Information System

Topics: Costs, Balance sheet, Asset Pages: 13 (2468 words) Published: May 13, 2014


Case Study: TCO, E-Commerce
Sara Soltanzadeh
Fairleigh Dickinson University

Table of Contents
IntroductionPage 3
BackgroundPage 4
Application of Concepts
TCOPage 4
E-commercePage 6
E-commerce advantages and disadvantagesPage 6
TreatsPage 8
Solution to E-commerce treatsPage 9
ConclusionPage 10
ReferencesPage 11
AppendixPage 12

Introduction
Establishing a travel agency business can be a profitable and accomplishing career option but there are seven steps you need to consider: 1. Research which franchisor or travel host agency you want to align with. 2. Decide if a retail location or home-based office is the right fit for you. 3. Apply for a business loan.

4. Choose your specialty.
5. Attend training.
6. Build your customer base.
7. Get out there.
To analyze your business, you may need to use different ways. One of the main tools is to calculate the Total Cost of Ownership. Usually it is used to evaluate the purchase of a system’s cost, and includes purchase, repairs, maintenance, upgrades, service and support, networking, security, training, and software licensing(John R, n/d). Total Cost of Ownership (TCO) is an analysis tool to remove all the lifetime costs that come from owning specific types of assets. TCO is sometimes called life cycle cost analysis (Marta S, 2004). There is not an exact formula to calculate the total cost of ownership. Different companies have different operations. Therefore, something which is useful for one company may be irrelevant for another one. “Due to the increased popularity and availability of internet access many traditional small businesses are considering E-Commerce as a valid and profitable sales channel (Irene L, 2010).” E-commerce and traditional commerce are different, and it's important to consider the differences between E-commerce and traditional commerce carefully, in order to decide if it would be a useful idea for your business or not (Irene L, 2010). Background

Generally, credit is often given to the Gartner Group for originating TCO analysis in 1987 (Cory J, n/d). However, the concept actually originated much earlier. In the first third of the twentieth century the Manual of American Railway Engineering Association (1929) referenced the total cost of ownership as part of its financial calculations (Cory J, n/d). Computing Microsoft used the TCO concept in the late 1990s in an analysis attempting to prove that Windows had a lower TCO than Linux (Cory J, n/d). “Those who purchase or manage computing systems have had a high interest in TCO since the 1980s, when the potentially large difference between IT systems prices and systems costs started drawing the attention of the IT consulting community and IT vendor marketers (Marty S, 2004).” There are three levels in the evolution of e-commerce, innovation, consolidation, and reinvention (Author stream, n/d). Innovation took place from 1995–2000 and was characterized by excitement and idealistic visions of markets in which quality information was equally available to both buyers and merchants (Author stream, n/d). After 2000, e-commerce started its second level: consolidation. In this level, the traditional firms started to use the websites to increase their businesses. In 2006, though, e-commerce entered its current stage, reinvention, as social networking and Web 2.0 applications reinvigorated e-commerce and encouraged the development of new business models (Author stream, n/d). Application of Concepts

TCO
Obvious costs in TCO are the costs familiar to everyone involved during planning and vendor selection, such as (Marty S, 2004): Purchase cost:  The actual price paid (Marty S, 2004).
Maintenance costs: warranty costs, maintenance labor, contracted maintenance services or other service contracts (Marty S, 2004). Hidden costs are included:...

References: Irene, L. (2010, July). Weighing the Differences between E-Commerce and Traditional Commerce, Retrieved from: http://ezinearticles.com/?Weighing-the-Differences-Between-eCommerce-and-Traditional-Commerce&id=6611722
James, B
Marty, S. (2004). Building a Business Case: Total Cost of Ownership (TCO) Explained. Retrieved From: http://www.business-case-analysis.com/total-cost-of-ownership.html
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