How Information Gives You Competitive Advantage by Michael E. Porter and Victor E. Millar
Required to make a summary which includes what have you learned, pros and cons of the assigned paper, and criticism of the paper.
Competitive advantage in information technology
The information technology revolution is changing our economy. It has increased revenue for businesses because it has reduced the cost of acquiring, processing and information transmission (Wagner, Beimborn & Weitzel 2014).
For the business to enjoy the benefits that come along with the application of information it needs to invest more in capital furthermore the management needs to be directly involved in new technologies. Managers must know that information technology is not only the use of computers, in today business information technology is applied broadly, for instance, the use of data recognition equipment, factory automation communication technologies amongst others.
Information advancement has influence competition in three ways
- It has change industry structure and there alters the competition rules
- It has created a competitive advantage by giving business organization new ways to deliver their duties
- It has revolved whole business existing operations.
Information technology has changed ideas today business operates. It has affected the process by which companies manufacture their products; furthermore, it has reshaped the product itself, packing of business goods, information and services to increase value for their buyers (Avgerou & Walsham 2017)
- Changing the product- products have both data and physical components, the latter defines everything that the buyer needs before he/she purchases the product and utilize it to accomplish the desired results. The product it involves it’s the characteristics and how should be used, for instance, service procedures, accessibility, and the product expiry date.
- Direction and space change- though there is a trend in information intensity and product, importance and role of information technology are relatively different among industries. Insurance and banking have always had information intensity. These are among the first industries that have an enthusiastic event of data processing, on the other hand, industries that produce say sugar is manufactured by physical processing.
The use of Information technology is not only changing business processes and products, but also it transforms the nature of competition itself.
Modifying value chain- facts allows string at all progression unit, changing the way value activities are accomplished and nature of linkages among them.
Products have contained information on their operation, a posh mill, for instance, needs a regulator system which detects numerous components in the element of the billing succession.
Every activity creates and uses information. For instance, algorithms use facts like arrangement potentials, transforming the rates and the plan production to facilitate cost-effective and timely delivery.
The following are methods in which information technology is affecting the organization. The first is the invention in the technology is changing the structure of the organization. Secondly, it has increased the important levels that companies may use to create competitive advantage and thirdly, information technology is hatching new businesses.
The structure of the industry is contained in five modest forces that determined its profitability; this is the power of supply, the power of consumers, the fears of a new entrance, threats of substitute goods, and the existing competition. Information technology unfreezes the structure of any organisation, and this creates an opportunity for an organization to:
- To increase the supremacy of buyers in productions by accumulating components of the purchase
- Use flexible computers that contain manufacturing and aided design systems that affect the risk of substitution in many sectors.
- Automation of custom customer billings and order processing has amplified in various distribution industries
Adoption of business structure technology has a particular sound effect on negotiating relation between company and buyers because it affects the linkages among them.
Information technology that connects suppliers and buyers are disseminating. Xerox brinks processing data to be supplied electronically and help in delivering of materials
Competitive advantage - Information technology affects competitive advantage in either the differentiation of products or cost. Effects of technology in various activities allow the company to increase competitive advantage by utilizing a change in ambitious scope.
- Lowering cost- technology alters business cost causing it to reduce the cost of goods and services which leads to a decrease in the prices of consumer goods.
- Changing the ambitious scope of technology may modify the relationship between among reach and competitive advantage. Technology increases industries ability to manage its activities locally and internationally. It unlocks the power of a broad geographical range to create a competitive advantage
- Spawning new business- information technology revolution is creating industries that never existed in different ways. First, it makes a company technologically viable. Secondly, information generates new companies by deriving demand for new products, and thirdly information technology leads to the invention of new products from the existing ones. An industry that has information processing rooted with a value chain has a contact ability that would be sold (Hertlein & Ancheta 2014)
A company’s senior staff may consider this steps these steps enjoy the advantage of business technology innovations:
1.31 Information intensity- The first task of a company is to analyze the current and the potential information intensity of products and function of its business units. Information technology plays a crucial role in an industry that is characterized by high information intensity in the value chain and potential top product intensity.
