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Valuation of Vertically Integrated Digital Order Processing Systems: Using a case study to develop a framework to economically evaluate IT-investments
Blekinge Institute of Technology, Faculty of Engineering, Department of Industrial Economics.
Blekinge Institute of Technology, Faculty of Engineering, Department of Industrial Economics.
2024 (English)Independent thesis Advanced level (professional degree), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

In the rapidly evolving industrial sector, companies must leverage digital technologies to enhanceoperational efficiency and maintain a competitive edge. This study investigates the economic evaluationof IT investments, focusing on the integration of digital order processing systems within the supplychain management of Tetra Pak. Driven by the need to understand the direct financial impacts andstrategic benefits of such investments, the research aims to analyze a hypothetical future implementationusing historical data to determine its financial viability. The primary problem addressed in this thesis isthe economic viability and strategic benefits of integrating digital order processing systems in a firm'ssupply chain, specifically within the context of Tetra Pak. The challenge also lies in evaluating theseinvestments when not all data is known or readily available, which necessitates an adaptable evaluationframework. The study employs a mixed-methods approach, combining qualitative and quantitativeresearch techniques. Data was collected through a literature review, semi-structured interviews, andanalysis of financial documents. Quantitative models, such as Cost/Benefit (C/B) analysis, DiscountedCash Flow (DCF), and Net Present Value (NPV), were utilized to assess the financial impact and overallvalue of the IT investment. This methodological framework was designed to provide an evaluationdespite incomplete data. The results indicate that the potential IT investment would significantlyenhance operational efficiency and reduce costs. The application of NPV and return on investment (ROI)models demonstrated a positive economic outcome, with an annual net benefit of 457 600 SEK per year,over five years, confirming that the benefits of digital system integration surpass the initial investmentcosts. The findings highlight not only cost reductions but also possible improvements in customersatisfaction and internal process efficiencies. The discussion section addresses the implications of thefindings, emphasizing the relevance of traditional financial models like NPV and DCF whileacknowledging their limitations in handling uncertainties. It suggests that, among other things,incorporating probabilistic methods and scenario analyses can enhance the accuracy and reliability offinancial evaluations. This approach ensures that investment decisions are aligned with strategic goalsand adapt to dynamic market conditions. In conclusion, the developed framework provides a solidfoundation for evaluating IT investments within firms, even when data is incomplete. By integratingC/B analysis, quantitative modeling, and advanced financial evaluation techniques, the studydemonstrates that such investments are economically viable and strategically beneficial and that thereis much future work to be done in economics to better evaluate IT-investments.

Place, publisher, year, edition, pages
2024. , p. 58
Keywords [en]
Vertical integration, economic evaluation, IT investments, DCF, case study
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:bth-26328OAI: oai:DiVA.org:bth-26328DiVA, id: diva2:1876426
External cooperation
Tetra Pak Services
Subject / course
Degree Project in Master of Science in Engineering 30,0 hp
Educational program
IEACI Master of Science in Industrial Management and Engineering
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Examiners
Available from: 2024-06-25 Created: 2024-06-24 Last updated: 2024-06-25Bibliographically approved

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CiteExportLink to record
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Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
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  • de-DE
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  • en-US
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  • nn-NO
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  • Other locale
More languages
Output format
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