The Use Of Information Communication Technology Business Essay

This study contains the information that I have been required to fix for my employer, a direction consultancy house that will be established in the close hereafter. The study is structured as follows. A hard currency flow prognosis from 2013 to 2015 has been prepared based on the premises that have been provided. Based on the hard currency flow prognosis, the start-up support required to guarantee that the concern avoids overdrafts until 2015 has been calculated. Following the hard currency flow prognosis is an analytical subdivision that foremost explains how on the job capital direction is critical for the profitableness of the concern. This is followed by an information paper addressed to prospective clients.

The information paper discusses the benefits of information and cognition direction to organisations. The following subject the information paper covers is the function that information and communicating engineering dramas in environmental scanning and benchmarking. Last, the extent of the relationship between organisational acquisition and competitory is discussed.

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To explicate the constructs I have used findings from research documents every bit good as experiences from the private sector.

Cash flow prognosis for three old ages:

The importance of working capital direction to the profitableness of the concern

Working capital direction, which refers to direction of current assets and current liabilities ( survey finance, 2013 ) is critical for the profitableness of the concern. To understand how on the job capital direction affects profitableness, we can analyze each constituent of working capital separately.

Current assets comprises of points such as hard currency, histories receivable and stock lists. If a concern has surplus hard currency, it will cut down net incomes since idle hard currency earns minimum returns. If alternatively this excess hard currency was used to cut down loans for illustration, so the concern would salvage money by non holding to pay involvement on loans. And the involvement rate on loans would be higher than the involvement rate on hard currency.

Having a high degree of histories receivable, or high yearss receivables, indicates that money is tied up in assets which are non gaining a return. This is about like an involvement free loan. If the company reduces the sum of histories receivable, it will hold more hard currency. This hard currency can be put to more productive usage to increase profitableness, for illustration by cut downing loans as mentioned above. In a similar mode, holding a high degree of stock, or high yearss stock list, indicates money is tied up in assets which are non gaining a return. Reducing the sum of stock will increase the hard currency available, which can be put to more productive usage. Furthermore, for concerns which sell perishable goods such as bars and fresh meat, holding lower degrees of stock, or turning over stock more frequently, will increase merchandise quality and cut down wastage. On the other manus, holding a lower degree of stock can be damaging, particularly if there is a higher than expected addition in gross revenues and the concern does non hold adequate stock to sell to clients.

Current liabilities comprises of points such as histories payables and bank overdraft. If a concern additions yearss payables, in other words it takes longer to pay histories payables, it will increase the sum of hard currency that the concern has. This hard currency can be put to more productive usage, therefore increasing profitableness.

On the other manus, if involvement is collectible on late payments, so detaining payments may non be the best option.By and large overdrafts have a higher degree of cyberspace rate, hence this is an expensive beginning of capital. Reducing bank overdrafts, if possible, can lend to more profitableness. If a concern reduces histories receivable, degree of stock or increases histories collectible, it will hold more hard currency, which it can utilize to cut down bank overdraft.Explained supra is how single constituents of working capital can increase profitableness. By pull offing working capital better, the concern can increase profitableness through doing its assets ‘work harder ‘ .

Since working capital is defined as the difference between current assets and current liabilities, the degree of working capital indicates the ability of a concern to run into its short term duties. If a concern has deficient current assets to run into current liabilities, it could confront serious effects as a consequence of non paying its debts on clip ( Shinand and Soenen, 1998 ) . Creditors could take legal action if current liabilities such as histories payables are non paid. This higher hazard as a consequence of holding deficient working capital can impact the cost of capital ( Shah, 2009 ) . In other words, if a concern is considered high hazard the Bankss may bear down a higher involvement rate.

Furthermore providers may be less willing to sell goods on recognition, or to hold long collectible clip. Hence non pull offing working capital adequately can impact profitableness.

The benefits that information and cognition direction bring to organisations

Knowledge direction is the procedure of capturing, distributing, and efficaciously utilizing cognition Davenport ( 1994 ) .

