The Digital Transformation of Traditional Businesses - Assignment Example

The Digital Transformation of Traditional Businesses Author’s name Institutional affiliation The Digital Transformation of Traditional Businesses 1. Describe the kinds of businesses that can use new information technology. New information technologies are increasingly becoming part of the business circles in the modern world. Businesses are using new information technology to connect better with their customers and enlarge their competitive advantage (Gottschalk, 2007). There are various businesses that use new information technology. The media industry is one of the businesses that are using new information technology. Online editions of newspapers are customizing news and information that subscribers would want to have. Unlike the one-size-fits- all product that was traditionally being produced, new information technology is customizing content (Ancion, Cartwright and Yip, 2003). Computer software and hardware companies like Dell Computers are also capitalizing on new information technology to ensure that customers receive products that fit their preferred specifications (Flynn and Vencat, 2012). The ability to customize product specifications is made possible through the use of new information technology. Airline companies are also benefiting from new information technology by enabling them to deliver services electronically. The ability of customers to book reservations online is made possible through the active utilization of new information technology (NIT). The banking industry has also capitalized on using new information technology that enables banks to enhance convenience for their customers. New information technology enables banks to standardize automated teller machines through shared networks, and as a result, customers are able to use their accounts even when travelling abroad. Online companies like Amazon.com are increasingly using new information technology to act as middlemen. They partner with other companies by providing an online platform to sell their products. 2. Illustrate the reasons for the drivers of NIT that the authors have identified in their study. The authors have identified various significant reasons for the drivers of NIT in their study. Electronic deliverability is one of the drivers of NIT. The ability of companies to deliver products and services electronically drives NIT to a great extent, and enables the companies to reach out to their customers in an efficient way. The capacity of companies to reach out to many customers through an online platform gives them competitive advantage over the companies that do not (Davenport, 2003). Information intensity is crucial in enabling companies to spread information about their products and services (Galbraith, 2007). Information intensity drives NIT by giving companies a viable platform through which inherent information about their products can be made available to customers (Gunasekaran, 2010). Businesses that make available the appropriate product and service information to their potential customers have a better competitive advantage than businesses that do not leverage the information content about their products (Ancion, Cartwright and Yip, 2003). Customizability drives NIT by allowing businesses to tailor-make their products and services to fit the desires of their customers. New information technology gives businesses an opportunity to profit by producing a variety of products that fit the different wants of the customers (Cohan, 2000). Through customization, new information technology enables companies to thrive in an environment that is highly competitive. Aggregation effects drive NIT by enabling companies in the modern world to bring different services together to give their customers a convenient transaction environment. For example, financial institutions, through the aggregation effect of NIT, they are able to conveniently serve their clients with different financial needs. The use of information technology by modern companies increases customer confidence because of reliability and provision of quality products (Kangas, 2003). Search costs, as a driver of NIT, implies that the use of new technology enables customers to search for information about products and services over the internet at reduced cost and less time. The online platform gives customers and clients an opportunity to be acquainted with the vast information about companies’ products and services (Laudon and Traver, 2002). Through this platform customers can conveniently compare prices before making purchases. New information technology is highly important in the modern business world because it allows for real-time interface. For customers and businesses that deal with sensitive information that changes unpredictably, new information technology is crucial in enabling customers and companies to track the information effectively. For example, for people who engage in online trading, the real-time interface aspect enables customers and companies to transact anytime of the day (Roche, 2000). Contracting risks drives NIT by reducing the risks that customers might incur while making transactions. For example, if an order made online is mishandled in any way, the risks to the customer are minimal, thus motivating him/her to make more purchases. Businesses that reduce the risks that might occur in a transaction