The Digital Transformation of Traditional Business - Assignment Example

The Digital Transformation of Traditional Business Student’s Name: Instructor’s Name: Course Code & Name: Date of Submission: Question one: The kinds of businesses that can use new information technology i) Airline companies New information technology can enable airline companies facilitate bookings and reservations for customers online via websites. After booking, the confirmations and tickets are efficiently delivered to the customers through email. This boosts electronic deliverability of service to customers (Kudyba&Diwan, 2002). Further, new information technology enables airline companies to fill the missing competencies, by entering into partnership with other Information Technology companies. These strategic alliances aid the airline companies to improve their service delivery, for example, through providing internet access to their customers while in flight. ii) Financial institutions Convenience is essential to customers of financial institutions such as banks. The new information technology has enabled banks to deliver bundled services to customers through service aggregation effects as customers can get their services through one account.This enhances convenience and efficiency in delivering service to the customers. In addition, customers get more confidence in these transactions, as they do not have to deal with intermediaries. iii) Book sellers Book selling companies such as Amazon are able to diversify their products for example, by incorporating products such as toys, clothing, tools and other items. This is facilitated by the development of new information technology which enhances aggregation, by combining different products and services. Consumers have already developed confidence in these companies through their websites because they trust the quality of their products and services. New information technology has also facilitated standardization benefits of financial services to customers as they are able to do transactions anywhere anytime by use of automated teller machines even at the international level. iv) Information Technology companies New information Technology enables companies like Microsoft to create programs such as Microsoft Word, Excel and Power point which are suitably compatible to different users across the world making sharing of documents easy.Similarly, computer making companies like Dell are able to design computers tailored to meet the specific customer preferences with respect to features like the disk space, microprocessor power and random access memory. v) Media companies News editing companies make use of the new information technology that enables it to customize the news to meet the preferences of a particular subscriber with regard to information. Hence, customers are able to access only the news and information they need. Question two: reasons for the drivers of NIF that authors have identified in the study. i) Electronic deliverability This driver facilitates online booking of reservations in airline companies, and customers are in a position to receive their confirmations and tickets with efficiency via email. Hence, transaction cost is minimized since middlemen are eliminated, and the timeliness observed. The company is also able to make more transactions within a given time. ii) Information intensity Products and services have a lot information related to them. Rational customers require this information so that they make their purchase decisions. This information includes product and service description, their prices and their contents. With the development of new information technology, companies are able to post this information on their websites where customers can access it easily. This has enhanced customers’ efficiency in their purchase decisions since they do not have to go through tedious manuals and journals to get information concerning the products and services. iii) Customizability Through this driver,companies are able to tailor their products and services according to the specific needs and preferences of customers(Dhir, 2004). For instance, media companies can post specific headlines through their websites to meet the needs of different customers, hence a customer does not need to go through the entire document. Similarly, companies like Dell can customize computer specifications according to the preferences of a certain customer, taking into consideration features like disk space, random access memory and microprocessor speed. iv) Aggregation effects Through this driver, new information technology facilitates companies like banks with avenues in which they can integrate the common products and services needed by customers. For example, the bank may combine services like savings deposits, insurance covers mortgages and financial advice service with regard to investments, all under one account. This enhances convenience for customers and minimizes transaction costs and brokerage fees since middlemen are not involved. v) Search costs Prior to the development of the new information technology, it was difficult for customers to find for items manually, as it required more effort and time. However, after companies like Amazon came into being, this problem was alleviated. With the invention of the Web, customers can now efficiently search for the items they want regardless of their physical locations or time zone differences. Through this, transaction costs are greatly minimized and customers can get the exact products they online. Transparency in transactions is also achieved as suppliers and customers can compare service and product description and their prices online. vi) Real-time interface This driver is essential to customers and