The Kinds of Businesses That Can Use New Information Technology - Assignment Example

Management Information Systems 1. Describe the kinds of businesses that can use new information technology.  3 Marks The kinds of businesses that can use new information technology (NIT) are those whose operations stand to benefit most from the use of such technology. This depends on the types of products or services that such businesses produce, the processes they engage in with their customers, and the relationships they need to have with other players such as their partners and competitors. In regard to the types of products and services that businesses produce for instance, airlines and book retailers can readily sell their product/service over the Internet because such products/services can be delivered electronically or do not have much variation or detail. This is in contrast to products such as cars and high-end clothing, which are not only costly but also require some scrutiny before customer can acquire them (Andal-Ancion, Cartwright & Yip, 2003, p. 34). In terms of the processes that businesses are involved in with their customers, firms that can use NIT are those that want to engage more with their customers. For instance, they can use websites to provide product information, they can use new technologies to tailor product or service offerings to the specific preferences and needs of customers, and they can also use such technologies to provide information about products whose detail changes rapidly and unpredictably (Andal-Ancion et al. 2003, pp. 35-36). Finally, in view of the relationships with partners and competitors, businesses that can use NIT are those that stand to benefit from such relationships. For example, firms can partner to enhance their online supply chains, to identify emerging market trends, to create new projects, and to fill gaps in their own level of technology (Andal-Ancion et al. 2003, pp. 39-40). 2. Illustrate the reasons for the drivers of NIT that the authors have identified in their study. 6 marks The three main reasons for the drivers of NIT as identified by Andal-Ancion et al. (2003) are the mediation strategies that businesses employ in their various areas of operation. These are classic disintermediation, remediation and network-based mediation. Classic disintermediation implies that a firm might use NIT to eliminate or reduce the number of middlemen that exist between it and its customers. This is driven by factors such as electronic deliverability – which makes it possible to deliver some products (e.g. air tickets) to the customer directly through electronic processes; customisability – which makes it possible to tailor the product offering to the specific needs of consumers, for instance online newspapers; and information intensity – such as the need to deliver information directly to the customer, which eliminates other intermediaries that would increase costs in the process (Andal-Ancion et al. 2003, p. 37). For instance, driven by the electronic deliverability of air tickets, easyJet was able to eliminate intermediaries in the sale of tickets by making it possible for customers to book flights online. By using NIT to eliminate the intermediaries involved in interactions with customers, easyJet was able to offer lower fares (Andal-Ancion et al. 2003, 37-38). Remediation denotes that instead of choosing to eliminate middlemen, firms use NIT to embrace them. Embracing middlemen in the distribution chain is necessary when the distribution chain in too demanding, when there is a high contracting risk involved, as well as when the company is missing some competencies (Andal-Ancion et al. 2003, p. 39). For example, Tesco.com capitalises on the aggregation effects of using NIT to partner with other supermarket stores, which act as warehouses for its Internet-based business. Instead of having a standalone business, Tesco.com uses online networks to enhance its business (Andal-Ancion et al. 2003, p. 39). Similarly, eBay eliminates the risk that would be perceived by users of its website by having a system through which buyers rate the sellers on its website. eBay has also partnered with SquareTrade, a firm that licenses some vendors, to assist in resolving disputes between sellers and buyers who use the website. As well, by using NIT, Toys “R” Us has partnered with Amazon.com, a deal that enables Toys “R” Us to use Amazon’s dependable online delivery system (Andal-Ancion et al. 2003, p. 39). Network-based mediation suggests that firms are driven to use NIT by creating strategic partnerships and alliances with existing and new players. This is driven by factors such as the need to standardise products, to fill missing competencies and to enjoy other benefits that result from partnering with other players, such as adding value to the services or information provided to customers. For instance, Eastman established an Internet portal called PaintandCoatings.com, which offers value-added details to clients who buy coating products. To gain standardisation benefits, Eastman has worked together with its peers to come up with an initiative that enables the transfer of information electronically among various organisations. Eastman has also used NIT to acquaint itself with competencies that it initially lacked (Andal-Ancion et al. 2003, p. 40). 3. Discuss the usefulness of mediation strategies that the authors are researching.  6 marks The usefulness of mediation strategies that were researched by can be seen it terms of how the strategies are linked to what motivates firms to use NIT in their operations. There is a link between how firms stand to benefit from using NIT, the mediation strategies they adopt, the various technologies that they actually use and the usefulness of their strategies. To start with, the nature of products or services that a business produces determines the types of NIT that it is likely to use, the mediation strategy to be used and the usefulness of doing so. For instance, products such as books are easy to order and deliver using online facilities. Similarly, airline and bus tickets can be conveniently ordered online. Such goods or services, by their nature, eliminate the need to have intermediaries between the buyer and the seller, as opposed to goods that have complex details such as cars. Thus, a seller will find it easy to use the classic disintermediation strategy as this helps reduce costs and increases interaction with customers. The disintermediation strategy is also useful in regard to the capacity of the seller to provide information about products to the customer through platforms such as websites. The remediation strategy is useful when one looks at factors such as the need to reduce the risks involved in the distribution chain, the need to reduce search costs, the benefits associated with linking up with other players to serve the customers through aspects such as real-time interface, and the capacity to fulfil functions that would not be possible when an organisation works alone. Generally, a firm that uses technology to provide more information to customers and to reduce the risk involved in areas such as online buying is likely to have increased customer confidence. For instance, when Toys “R” Us partnered with Amazon.com, there is no doubts that this increased customer confidence in its products and services since Amazon is a company of high repute. As well, when Tesco.com partnered with other supermarkets, it reduced its product delivery time, meaning that customers not only spent less time searching for products but also received them on time (Andal-Ancion et al. 2003, p. 39). This indisputably increased product sales and customer loyalty. The usefulness of the network-based mediation strategy lies in the benefits that firms derive from partnering with other players such as competitors and suppliers. Notably, different firms have different levels of skills, knowledge, research capacity as well as overall competencies. By partnering with others using various types of NIT, businesses get to enhance their scope of operations and gain new competencies. This in turn implies that they can increase their market reach. Since customers like to buy products from various providers, network-based mediation enables firms to partner with others to identify emerging market trends, to develop new projects, and to fill gaps in their existing technology, which enables them to serve more customers using different approaches. References Andal-Ancion, A., Cartwright, P. A., & Yip, G. S. (2003). The digital transformation of traditional businesses, MIT Sloan Management Review, 44(4), 34-41. Read More