with business strategy (Targett, et al 1999):

The need to maximize performance of interrelated activities rather than individual business functions, combined with the opportunities offered by IT, means that a new approach to the coordination of processes across organizations is necessary to achieve sustainable competitive advantage (1999: 125).

Question No.2

It is essential for a company to have its organizational strategy and information business strategy match to the overall business strategy this will help in the improvement of the company's overall organizational efficiency. There is a high understanding on the importance of its relationships, a survey was distributed to Norwegian IT managers showed that improving links between information systems strategy and business strategy is the top priority in information technology management (Grembergen 2002).

It is argued that emphasis given on “the construction of sustainable competitive advantage by building up intangible assets such as strong IS/IT staff, reductions in the gaps between IS/IT and internal business communities, and organizing for effective IS/IT work,” (Targett, et al 1999).

Who Pays for the Internet

Response Structure No.3

Paying for the Internet today is not just an option but a necessity. With the exponential increase of its influence on how prospective clients ' attitude toward buying a product or service, it is has now become an integral part for any company to remain relevant and competitive in the ever-changing business landscape.

Online presence opens up a wide array of opportunities for businesses to achieve growth. Even in distant locations business can now find new markets, interactions will be more closer and relationship can be develop without the need of personal presence. Serving the prospective clients effectively will create a loyal audience and ready market for their products or services (Fox 2000). Companies who fail to create an online presence will impact their image to its clients making it look like a business that has not yet reached the internet era.

According to InfoWorld (1996), the biggest reason for businesses to engage in online activities is to improve their sales and market their company, garnering 25% of respondents (multiple responses applied). Other reasons that cornered at least 20% of the respondents are, gathering information, supply chain/product information and technical support/service.

However going online can have its pitfalls especially if not planned properly cost can even go higher if managing its website is left unchecked. Therefore it important be make the organization knowledgeable on online technology to fully capitalize on its advantages.

Question No.3

With the growing presence of the internet worldwide it has become a new avenue for businesses to reach out to other traditional markets. It is common nowadays for company put up a web presence and e-commerce has continued to grow and become an avenue of trading for businesses and their clients. The following are the factors on why should going online is a necessity for organizations today:

Inexpensive way to reach new markets and connect with new clients. There currently 1.5 billion people using the internet (Fox 2000).

Reduce organizational costs in logistics, transportation, other operational expenses.

A 24-hour global presence and the possibility of an automated approach of managing businesses.

An excellent communication and marketing tool

Shows professionalism and an opportunity to present it self to the whole world.

Starting an online presence is inexpensive although it has to be carefully planned to make the website an effective tool in communicating to its prospective clients. The following are the possible considerations in doing business online:

Make sure that the website is secured enough for the clients to conduct business transactions

Avail a reliable web host and bandwidth to prevent the website from going down.

Create a comprehensive website architecture to efficiently design its functionality and aesthetic look.

Take advantage of latest Web 2.0 technologies that involves interaction with prospective clients.

Use search engine marketing to optimize the website's capabilities to reach the desired audience.

Work Cited

Cohen, J. (2005). Intangible Assets: Valuation and Economic Benefit. United States: John Wiley & Sons, Inc.

Evans, P. & Wurster, T. (2005). Blown to Bits: How the New Economics of Information Transforms Strategy. United States: The Boston Consulting Group, Inc.

Fox, S. (2009). E-Riches 2.0: Next-generation Marketing Strategies for Making Millions Online. United States: Scott Fedewa

Grembergen, W. (2002). Information Systems Evaluation Management. United States: IRM Press.

Kaplan, R. & Norton, D. (2001). The Strategy-focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment. United States: Harvard Business School Publishing Corporation.

Parker, R. & Radosevich L. (1996) Third Annual IWAY Poll: Web Presence is the Point. InfoWorld 18, (52/53) 12

Targett, D., Grimshaw, D. & Powell, P. (1999). IT in Business: A Manager's Casebook. Great Britain: Reed Educational and Professional Publishing.

Schniederjans, M. & Cao, Q. (2002). E-commerce Operations Management. Singapore: World Scientific Publishing Co. Pte. Lld.


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