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Managing the Strategic Alignment of Organizations 87
effect of extensive build-up of the firm such as globalization and new product
decisions.
Of importance for the organization is the effect of e-commerce on the
economic and social impact and on the alignment of the organization. The cost to
appear in the global market on the Internet could be affected as follows:
• The Internet market is perfect and all ‘clickers’ could get the correct
information, these shoppers and browsers act rationally and that no costs per
transaction completed exists.
• Personal and manufactured leverages are perfect substitutes and they would
affect alignment in equal amounts.
• Corporations and individuals can borrow money at the same rate.
• All organizations on the Internet can be placed in the same risk class so that
all classes are homogenous.
• Since it will be difficult to control tax on the Internet it should be assumed that
no tax would be levied.
• The average income of any organization can be represented by a variable that
could be picked statistically.
These arguments could be the following:
• The total economic value of any organization on the Internet should rise with
the use of leverage
• The turnover ratio on the economic book value of owner’s equity should rise
with the advent of leverage but should not affect debt of the organization on
the Internet
• Leverage should not affect debt unless the organization uses debt to finance
the e-commerce.
Certain conditions could be analysed with the help of leverage - such as
economics. Because the capital-market is not complete, will it also affect the capital
structure? If organizations make the wrong decisions about leverage and alignment,
then the following could happen:
• Possible incorrect application of financing
• Possible loss of qualified staff
• Loss of suppliers
• Loss of sales and the liquidation of the organization
• Economic and financial problems
• Loss of market share
• Formal liquidation procedures.
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