businesses that deal with information that is ever changing unexpectedly. The traders who deal with the stock market require instantaneous access to information. This is because the information often changes and investors without access to such information may make tremendous losses in their investments. According to (Stanezyk, 1991), real -time interface also facilitates the customers with the flexibility of making transactions at the comfort of their homes as they do not have to be tied to the fixed office hours. vii) Contracting risk New information Technology minimizes the contracting for customers as prices are relatively low, and the specifications of titles of the exact products such as books are very clear.in addition, the physical quality of the books does not vary significantly with the order specifications, and the sellers deliver the orders efficiently so as to enhance customer retention. viii) Network effects This driver emphasizes on the principle that as a large number of people uses a service or a good, its utility is increased. Therefore, companies employ more resources on new information technology to diversify the scope of usage of their products by ensuring suitable compatibility of the products to different users across the globe. For example, Microsoft has developed programs like Microsoft Word, Excel and Power point which enhance transferability of documents. ix) Standardization benefits Companies have embraced the use of New Information Technology to enhance the efficiency of business transactions by standardizing their business operations. This has also greatly boosted customers’ convenience. For instance, automated teller machines allow customers to transact even when they are far from their home bank branches. x) Missing competences New information technology enables a company to partner with others through company alliances so as to obtain the services that it lacks but essential to its operations. For example, airlines companies partner with IT companies to improve their service provision like enabling their customers to access internet services while in-flight. Air Canada’s partnership with IBM is an example of a practical partnership that has been successful. Question three: the usefulness of mediation strategies the authors are researching i) Classic disintermediation Classic disintermediation is a mediation strategy in which companies employ certain drivers of new information technology to eliminate middlemen who reduce efficiency in transactions. Airline companies like EasyJet Airline Co. enhance electronic deliverability to issue tickets online by eliminating travel agencies. Through information intensity, they are able to post all their information online such as job application procedures and hence reduce paperwork. Search costs by customers are highly reduced as they can compare competitor prices instantaneously by the real-time interface factor (Kirk, 2009). ii) Remediation Through the remediation strategy, companies like Toys “R” Us utilize new information technology drivers to strengthen their relationships with other companies. Through aggregation effects, the companies use their existing websites to sell other new additional products, as explained by (Spagnoletti, 2013) . For example, the success of Tesco is attributed to its use of the existing supermarkets as stores for its online shop, Tesco.com. Companies like eBay reduce contracting risk by using intermediaries who reduces conflicts between buyers and sellers. Similarly companies fix missing competences by outsourcing the services they lack from other companies. For instance, Toys “R” Us partnered with Amazon to get assistance in logistics of retailing. iii) Network-Based Mediation This is a mediation strategy that fixes the problem of customers being limited to one supplier or suppliers being restricted to one customer, by enabling interactions of the stakeholders through the network(Kudyba&Diwan, 2002). For example, Eastman created an internet portal to enhance network effects by providing information to customers who use coating products. The company was also able to standardize its business operations by collaborating with other top companies in the initiative named the Chemical Industry Data Exchange (CIDX), which was effective in elimination of incompatible systems. CIDX also utilizes new information technology to minimize search costs as sellers and buyers are able to communicate easily. Eastman was also able to enhance real-time interface by providing customer service 24/7. It also partnered with webMethods Inco. to fill missing competences by refining their products to meet the chemical industry needs. References Kudyba, S., &Diwan, R. (2002). Information technology, corporate productivity, and the new economy. Westport, Conn.: Quorum Books. Kirk, A. (2009). Information technology. New York: Ferguson. Burns, A. (1984). New information technology. Chichester, West Sussex: E. Horwood. Kauffman, R., & Techatassanasoontorn, A. (2011). New theories and methods for technology adoption research. Information Technology And Management, 12(4), 289-291. doi:10.1007/s10799-011-0109-2 Stanezyk, S. (1991). New Technology. J Inf Technol, 6(2), 118-118. doi:10.1057/jit.1991.23 Burns, A. (1984). New information technology. Chichester, West Sussex: E. Horwood. Science and Technology Policy Institute, RAND. Braudo, R., &MacIntosh, J. (1999). Competitive industrial development in the age of information. London: Routledge. Spagnoletti, P. (2013). Organizational change and information systems. Berlin: Springer. Low, L. (2000). Economics of information technology and the media. Singapore: World Scientific. Dhir, A. (2004). The digital consumer technology handbook. Amsterdam: Newnes. Read More