Harmonizing to one research paper, there is a “ divide in academic and practitioner treatments as to the effects of cognition direction: One side argues that cognition direction is a ephemeral direction craze that has had small or no consequence on concern public presentation. “ ( North, Reinhardt, and Schmidt, 2004 ] ) .To explore the benefits of information and cognition direction to organisations, positions from a figure of organisations is summarized following.Harmonizing to a Global Deloitte study ( 2012 ) over 80 % of Deloitte Knowledge users indicate that sharing cognition leads to competitory advantage and adds a existent client value. Knowledge direction helps work out most of the common concern jobs and helps companies increase their benefits by:Bettering concern determinations thanks to facilitated entree to expertise and to taking patternsIncreasing efficiency, productiveness and work smarter by cut downing instances of “ reinventing the wheel ”Bettering invention through wider and borderless coactionReducing loss of know-how by capturing explicit and tacit cognitionRushing productiveness with on-board preparations and timely entree to knowledgeIncreasing client satisfaction by presenting value penetrationsEnhancing quality and ability to join forces by standardising ways of working and enabling treatments with prima expertsDeloitte ( 2012 ) further explains the function societal media dramas. “ With corporate amalgamations, employee turnover and planetary enlargement, people must work otherwise: they need to join forces with equals that are overseas, exchange thoughts, maintain current on planetary affairs and have speedy replies to their inquiries. Social Media plays an of import function in cognition direction as it enables employees to join forces, connect and quickly entree to experts and information. ”A 2011 Oracle white paper states the five cardinal benefits that knowledge direction enables via client service betterments:Reduced research clipIncreased declaration truthReduced preparation clipManagement of increasing service volumesCreation of service penetrationVerizon Wireless implemented a undertaking to convey its knowledgebase to over 40,000 service reps, cut downing “ content pandemonium ” to increase first contact declaration, lessening escalations, velocity handle clip, and manage important growing in the client base without a corresponding addition in staff.

Cypress, an IT company, benefited from cognition direction through cost nest eggs, improved call declaration clip, addition in bringing of services on clip and decrease in service defects ( WLE, 2006 ) .Because of the importance of cognition direction, Deloitte has a specific division responsible for confer withing on cognition direction. Harmonizing to Drucker ( 2012 ) ” Knowledge direction prevents companies from invariably reinventing the wheel, therefore the diminishing supply of endowment, the retiring boomers, the staff turnover etc. Like ne’er before, tackling and leveraging on cognition and expertness is no longer a luxury, it is a necessary game modifier. ”Other taking planetary consulting houses such as Bain, Boston, McKinsey and KPMG all consult on cognition direction, every bit good as have their ain in-house cognition direction systems for its ain employees. Boston has a cognition direction forum, offering an environment for the exchange of thoughts, best patterns, and concern chances through a assortment of acquisition, communicating, and networking scenes ( Boston Km forum, 2013 ) . McKinsey maintains an organisation called the McKinsey Knowledge Centre that provides rapid entree to specialised expertness and concern information ( McKC, 2013 ) .While faculty members and practicians may non come to a consensus position on the importance of cognition direction, many planetary companies every bit good as confer withing houses place high importance on it.

The usage of Information Communication Technology ( ICT ) in environmental scanning and benchmarking

Environmental scanning is the procedure of continually geting information on events happening outside the organisation to place and construe possible tendencies. Benchmarking involves comparing the public presentation of a company ‘s merchandises or procedures externally with those of rivals and best-in-class companies and internally with other operations within the ain houses that perform similar activities ( Brain & A ; Company guide, 2010 )Both environmental scanning and benchmarking affect garnering information from internal and external beginnings, and it is in this regard that engineering plays a function. The usage of Internet engineering “ mitigates the trouble in roll uping informations, reaches a wider audience, and maintains informations security ” ( Johnson, Chen and McGinnis, 2010 ) .The Center for Association Leadership, which is portion of the American Society of Association Executive ( ASAE ) , has on-line resources to help its members.

One of the resources available to members is the “ Scan to Plan Interactive ” , an online tooled signed to assist members screen out and prioritise tendencies that could determine their hereafter ( Dalton, 2011 ) . This is one illustration of how engineering is used to supply resources, counsel and analytical capableness to companies. In add-on engineering is used in really garnering information. New indexing and filtrating techniques facilitate the accession of stuffs via the web ( Myers, 1999 ) .

Different organisations use engineering to different extents. For illustration the Simon Fraser University has developed a guideline for carry oning an environmental scan. The guideline called “ Conducting an Environmental Scan ” contains a list of external beginnings of information. Almost all of the beginnings are web based, including specializer databases and other on-line resources. This indicates extended usage of engineering by Simon Fraser University to carry on environmental scanning.

