No Marshmallows, Just Term Papers
Club IT is a new club set up by Lisa and Ruben. It currently faces competition from other clubs in the community and wishes to engage the use of information technology to increase comparative advantage so as to increase market share and promote customer loyalty. In this presentation, we will be looking at some of the tools which Lisa and Ruben can utilize to fulfill these objectives.
The wireless order-taking system will help to increase Return on Investment (ROI) for Club IT. This is because the new system allows more efficient managing of reservations as well as a more systematic way of ordering. In addition, it allows the organization to reduce costs of operation because number of staff required will decline. Materials traditionally used for taking orders will no longer be required. Therefore, it is expected that profit will increase more than $20,000 per year. The cost of the system is estimated to be about $35,000, therefore break-even period is estimated to be about 2 years.
The formula for estimating the ROI = gains investment-cost of investment/cost of investment).Without intangibles or other tangible assets that may affect the earnings at Club IT, and reducing the wait staff by one person will produce a Return of Investment of 35.04%. This means that for every dollar invested, the organization will gain .35 in net returns. Therefore, will allow higher amount invested and give Club IT higher returns on the effects of other tangible and intangible assets.
NPV (Net Profit Value) refers to the difference between the present value of cash inflows and the present value of cash outflows This can be used to assess the profitability of an investment. With the current situation of Club IT, implementing wireless order-taking system will require to spend to avail installation of the system and the costs of program applications plus the fees to the support staff who will maintain the system. The cash outflow will...