1. Cloud computing describes computation, software, data access, and storage services that do not require end-
user knowledge of the physical location and configuration of the system that delivers the services. Parallels to
this concept can be drawn with the electricity grid where end-users consume power resources without any
necessary understanding of the component devices in the grid required to provide the service.
Cloud computing is a natural evolution of the widespread adoption of virtualization, service-oriented
architecture, autonomic and utility computing. Details are abstracted from end-users, who no longer have
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need for expertise in, or control over, the technology infrastructure "in the cloud" that supports them.
Cloud computing describes a new supplement, consumption, and delivery model for IT services based on
Internet protocols, and it typically involves provisioning of dynamically scalable and often virtualized
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resources. It is a byproduct and consequence of the ease-of-access to remote computing sites provided by
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the Internet. This frequently takes the form of web-based tools or applications that users can access and use
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through a web browser as if it were a program installed locally on their own computer.
Value chain A value chain is a chain of activities for a firm operating in a specific industry. The business unit is
the appropriate level for construction of a value chain, not the divisional level or corporate level. Products pass
through all activities of the chain in order, and at each activity the product gains some value. The chain of
activities gives the products more added value than the sum of the independent activity's value. It is important
not to mix the concept of the value chain with the costs occurring throughout the activities. A diamond cutter,
as a profession, can be used to illustrate the difference of cost and the value chain. The cutting activity may
have a low cost, but the activity adds much of the value to the end product, since a rough diamond is
significantly less valuable than a cut diamond. Typically, the described value chain and the documentation of
processes, assessment and auditing of adherence to the process routines are at the core of the quality
certification of the business, e.g. ISO 9001.
What activities a business undertakes is directly linked to achieving competitive advantage. For example, a
business which wishes to outperform its competitors through differentiating itself through higher quality will
have to perform its value chain activities better than the opposition. By contrast, a strategy based on seeking
cost leadership will require a reduction in the costs associated with the value chain activities, or a reduction in
the total amount of resources used.
Agency theory, a theory explaining the relationship between participants, such as a shareholders, and agents,
such as a company’s executive. In this relationship the principal delegates or hires an agent to perform work.
The theory attempts to deal with two spesific problems. First, that the goals of the principal and agent are not
in conflict (agncy problem), and second, that the principal and agent reconcile different tolerance for risk.
A theory concerning the relationship between a principal (shareholder) and an agent of the principal
(company’s manager)