According to Porter’s article, revolution on information technology (IT) affects competition by changing the alignment of the industry and rules of competition. This makes competitive advantage in ways for companies to exceed their competitors and bring businesses in place. IT spread all through the value chain, which are activities performed in business at a low cost, and helped perform optimization functions for companies. This allowed the capture of information that wasn’t accessible before. The value chain are activities that have physical and information processing components. Technological advancements afflicted the physical components that businesses used and IT progressed in a way that was faster than other technologies, like physical …show more content…
This is done in a market that might be repugnant to business incumbents, but innovation of a new product ultimately redefines the business. They usually start small on businesses and aren’t attractive at first, but once they start growing it can benefit businesses to perform better and get a large market share. Technological improvements make a disruptive innovation possible, which don’t necessarily make products better because they don’t meet the next generation needs of customers. They commonly conclude in worse performance for a limited time until a value proposition is implemented in the market. Despite this, it makes products more affordable and cheaper to consumers in emerging markets. Firms usually adopt business models and exploit aged technologies for new ones, which help them improve their products. These innovations can be conflicting when it comes with the values of the company because they tend to assure low-margin profits. Small firms in growth markets chase these innovations because of their values. Their cost framework can adjust low profit margins and market research that allows managers to make hypothetical decisions. A disruptive innovation also helps to develop a new value network, which allows an organization to buy or sell products within a plan. Resource allocation is important to be able to manage a disruptive …show more content…
IT has a strong consequence on competitive advantage, which allows firms to exploit into the competitive scope. It is the function of the value chains that affects competitive advantage by achieving performance in a business. A firm achieves the scope of value activities if they use common strategies. The first one is reducing costs in production and activities that affect physical processing which can no longer affect costs. This is due to the use of the abundant information-processing component. A low cost producer might want to exploit cost advantage for sources like the economies of scale and favored to access to raw materials. The economies of scale are beneficial to firms because more products or services are produced with lower input costs. It is also a source of barrier to entry for competitors making them move to a larger scale. The second one is a differentiation strategy and its impact on IT allows a firm to easily customize their products. They present new features that many buyers see as important, which meets their needs for the product. The last one is the change of competitive scope where technology allows companies to adjust its activities everywhere. As IT becomes more popular, the opportunities of the competitive scope for firms become higher. A well-organized strategy for IT will give firms these
It depends on the company, which strategy they would fellow- comparing their competitors’ strategy. It does not matter whether the follow cost leadership or differentiation strategy, they must manage their own value chain.
Electricity, the telephone, the steam engine, the telegraph, the railroad and ..IT? In his HBR article, "IT Doesn't Matter," Nicholas Carr has stirred up quite a bit of controversy around IT's role as strategic business differentiator. He examines the evolution of IT and argues that it follows a pattern very similar to that of earlier technologies like railroads and electricity. At the beginning of their evolution, these technologies provided opportunities for competitive advantage. However, as they become more and more available as they become ubiquitous they transform into "commodity inputs," and lose their strategic differentiation capabilities. From a strategic viewpoint, they essentially become "invisible."
Information technology has advanced in multiple ways in society, where organizations has implement the structure into their work environment. Industries have outsource their manufacturing to other places in the world and rely on telecommunication to keep the marketing. The geographic distribution has changed significantly by reducing the distance it takes to complete an operation, due to information technology. These are just a couple of examples of how this advanced technology has reshape our society and continuing.
Both Porter and Miles and Snow’s strategy typologies are based on the concept of strategic equifinality, or the ability for firms to be successful via differing managerial strategies (Hambrick, 2003, p. 116). Porter 's strategy is more generic while Miles and Snow’s is more specific in nature. Porter’s generic strategy typology is based on economic factors centering on the source of a firm’s competitive advantage and the scope of a firm’s target market (González-Benito & Suárez-González, 2010). Porter’s typology emphasizes a firm’s cost, product differentiation or non-differentiation and market focus. When utilizing Porter’s strategy typology, a firm must first decide to target its products toward the mass market versus a market niche or focus. Secondly, a firm will determine if it wishes to minimize costs or differentiate its products with differentiation meaning that firms will most likely forego lower costs (Parnell, 2014, p. 184). This can lead a firm to develop a myriad of strategies between these options. Strategies which may have or not have focus, may or not be differentiated, may or not be low cost or any combination of strategies. In contrast to Porter, Miles and Snow’s typology is more specific in nature.