Harmonizing to Kozak ( 2004 ) , the growing of computing machine engineering increased the application of benchmarking. While engineering plays an of import function in scanning and benchmarking, companies in certain industries, and in states, may non utilize engineering, or utilize it to a lesser extent. For illustration a store proprietor in Central Asia may non utilize engineering for scanning and benchmarking since information may non be available through online, or the information may non be up to day of the month and dependable. In such cases scanning and benchmarking is done without the usage of engineering.

However, the overall decision is that information and communications engineering plays a critical function in scanning and benchmarking.

The extent of the relationship between organisational acquisition and competitory advantage

“ The most successful corporation of the 1990s will be something called the Learning Organization. The ability to larn faster than your rivals may be the lone sustainable competitory advantage ” ( Gues, 1988 ) .The statement from Gues ( 1988 ) is reinforced by Jack Welsh, former CEO of General Electric, who said “ An organisation ‘s ability to larn, and interpret that larning into action quickly, is the ultimate competitory advantage ” ( Business larning & A ; life 2013 ) .

In other words, concerns must continuously larn in order to keep competitory advantage and win.Organizational larning involves more than merely employees returning to school to larn, it is about the ability to harness and utilize the cognition for competitory advantage. It encourages employees to larn new accomplishments continually to be advanced and to seek new procedures and work methods in order to accomplish the strategic concern aims of the organisation ( Appelbaum and Gallagher, 2000 ) .The links between competitory advantage and acquisition in organisations has been summarized as follows ( Hever 2000 ) :Human resources can present sustainable competitory advantage when developing organisational capableness particularly for invention.

To accomplish this, the strategic direction of these resources must include a scheme to distinguish them from those of the competition by geting and prolonging taking border competences that continue to add value and contribute to developing nucleus competencies.An organisational acquisition focal point is indispensable to accomplish this distinction, and may be the lone manner to accomplish competitory advantage.Organizational larning itself must hold a competitory focal point.Competitive advantage can merely be sustained by changeless competitory acquisitionHarmonizing to a survey by Brookings Institution, 60 per centum of an organisation ‘s competitory advantage is derived from internal promotions in cognition, invention, and acquisition ( Carvenale, 1992 ) .This decision is farther reinforced by a instance survey conducted on Scandic, one of the largest hotel companies in Scandinavia. The instance survey concluded that cognition sharing, organisational acquisition and fight are all related and are reciprocally reenforcing ( Skinnarland, Itera and Sharp, twelvemonth unknown ) . Because of the importance of organisational acquisition, companies place a high grade of importance on it, and it produces consequences. Laser Drive, Inc.

, a Pittsburgh-based maker, used larning organisation techniques to accomplish a market portion of 70 per centum. Motorola estimates that for every dollar spent on job resolution and statistical procedure control preparation, 30 dollars are returned to the corporation. Several companies have reported a preparation return on investing of more than 1,000 per centum ( Peters, 1987 ) . On the other manus, organisational acquisition is non ever good, particularly if organisations learn the incorrect thing, for illustration how to fabricate something no 1 wants, or can make false decisions. Furthermore, superstitious acquisition occurs when an organisation interprets certain consequences as results of larning when in fact there may be small or no connexion between actions and results ( Locke and Jain, 1995 ) .


A sum of $ 1.6 million in startup support is required to guarantee that the concern has no overdrafts until 2015.

The overdraft is needed to cover negative net hard currency flows during 2013 and 2015, preponderantly due to capital outgo. The analytical paper explains the importance of pull offing working capital. By pull offing working capital better, the concern can increase profitableness through doing its assets ‘work harder ‘ . Furthermore holding equal on the job capital reduces hazards. The information paper for prospective clients explained a figure of issues. While faculty members and practicians may non come to a consensus position on the importance of cognition direction, many planetary companies every bit good as confer withing houses place high importance on it. This shows the importance that many houses place on cognition direction.

It was found that and communications engineering plays a critical function in scanning and benchmarking. It makes informations aggregation easier, reaches a wider audience and maintains informations security Jack Welsh ‘s statement on the importance of organisational acquisition summed up the of import function it plays in assisting concerns maintain competitory advantage. Several instance surveies indicated the extent to which organisational acquisition contributes to houses holding a competitory advantage.


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