Information Technology's Role in Gaining and Maintaining the Competitive Edge and How It Effects the Organization's Strategy

Information Technology’s Role in Gaining and Maintaining the Competitive Edge and how it Effects the Organization’s Strategy

Information Technology for Managers (ITM 5000)

Abstract

Information technology is changing the way companies operate. It is affecting the entire process by which companies create their products. Furthermore, it is reshaping the product itself: the entire package of physical goods, services, and information companies provide to create value for their buyers. 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 (more value). Information technology must be conceived of broadly to encompass the information that businesses create and use as well as a wide spectrum of increasingly convergent and linked technologies that process the information. The information revolution is affecting competition in three vital ways: It changes industry structure which alters the rules of competition; it creates competitive advantage by giving companies new ways to outperform their rivals; and it spawns whole new business, often from within a company’s existing operations.

Information Technology’s Role in Gaining and Maintaining the Competitive Edge and how it Effects the Organization’s Strategy

Organizations of all sizes are using various information technology tools and applications in order to become more competitive. In many organizations, a percentage of total sales is usually devoted to the information technologies budget. Experts believe, if information technologies are employed properly, they should make organizations more efficient and effective (Bidgoli, 2014).

Information systems can help organizations reduce the cost of products and service and if designed correctly, assist with differentiation and focus strategies, too. For example, Wal-Mart has been using overall cost leadership strategies...