Question

• To what end have billions of dollars have been spent on computer hardware, software, network communications, and all the other requirements of having world-class technology.
• Has the money spent on technology allowed businesses to become more profitable?
• Has the implementation of information technology led to a sustainable competitive advantage?

Answer 1

1. Nowadays technology has occupied a bigger position in our lives and if you want to run a business that it is impossible to start a business without the use of technology. Advancement in computers, phones, tabs, Pos systems, data backups, the software can be seen everywhere.

The most difficult thing that has become for the business to allocate the funds to the information technology in the business. Without advancements in the organization, we cannot run the business in the long run. So it should be decided by the budgeting team how much to spend on the technology. So we must know clearly where to allocate the funds and when the best time to allocate the funds is. The technology can be seen as both for the cost of doing business and the opportunity to do more things. We should also know the benefits of technology in the business:

· One of the major benefits of technology is the ability to reach more potential customers and then it can develop better relationships within the customers.

· Technology helps in providing unique and better services to customers.

· Using the demands of the customer to better guide the business.

· Technology reduces the costs, improves the efficiency, maximize the profit, minimize the waste devotes talent to the business core instead of overhead.

· Technology helps is rising above the competitors and helps in the progressive and forward-thinking in the industry.

If we talk about statistics the average small company spends 6.9% of its revenue on it which is less than $50 million.

If we talk about the mid-size they spend between $50 million to $2 billion on IT or we can say 4.1% in total.

If we talk about the larger companies they spend relatively tiny over $2 billion.

2. Yes, the implementation of information technology has led to a sustainable competitive advantage in many ways. First of all the relationship between the sustainable and the competitive advantage is very crucial because the IT investments are doomed to create overall damage to the company. IT nowadays is often the lowest –cost and highest quality way to perform actions which means that not only companies are attracted but IT tends to destroy conventional forms of differentiation. Only by succeeding the sustainable competitive advantage, companies can benefit themselves from their IT investments.

IT alone cannot provide a sustainable competitive advantage and the competitors can easily copy our technology in all the cases and what makes a competitive advantage is the combination of the technology as well as the capability and factors. We can also divide this discussion in the form of strategies

The extend strategy

A good extended strategy for the organization could be to implement the IT system in order to centralize the processes of purchasing and then lowering the costs. In these types of cases, the competitors will imitate technology and it will become useless for them especially for regional producers. It is not technology alone that gives us a competitive advantage but the combination with the capabilities that the company can implement efficiently.

The first-mover strategy

The extended strategy focuses on exploiting the advantage and the characteristics by making a competitive advantage, but without considering innovation and creating a new business or new activity. The first-mover strategy IT alone is not sufficient because of the assumption we made that technology is available to more and more companies. It is impossible to achieve a sustainable competitive advantage without IT. Because IT is necessary but not sufficient. The first two steps deal mainly with technology and third the ability of the company to create conditions.

Let’s take the example of eBay as it was the first company to implement the solution to buy and sell goods through the internet. It used the IT solution and the sustainable competitive advantage in order to be the first mover in the market.