A company’s value chain can be created through a number of avenues. Tangible and intangible resources including knowledge, capabilities, skilled human resources, information systems, and company infrastructure can each be a distinctive competency. However, the multi-faceted business environment and industry dynamics can effectively erase a company’s advantage over time. This is particularly true with tangible resources. It’s easy for competitors to imitate one another. For example, all players in the package courier industry have invested heavily in tracking technology, shipping labels, and scanners. When UPS decided to move into the retail industry and acquired Mail Box Etc. in 2001, FedEx followed suit and acquired Kinko’s in 2004 (Hill & Jones, 2011). Marketing strategies related to pricing and promotions are also highly coveted.
Information Technology (IT) is a foundation for conducting business today. It plays a critical role in increasing productivity of firms and entire nation. It is proven that firms who invested in IT have experienced continued growth in productivity and efficiency. Many companies' survival and even existence without use of IT is unimaginable. IT has become the largest component of capital investment for companies in the United States and many other countries.
of a firm to attain new forms of competitive advantage (Müller, 2011). It is due to these
This perspective is concerned with the exploitation of emerging IT capabilities to impact new products and services (business scope), influence the key attributes of strategy (distinctive competencies) and develop new forms of relationships (business governance).
Competitive strategy is the approach that an organisation takes in order to gain advantage over its competitors. According to Porter, there are two major sources of competitive advantages: costs and differentiation. Cost-based competitive advantage involves reducing production costs so that an organisation can earn higher profit margin or offer products at lower price compared to competitors. Differentiation-based competitive advantage involves offering unique properties that are not offered by competitors’ products. Differentiation allows an organisation to charge a premium for their products because they offer additional benefits to buyers.
Value chain analyses a firm 's internal activities such as planning, production, and development, packaging and distribution so as to create value for clients. The function of the value chain is to identify the sources for cost reduction along with quality improvement. It means value chain is used to identify the strong and weak points, positive and negative points, the scope of improvement; in a nutshell, the advantages and disadvantages of the activities taking place in the system. The value chain is also called as a strategic analysis tool and it is a well-known concept in business management industry.
Apple was founded in 1976 by Steve Jobs and Steve Wozniak, who were determined to change the way people were utilizing the computer. From then Apple has been able to grow its business into one of the most prominent company in the world. Apple Inc. is an American company that creates software, cellular phones, computers and consumer electronic products as well. Some of the Apple products most recognized products are the iPod, iPhone, Mac, and the recently new iPad. They have established over 300 retail stores in about 10 countries around the world. Many people do not know this, but also service numerous of computer software, such as Mac OS X operating system, Final Cut Studio, Logic Studio, iOS, which is a mobile operating system that hosts
...ompletes an analytical assessment of a firm. A firm establishes its competitive building by investing scarce resources again and again in its value-added activities. By doing this the organizations will be able to give rise superior products and services that the buyer's desire and continue to grow the business and adhere to its strategic plan once implemented.
Information technology is infiltrating all aspects of business, both large and small. Without it, a company will not be able to keep up with their competition. On the flip side of this theory however is the fact that information technology is cheap, therefore everyone had access to it. This in turn allows all the competition to have the same edge. This may work for a smaller company that has a good marketing campaign. Larger companies have always been able to succeed in the competitive market due to their ability to gain a foothold in the stock market and obtain funding that a smaller company may not be able to do. The ability to advertise allows these smaller organizations to become more lucrative simply by being recognized. A retail company that is willing to ship their products globally is in a position to increase their sales exponentially.
Keeping up with technology is difficult, tiresome, and firms find it very costly to keep at pace with it. Technology rapidly and constantly keeps on changing. Being at par technologically requires extensive research and strategic analysis of acquiring new innovation. Enforcing new technology requires staff retraining and in some cases making employees redundant.