The relationship between IT and a company's competitive advantage or strategy – use of Porter's "Five Forces" on competition The relationship between IT and a company's competitive advantage or strategy – use of Porter's "Five Forces" on competition 1…
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In the context of each organization IT can be both an advantage and a disadvantage in regard to a firm’s competitiveness. The specific role of IT is presented below using examples, as appropriate, for making the relevant views clearer. 2. IT and Porter’s Five Forces on competition 2.1 How IT is intertwined with the effects of Porter's "Five Forces" on competition in a company's industry The Five Forces theory of Porter promotes the idea that in order to survive in its industry a company should identify a strategy for facing effectively five forces: a) the threats related to new entrants, b) threats from substitute products, c) the pressures from suppliers, d) the pressures from customers and e) the increasing competition within the industry (Roy 2011, p.26). In practice, it has been proved that in each organization IT could be intertwined with the effects of these Forces. IT could play this role in two different ways: it could either set in risk a company’s competitive advantages or it could promote these advantages securing the competitiveness of a company. In fact, it seems that in each company IT can influence the performance of the company in regard to the management of all Forces, as including in the Porter’s Five Forces model. Reference should be made primarily to the potentials of IT to provide to firm critical information in regard to the local or the global market (Roy 2011, p.7). By having access to such information managers can identify strategies that can help the firm to face effectively all industry’s forces, as these forces are included in Porter’s Five Forces. For example, information on substitute products available in the market can lead a firm to make appropriate improvements on its existing products so that its market competitiveness is secured (Roy 2011, p.7). 2.2 Description of five specific areas where IT represents a risk to a company's competitive advantage - how IT affects these advantages IT can set a firm’s competitive advantages into risk. Reference can be made, as an example, to the following areas of an organization: a) Internal communication networks; in most organizations, internal communication is based on IT systems (Naunheim 2011, p.1). The phenomenon is more intensive in organizations of medium/ large size where e-mail is used as the key tool of communication in the workplace (Naunheim 2011, p.1). Ineffective IT systems can cause severe communication problems among employees resulting to the delay or even the failure of organizational tasks (Naunheim 2011, p.1); b) Development of new products/ services; the competitiveness of all organizations is depended on their ability to create products/ services that will have an advantage compared those to the competitors’ (Dosi, Teece & Chytry 1998, p.216). However, in practice not all firms are able to develop such products/ services especially in the long term (Dosi, Teece & Chytry 1998, p.216). This weakness has been made clear in the following case: IBM had been already a successful company when Apple appeared (Dosi, Teece & Chytry 1998, p.216). Still, it was Apple that managed to conquer the global market by emphasizing on personal computer’s capabilities, even more than IBM, the firm that first introduced the specific device (Dosi, Teece & Chytry 1998, p.216); c) Manufacturing process; today, the major part of each firm’s manufacturing processes is based on IT systems; however, the IT systems used in such activities are not always
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“Harvard Business Review Competitive Forces Paper Essay - 1”, n.d. https://studentshare.org/design-technology/1482624-harvard-business-review-competitive-forces-paper.
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