2.9. Summary
Key Takeaways
- In the last 20 years, companies have created profound shifts in the way firms advertise and individuals and organizations communicate.
- New technologies have redefined our concepts of software and computing, cut costs, fueled data-driven decision making, and raised privacy and security concerns.
- Technology can play a key role in creating and reinforcing assets for sustainable advantage.
- Beware of those who say, “IT doesn’t matter” or refer to the “myth” of the first mover. This thinking is overly simplistic. It’s not a time or technology lead that provides sustainable competitive advantage; it’s what a firm does with its time and technology lead to create valuable assets.
- The value chain can be used to map a firm’s efficiency and to benchmark it against rivals, revealing opportunities to use technology to improve processes and procedures. When a firm is resistant to imitation, its value chain may yield sustainable competitive advantage.
- Nothing lasts forever, and shifting technologies and market conditions can render once strong assets as obsolete.
- Just purchasing and installing the latest technology will not by itself make a company more successful.
Review Questions
- How is social media impacting firms, individuals, and society?
- How do recent changes in computing impact consumers? How do they impact businesses? Explain.
- What are the strategies employed to achieve competitive advantage? Provide some examples for each strategy not used in the text.
- Do you think it is possible to use information technology to achieve competitive advantage? If so, how? If not, why not?
- What is the value chain, and how can it be enhanced by information systems and technology?
- What are the primary activities and support activities of the value chain?
- What are switching costs? What role does technology play in strengthening a firm’s switching costs?
- Why is an innovation based on technology alone often subjected to intense competition?
- Does technology lower barriers to entry or raise them? Do low entry barriers necessarily mean that a firm is threatened?
- Is there such a thing as the first-mover advantage? Why or why not?
- A former editor of the Harvard Business Review, Nick Carr, published an article with the title “IT Doesn’t Matter.” In the article he also offered firms the advice: “Follow, Don’t Lead.” What would you tell Carr about the relationship between time, technology, and competitive advantage?
- Identify a company whose strategy might be at risk if they were to adopt a generic enterprise software. Why do you think adopting generic software would be risky to the company? What could they do as an alternative?
Exercises
Overview
This assignment will help you apply Porter’s Five Forces to an organization to find competitive opportunities using technology.
Assignment
In this assignment you will choose an organization, and then walk through each force and ultimately choose a technology strategy to create an advantage.
- Choose an industry, and then choose an organization within that industry. Describe both briefly.
- Using Porter’s Five Forces, for each force describe a ‘problem’ and an ‘opportunity’ within each force for the organization you selected in the above step.
For Example: If I chose fast food and McDonald’s, a problem for McDonalds in the customer force is that customers are increasingly becoming health-focused. An opportunity for McDonald’s would be to explore ‘power shakes’ that include workout supplements. - Next, examine the four basic competitive strategies. For each strategy, identify your selected organization’s main competitor that would fit in that strategy (describe why you feel it fits). Which strategy (area) provides the most opportunity for your organization and which area does your organization belong to?
- Finally, make a statement on what your selected organization’s strategy should be.