- Ascertain and rank ways information technology may create competitive advantages.
Cost leadership- the primary desire of every organization is to have a low cost of production and to gain more profit, to realize this the business must ensure the high level of productivity, high capacity utilization and high bargaining power amongst others.
Differentiation focus- the use of information technology enhance product and leaderships differentiation which would help to strengthen superior and high-quality products, branding (strong consumer recognition), expand industry and leads to consistent support promotion.
- The use of technology in production - Technology and company structure- employees must forecast the perspective impression of the information technology in their business organization; they should analyze how technology can affect competitive forces.
The use of technology to affect all activities in the worth chain. The significant fact is that innovative associations among the events are realized. Managers can sort out actions that may affect them regarding differentiation and cost. Tasks that present a high percentage cost or other factors that are important in differentiation creates the adjoining scrutiny, mostly if they are important data processing categories. The events that are vital are within, and without are also essential, managers must examine these activities to find methods that technology can enable crucial competitive advantage (Valacich,& Schneider,2015).
Furthermore, the use of value chain information technology in an organization to transform in an ambitious scope, help serve to serve the organization new segments and allow full line competition.
Business staff should realize opportunities to create new business from the existing one. Information technology is a crucial avenue for commercial diversification.
Plan to take advantage of information technology- An organization perceiving to take advantage of technology should develop an achievement strategy to exploit the information change. This strategy should order the strategic reserves which are required for software and hardware in establishing product growth actions.
Advantages of information technology (Mankasingh,& Ramsoomair,2017)
- Saves time and increase production- today business uses technology to automate their activities. For instance, in bakery electronic temperature sensors to know an increase or decrease in temperature. The operator receives information directly from an operator, reporting the change in temperature. The temperature systems save time and also gives high-quality products.
- Improves communication
With the help of advanced information technology tools like video conferencing, phones electronic mail and instant messaging enhance fast movement of information within an organization.
- Data storage, file management, and data are reporting- most business today used cloud hosting services to store and back up organizations data, directors of business can access data anywhere by the use of services like dropbox.com.
- Improves finance management- finance software’s like Sage 50, Quick books, Bookkeeper and accounting age enhance several accounting tasks in business. The accountants can easily balance their books.it also allows faster calculation and processing of financial and the recording of information
- Improves business-consumer relationship- organizations have embraced social technology to interact with their clients and customers creating a robust business-consumer relationship
- Improves competitive business advantage- the use of technology in business have enhanced competitive advantage over competitors.
- Implementation expenses
Small businesses do not afford expensive core technologies because of this they may end up losing their customers to a company which has capital-intensive technologies.
- Job elimination- the use of technology in the business organization, has replaced human labor which creates unemployment.
- It breaches technology- businesses storing their data on the remote cloud which may be affected by frauds and vulnerability issues.
Avgerou, C., & Walsham, G. (Eds.). (2017). Information Technology in Context: Studies from the Perspective of Developing Countries: Studies from the Perspective of Developing Countries. Routledge.
Baller, S., Dutta, S., & Lanvin, B. (2016). Global information technology report 2016. Geneva: Ouranos.
Hertlein, K. M., & Ancheta, K. (2014). Advantages and disadvantages of technology in relationships: Findings from an open-ended survey. The Qualitative Report, 19(11), 1-11.
Mankasingh, D., & Ramsoomair, F. (2017). Competitive advantage for a small information technology consulting firm: the study of managerial hiring preferences of business analyst information technology consultants. Journal of Management, 12(1).
Valacich, J., & Schneider, C. (2015). Information Systems Today: Managing in a Digital World Plus MyMISLab with Pearson eText--Access Card Package. Prentice Hall Press.
Wagner, H. T., Beimborn, D., & Weitzel, T. (2014). How social capital among information technology and business units drives operational alignment and IT business value. Journal of Management Information Systems, 31(1), 241-272.
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