are more appealing to customers (Tozer, 2009). Hence, new information technology is important in the business world today. Network effects stem from the use of NIT by bringing different companies together to increase the utility of a product. New information technology makes it possible for companies to harness their input to enhance the use of their products and services in the market. For example, in the automotive industry, companies connect together on an online platform to create a large network of partners who enable business to be conducted effectively (Lucas, 2002). The standardization effects of new information technology make it possible for business-business transactions to thrive as well as creating convenience for customers. For example, in the banking industry, banks standardize their automated teller machines through shared networks such that their customers can use their accounts even when out of their countries. This is made possible through the use of new information technology. Lastly, new information technology allows companies to form alliances aimed at filling any missing competencies. Through the active utilization of new information technology, companies that are not able to perform certain internal processes can outsource the services from other companies (Ancion, Cartwright and Yip, 2003). Therefore, the need to fill missing competencies drives NIT to improve the products and services offered by a company. 3. Discuss the usefulness of mediation strategies that the authors are researching. According to Ancion, Cartwright and Yip (2003), mediation strategies are useful in various ways. Through the use of new information technology, mediation strategies help to drive the aims and objectives of companies as well as serving their customers better. Classic disintermediation is one of the mediation strategies that the authors have addressed. This mediation strategy involves the cutting of intermediaries such that companies can interact directly with their customers (Ancion, Cartwright and Yip, 2003). Classic disintermediation is useful in avoiding the use of distributors and delivering products electronically. Moreover, the strategy is useful in cutting the services of an intermediary in delivering the information content of a product, and instead using an online platform to deliver information content about a product or service (Weber, 2001). Remediation strategy is significant in achieving the benefits of combining products and services. Through the use of new information technology, remediation strategy helps companies to work more closely with their middlemen and in the process build more positive business relationships (Ancion, Cartwright and Yip, 2003). The establishment of better relationships between companies and middlemen ensures that their businesses are able to bear much fruit in the transaction processes (Qirim, 2004). Furthermore, remediation strategy is useful in the customization of products if a middleman is able to perform the function. Network-based mediation is useful in enabling companies to partner and form alliances aimed at missing any gaps related to competency (Ancion, Cartwright and Yip, 2003). Through the use of new information technology, companies are able to outsource services in order to improve functionality (Tansey, 2003). In addition, network-based mediation, through the use of NIT enables companies and customers to form partnerships that enable them to share with each other in real time. Through this strategy, industry players can work together more closely, and as a result enhance the convenience of business transactions. References Ancion, A.A., Cartwright, P.A., and Yip, G.S. (2003). The Digital Transformation of Traditional Businesses. MIT Sloan Management Review, 44 (4) 34-41. Cohan, P. (2000). E-profit high payoff strategies for capturing the e-commerce edge. New York: AMACOM. Davenport, T. (2003). Process innovation: Reengineering work through information technology. Boston, Mass.: Harvard Business School Press. Flynn, A., & Vencat, E. (2012). Custom nation: Why customization is the future of business and how to profit from it. Dallas, Tex.: BenBella Books. Galbraith, S. (2007). Anatomy of a business: What it is, what it does, and how it works. Westport, Conn.: Greenwood Press. Gottschalk, P. (2007). Business dynamics in information technology. Hershey: Idea Group Pub. Gunasekaran, A. (2010). Handbook on business information systems. Singapore: World Scientific. Kangas, K. (2003). Business strategies for information technology management. Hershey, Pa.: IRM Press. Laudon, K., & Traver, C. (2002). E-commerce: Business, technology, society. Boston: Addison Wesley. Lucas, H. (2002). Strategies for electronic commerce and the Internet. Cambridge, Mass.: MIT Press. Qirim, N. (2004). Electronic commerce in small to medium-sized enterprises: Frameworks, issues, and implications. Hersey, PA: Idea Group Pub. Roche, E. (2000). Information technology in multinational enterprises. Cheltenham, U.K.: Edward Elgar. Tansey, S. (2003). Business, information technology and society. London: Routledge. Tozer, G. (2009). Metadata management for information control and business success. Boston: Artech House. Weber, S. (2001). Information technology in supplier networks: A theoretical approach to decisions about information technology and supplier relationships. Heidelberg: Physica- Verlag. Read More