Why are information systems essential in business today? Describe four trends in the global environment that have made information systems so important.

The emergence of a global economy, transformation of industrial economies, transformation of the business enterprise, and the emergence of the digital firm make information systems essential in business today.  These trends present the business firm and its management with several new challenges. .   

As a growing percentage of the advanced industrial economies in the United States, Europe and Asia depends on imports and exports, information systems supply both communications and analytic instruments for engaging in trade and for managing businesses that are spread throughout the world. 

The major industrial powers in the United States, Europe and Asia are being transformed from industrial economies to knowledge- and information-based service economies.  In such economies, information systems and technology have become critical to these economies, and in this day and age, they have become essential to economies that primarily remain reliant upon manufacturing.
Development of the power and capabilities of information systems has transformed the possibilities for organizing and managing business enterprises.  Businesses of this style are less hierarchical (flatter) and are more decentralized, allowing them to rely more on informal commitments and temporary task forces.  Many managers have become more reliant upon individuals who report to them for decision making as these reportees have more learning and current knowledge.  Also, more and more under this transformation, companies are becoming more customer-oriented. 

The emerging technology and the organizational redesign that has accompanied it have created the condition for the emergence of the digital firm.  While firms of this type are still few and far between, they are growing in number.  Perhaps more important right now, almost all larger firms and even many smaller ones have become reliant upon the digital firm technology for much of their activity, including relations with customers and suppliers. 

OTHER COSTS

Expenses

Decreases in ownership claims arising from delivering goods or services or using up assets is called expenses

Losses

Reduction in the value of property due to physical damage or destruction.

Example

During manufacturing 200 units lost due to some reasons is called loss.

Opportunity Cost

An opportunity cost is the benefit which could have been obtained by following another course of action.

Fixed Cost

Fixed costs are those cost, which do not change significantly in response to change in an activity base.

Example

Fixed cost can also included administrative and executive salaries property taxes leases and many types of insurance.

Variable Cost

A variable cost is one that arises or fall in direct proportion to change in the activity base.

Example

If the activity base increases by 10% the variable cost automatically increases by 10%.

Avoidable Cost

Cost that will not continue if an on going operation is changed or deleted are relevant.

Example

Avoidable cost includes department salaries and other costs that could be eliminated by not operating the specific department.

UNAVOIDABLE COST

Cost that continue even if an operation is deleted or changed are not relevant in our example because they are not effected by a decision to delete the department unavoidable cost include many common cost which are these cost of facilities $ services that are shared by user.

EXAMPLE

Store depreciation, heating, air conditioning and general management expenses are cost of resource used by all departments.

PRODUCTION COST

Production cost identify with goods produced or purchased for resale. This cost initially identifies as part of the inventory on hand these product cost become expenses only when the inventory is sold.

PERIOD COST

Period cost is cost that is deducted as expenses during the current period with out going through an inventory stage.

FULL COST

The total of all manufacturing cost plus the total of all selling and administrative cost are called full cost.

DIFFERENT TYPES OF COST

Out Of Pocket Cost

The out of pocket often used to describe cost which have not been yet incurred and which may very among the alternative course of action out of pocket cost, therefore, are relevant in making decision.

Imputed Cost

Imputed costs are hypothetical cost representing the cost of a resource measured by its use value. An imputed cost is similar to an opportunity cost, except that an imputed cost may be arbitrary measure.

Relevant Cost

The cost that directly effects future business decision is called relevant cost

Irrelevant Cost

The cost that do not effect the future business decision are called irrelevant cost

Inventorial Cost

Total cost all type of inventory that include work in process inventory, finished good inventory, merchandise inventory is called inventorial cost.

Differential Cost And Increment Cost

Differential cost and increment cost are defined as the difference in total cost between two alternatives.

Example

The differential cost and incremental cost of increasing production from 1000 automobiles to1200 automobiles per week would be the additional costs of producing the additional 200 automobiles each week. In the reverse situation the decline in cost caused by reducing production from 1200 to 1000 automobiles per week would often be called differential cost or increment cost.

Expenses

Decreases in ownership claims arising from delivering goods or services or using up assets is called expenses

Sunk Cost

A sunk cost is one which has already been incurred by past action. Sunk costs are not relevant to decision because they cannot be change regardless of what decision is made.

How did import substitution policies affect the economics of Brazil and Argentina?

Many major South American countries—including Argentina, Brazil, and Chile—adopted these well-intended but ultimately destructive import substitution policies. In the late 1980s, however, the countries began to reverse their policies. They lowered tariff barriers, sought free-trade agreements with

their neighbors, privatized their industries, and positioned their economics to compete internationally.

For example. Is now one of the most free-market-oriented economies in the world. These policy shifted are expanding South America’s role in world trade, attracting foreign capital to the continent, and increasing productivity and per capital income.

Discuss the role of natural resources and agriculture in Africa’s economy?

Much of Africa’s economy is tied to its natural resources. Libya enjoys the continent’s highest per capital income--$ 7,900 in 1999—because of its substantial oil reserves. Agriculture also is important to African countries. For some Agricultural products ate their major exports. For example, coffee, cocoa and palm oil account for 80 percent of cote d’Ivoire’s exports, and coffee

and tea comprised 80 percent of Rwanda’s exports prior to the eruption of tribal conflicts in that country.

South Africa possesses fertile farmland and rich deposits of gold, diamonds, chromium, and platinum. Many MNCs used South Africa as the base fro their African operations until the 1970s. In 1999 South Africa’s exports—primarily minerals—accounted for 25 percent of its $ 131 billion GDP.

What is a Chaebol?

The cooperation between Korean government and large firms to dominate the Korean economy is called Chaebol or a large business organization that consists of a number of companies that deal with a variety of different business, manufacturing, or commercial activities are Called Chaebol. The most important of these conglomerates or Chaebol are Samsung, Hyundai, Daewoo Group, and LG (formerly Lucky-Goldstar).