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ISBB Chapter 7 - Does IT Matter?
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Terms in this set (11)
Collaborative Systems
One where multiple users or agents engage in a shared activity, usually from remote locations.
Competitive Advantage
A company is said to have competitive advantage over its rivals when it is able to sustain profits that exceed average for the industry.
Cost Advantage
Strategic superiority achieved through factors such as access to cheaper inputs, efficient processes , favorable location , skilled workforce , superior technology , and/or waste reduction or elimination.
Decision Support Systems
A computer program application that analyzes business data and presents it so that users can make business decisions more easily.
Differentiation Advantage
Unique benefits or characteristics of a firm, product , or program that set it apart and above its competitors in the customers' viewpoint.
Electronic Data Interchange (EDI)
The computer to computer exchange of business documents in a standard electronic format between business partners.
Entry Barrier
Are obstacles that make it difficult to enter a given market.
Michael Porter
Wrote the book Competitive Advantage: Creating and Sustaining Superior Performance, identifying two primary factors, Cost Advantage and Differentiation Advantage. Developed the 5 force model and the value chain model.
Nicholas Carr
A Harvard professor who wrote his article "IT Doesn't Matter" where he asserts that information technology is so readily available and the software used so easily copied, businesses cannot hope to implement these tools to provide a competitive advantage.
Porter's 5 Force Model
A framework developed by economist Michael E. Porter to determine the profitability and attractiveness of a market or market segment. Includes Industry Rivalry, Bargaining Power of Buyers, Bargaining Power of Suppliers, Threat of New Entrants and Threat of Substitute Products.
Value Chain
A set of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market.
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Verified questions
QUESTION
A stock’s returns have the following distribution: $$ \begin{matrix} \text{Demand for the Company's Products} & \text{Probability of This Demand Occurring} & \text{Rate of Return if This Demand Occurs}\\ \text{Weak} & \text{0.1} & \text{(30\\%)}\\ \text{Below average} & \text{0.1} & \text{(14)}\\ \text{Average} & \text{0.3} & \text{11}\\ \text{Above average} & \text{0.3} & \text{20}\\ \text{Strong} & \text{0.2} & \text{45}\\ \text{ } & \text{1.0}\\ \end{matrix} $$ Calculate the stock’s expected return, standard deviation, and coefficient of variation.
QUESTION
You have $33,556.25 in a brokerage account, and you plan to deposit an additional$5,000 at the end of every future year until your account totals $220,000. You expect to earn 12% annually on the account. How many years will it take to reach your goal?
QUESTION
Weston Corporation just paid a dividend of $1.00 a share (i.e., [math]\left.\mathrm{D}_{0}=\$ 1.00\right)[/math]. The dividend is expected to grow 12% a year for the next 3 years and then at 5% a year thereafter. What is the expected dividend per share for each of the next 5 years?
QUESTION
Executive salaries have been shown to be more closely correlated to the size of the firm than to its profitability. If a firm’s board of directors is controlled by management rather than outside directors, this might result in the firm’s retaining more earnings than can be justified from the stockholders’ point of view. Discuss those statements, being sure (1) to discuss the interrelationships among cost of capital, investment opportunities, and new investment and (2) to explain the implied relationship between dividend policy and stock prices.