Information Technology Cannot Really Give a Company a Strategic Advantage Because Most Competitive Advantages Don't Last More Than a Few Years and Soon Become Strategic Necessities That Just Raise the Stakes of the Game. Discuss?

Topics: Management, Strategic management, Management information system Pages: 6 (1958 words) Published: January 4, 2011

The information technology (IT) revolution has had an enormous influence on how organizations/companies are managed. It can credibly be claimed that no other source of change has had more impact on the paradigms and practices that underline the management function. Though other developments such as the emergence of the global economy and the increasingly knowledge-based nature of modern organisations have significantly affected how organisations are managed, IT developments actually are an integral part of these other phenomena that require innovations in the practice of management. It should be noted that the success of any business is first and foremost hinged on its management. It is the view of this author that IT on its own cannot bring superior profits to a company. This can only happen when it is used in combination with good management. The earlier use of IT, compared to competing companies, can actually give the company a competitive advantage that can turn out to be a strategic advantage if it can be sustained and maintained. The maintenance and sustenance need a lot of resourcefulness on behalf of management and all concerned. The resourcefulness is required to deal with quite a number of competitive forces abound in the business environment. A triumph against these forces will give a company competitive advantage that can turn into strategic advantage. In business a strategic advantage should be guarded religiously as it is a necessity. Abudi (2010) sums up the need of sustenance and maintenance when she said ‘Long-term competitive advantages require continuous business process improvement’. This paper will look at definition of terms found in the question, Porter’s competitive force model to have an insight on some of the competitive forces found in the business environment and how to counter those forces in order to have a competitive or strategic advantage.

The terms to be defined are Information Technology, Competitive Advantage, Strategic advantage and strategic necessity. There are many definitions given to these terms, however the definitions given below will be the working definitions for this paper. Information Technology: According to Information Technology Association of America (ITAA) “Information Technology is the study, design, development, implementation, support or management of computer-based information systems, particularly software applications and computer hardware." Competitive Advantage: According to Porter (1985), a competitive advantage exists when the firm is able to deliver the same benefits as competitors but at a lower cost (cost advantage), or deliver benefits that exceed those of competing products (differentiation advantage). Thus, a competitive advantage enables the firm to create superior value for its customers and superior profits for itself. Strategic Advantage: Falcon (2006) states that strategic advantage is broader than competitive advantage. It comprises internal operations and business relationships, as well as how the business compares to its competitors. It is the ability of the business to; operate efficiently and effectively, innovate products and services, win and retain customers, partner with vendors and suppliers, hire and retain employees and adapt to ever changing business climates and demands. Strategic Necessity: Mcafee (2006) believed that IT could be an irreplaceable contributor to competitive advantage, but did not believe that this advantage comes from slapping the ‘strategic’ label on a particular system or application, even one that’s valued by customers, revenue enhancing, and necessary for the rollout of new products or services. A system with all these attributes can be a...

References: 1. Abudi G (2010) ‘Business Process Improvement is a Strategic Necessity’ Management Resource for Business Leaders in Executive Brief of May 2010 publication.
2. Clemons, E. K. and M. C. Row (1991). "Sustaining IT Advantage: The Role of Structural Differences." MIS Quarterly 15(3): 275-292.
3. Eisenhardt, K. M. and J. A. Martin (2000). "Dynamic Capabilities: What are They?" Strategic Management Journal 21: 1105-1121.
4. Falcon A B (2006) ‘Does your technology provide your business with a strategic advantage’ Strategic Technology Management in Horizon Information Group, February 2006 publication.
5. Garr N G (2003) ‘IT doesn’t matter’ Havard Business Review.
6. Information Technology Association of America.
7. Mcafee A (2006) ‘The slippery nature of strategic IT’, The Business Impact of IT in Andrew Mcafee’s Blog, 10 April 2006.
8. O’Brien J A and Marakas G M (2006) “Management Information Systems”, Mc Graw – Hill/Irwin.
9. Porter M E (1985) “Competitive Advantage”, Free Press, New York.
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