COM 331-Ch.7-1 - COM 331 Intro to MIS Ch.7: Value Creation...

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COM 331 – Intro to MIS Ch.7: Value Creation and Strategic Information Systems Economic value Generated when worthwhile things that did not exist before are created -Entrepreneurs focus on market opportunities and the development of solutions to meet these opportunities p.192 Transformation process Some input resources that have a value of $ x in their best utilization are transformed in outputs for which customers are willing to pay $ x + $ v -Value, in the amount $ v , has been created p.192 Supplier opportunity cost (SOC) Minimum amount of money the suppliers are willing to accept to provide the firm with the needed resources p.193 Firm cost (FC) Actual amount of money the firm disbursed to acquire the resources needed to create its product or service p.193 Customer willingness to pay (CWP) Maximum amount of money the firm’s customers are willing to spend in order to obtain the firm’s product p.193 Total value created (TVC) TVC = CWP – SOC p.193 Value appropriation Total value created in the transaction is split among all the
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COM 331-Ch.7-1 - COM 331 Intro to MIS Ch.7: Value Creation...

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