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?

*300 words

Answer 1

ANS.

Every business owner must decide where to allocate funds, and it can be difficult to reconcile spending a huge amount on IT without seeing immediate returns. But IT is an integral part of nearly all organizations, and can offer widespread and lasting benefits.

Technology should be viewed as both a cost of doing business, and an opportunity to do more.

Some gains that come from well-invested IT dollars are:

• The ability to reach more potential customers and develop a better business relationship with your consumer base
• Providing better and unique service to customers
• Supporting better relationships with key partners
• Using customer demand to better guide the business
• Streamlining operations, reducing costs, improving efficiency, maximizing profit, minimizing waste, devoting talent to core business instead of overhead
• Rising above competitors to establish your business as the most progressive and forward-thinking in the industry

Customer expectations are rising quickly and the bar is always climbing; technology allows your business to compete and rise above in this digital world.

he information revolution is sweeping through our economy. No company can escape its effects. Dramatic reductions in the cost of obtaining, processing, and transmitting information are changing the way we do business.

Most general managers know that the revolution is under way, and few dispute its importance. As more and more of their time and investment capital is absorbed in information technology and its effects, executives have a growing awareness that the technology can no longer be the exclusive territory of EDP or IS departments. As they see their rivals use information for competitive advantage, these executives recognize the need to become directly involved in the management of the new technology. In the face of rapid change, however, they don’t know how.

The information revolution is affecting competition in three vital ways:

It changes industry structure and, in so doing, alters the rules of competition.

It creates competitive advantage by giving companies new ways to outperform their rivals.

It spawns whole new businesses, often from within a company’s existing operations.

An important concept that highlights the role of information technology in competition is the “value chain.”¹ This concept divides a company’s activities into the technologically and economically distinct activities it performs to do business. We call these “value activities.” The value a company creates is measured by the amount that buyers are willing to pay for a product or service. A business is profitable if the value it creates exceeds the cost of performing the value activities. To gain competitive advantage over its rivals, a company must either perform these activities at a lower cost or perform them in a way that leads to differentiation and a premium price.