CUPRINS - Universitatea George Bacovia

Savvas C. Savvidesdevelopments have been less favorable than in the EU, but especially so comparedwith the US.The benefits from ICT production and use materialize through variouspossibilities and through changes in a variety of business practices. Firms clearlybenefit from improvements in the organization of production and distribution, frombetter inventory management and from cost reductions associated with substitutionof more efficient and powerful computers for certain categories of white–collarlabor. Essentially, the role of ICT in enterprises is one of processing informationand, thus, reducing co-ordination costs such as for example inventory management(Coase, 1960). 29Sophisticated Supply Chain Management (SCM) systems have beendeveloped to help enterprises to improve overall operational efficiency througheach link of a firm’s supply chain, from supplier to customer, primarily byfostering better communication and cooperation within each link by all partiesinvolved. SCM can enhance the profit potential of enterprises primarily through thereduction in costs by making the firm more efficient and cost-effective across theentire system and by minimizing total system-wide costs, from transportation anddistribution to inventories of raw materials, work in process, and finished goods.Firms can thus respond more effectively to changes in the demand of theirproducts. The use of ICT could also make possible an improvement in competitiveconditions, thus increasing efficiency and reducing prices. Finally, the emergenceof new industries and sectors has been only possible because of the intensive use ofICT.It should be noted also that as economies develop and mature, furtherproductivity gains depend less on capital accumulation and more on innovationundertaken by public and private institutions and by enterprises. It is thusimperative that the Authorities in Cyprus facilitate the conditions that would induceand encourage innovation and the use and diffusion of ICT. Even though theStrategic Development Plan 2004-2006 of Cyprus addresses these issues, in theframework of the Lisbon Strategy, it seems that it does not go far enough and hasperhaps failed to transmit the urgency of implementing the elements of the strategyin their entirety. For instance, there are still some barriers to entry and new firmcreation in certain sectors, the relations between firms and science/academia in29 The 1991 Nobel laureate in Economics Professor Ronald Coase postulated that acompany compares the costs of organizing an activity internally with the cost of using themarket system for its transactions. The costs incurred by using resources outside was whathe called “transaction costs.” In addition to transaction costs, there are two other categoriesof costs: coordination costs and information costs. Coordination costs arise because of theuncertainty and complexity of such tasks as timing the deliveries, meeting customerspecifications, making alternative payments arrangements, and forecasting needs. On theother hand, information costs arise because information is essential for the propercoordination activities between the firm and its business partners.216