Information Technology for Managers - Essay Example

Journal Article Analysis and Application Name Course Name and Code Institution Name Instructor’s Name Date Recently, internet is a novel fundamental technology and has had considerable attention from investors, entrepreneurs, business observers as well as executives. The internet has had numerous implications on numerous companies worldwide, for instance, some companies have made bad decisions, and some firms have used internet technology so that they can shift competition away from pertinent matters such as features, quality, service as well as price, consequently making it intricate for anyone in the industry to realize profit. Some companies have forfeited pertinent proprietary advantages for misguided partnerships as well as outsourcing relationships (Porter, 2001). The most imperative aspect is not how to use internet technology however how to use it. Evidently, internet technology offers opportunities for firms to develop distinctive strategic positions compared to the past generations of information technology (Maumbe & Okello, 2013). A novel strategy is not required for a company to gain competitive advantage (Dhunna & Dixit, 2010). Interestingly, the internet will hardly offer a competitive advantage. Usually, companies that succeed are the ones that make use of internet as something that they complement to traditional approaches of being competitive and not those, which set their internet initiatives away from their established operations (Porter, 2001). Most companies, which use internet technology, have been confused by the distorted market signals that results from their own creation. During nuptial stages of rolling out of any novel technology the market signals can be misleading. Novel technologies catapults fecund experimentation, both customers and companies, and experimentation is usually economically unsustainable. Consequently, the market condition is much distorted and should be interpreted with great caution. Certainly, that is the scenario with internet. Sales figures can be misleading because of three reasons. Firstly, many firms have reduced purchase of services and products with hopes of staking a position in the internet as well as attracting customer base. Customers can buy goods at discounted prices or acquire them freely, rather than to pay process which reflect their exact costs. The moment prices are low, the unit demand is artificially high. Secondly, curiosity has attracted many people to the internet and they are willing to do business online when the benefits have been limited or uncertain. Lastly, some “income” from online commerce have been acquired in form of stock and not cash (Porter, 2001). Creative accounting methods have also increased. Undeniably, the internet has resulted in an increase in an array of novel performance metrics, which have loose relationship to the economic importance, for instance, pro forma measures of income that remove “nonrecurring” costs such as acquisitions. The suspicious relationship between actual profitability and reported metrics has helped to increase confusing signal regarding what takes place in the marketplace. Evidently, the real financial performance of various internet-related businesses is worse than what has been stated before. One can argue that proliferation of dot-com indicates economic importance of internet, this type of conclusion is very premature. For one key reason dot-com multiplied, they were in position of raising capital without demonstrating viability (Porter, 2001). It is intricate to determine the impact on internet on business by just looking at result overtime. Firstly, many businesses, which are active online, are artificial businesses that compete through artificial means and they are buttressed by capital, which recently has been made available. Secondly, in periods of transition, however as the market forces paly out the old rules come into play. Development of true economic value becomes the last intermediary for any business achievement (Porter, 2001). The economic importance of any company is nothing more than the difference between cost and price, and is reliably measured by the profitability sustained. When thinking about the economic importance it is pertinent to draw distinction between internet uses such as selling toys, trading securities or operating digital marketplaces as well as internet technologies, for instance, real-time communication services or site-customization that can be employed across various uses. The success of internet can be illustrated by the internet’s economic value. However this type of thinking is to some extent faulty since it is internet uses, which create economic value (Porter, 2001). The internet has established new industries, for instance, digital marketplaces and on-line auctions. Nonetheless, the greatest effect has been to enhance reconfiguration of current industries, which had been limited by high communicating costs, information gathering, or completing transactions. For instance, distant learning has been in existence for quite long time and many students enroll for this program. This program has been fruitful because of internet. The internet has the capability to expand distance learning however this did not develop the industry (Porter, 2001). Internet technology offers buyers access to information regarding products and suppliers, therefore bolstering customers bargaining power. Internet helps in mitigating need for elements such as developed sales force, reducing entry barriers, access to the existing channels. By enabling novel strategies to meeting needs as well as performing functions, it helps in making novel substitutes (Atkinson & Draheim, 2010). Companies have issues maintaining proprietary offering since it is an open system; therefore this intensifies rivalry among competitors. Internet helps in expanding the geographic market since it enhances competition among various firms in various geographic regions. Internet helps in reducing variable cost and change tilt cost structures towards fixed cost and developing greater pressure for firms to take part in cutthroat price competition (Porter, 2001). Deploying the internet can aid in expanding the market doing so have an expense on the average profitability. Paradoxically, the internet reduces the problem of marketing, purchasing as well as distribution; therefore allowing sellers and buyers to find and conduct business easily. The internet allows buyers to collect extensive information easily regarding products, from exhaustive specifications as well as repair the records to wholesale prices for novel cars as well as average values for the used cars. The internet also gives customers a chance to choose from the many online sellers, and this can involve sellers located in other countries in the world. For outsourcing to be effective there must be objectives that are driving the organization towards that goal. In most cases outsourcing is aimed at improving services offered by a company. In most cases it involves improving its quality of services and some of these factors for conducting outsourcing include quality of service, experience as well as cost. These three factors are pertinent since they are the ones that determine whether the organization will be effective in its outsourcing strategy. Outsourcing lowers entry barriers since new entrants only need to assemble bought inputs and not develop their own capabilities. Additionally, companies lose control over pertinent aspects in business as well as important experience in assembly, components or services shift to distributors therefore improving their power overtime. According to McGrath (2013), the business sector experiences stiff competition this has prompted its players to institute measures that will make them more competitive and this includes conducting their operations without having to spend much, commanding premium price, some done both. Price and cost advantage can be attained through two methods; operational effectiveness and strategic positioning. The internet impacts on strategic positioning and operational effectiveness through different ways. The paper explains six principles regarding strategic positioning. To develop and maintain an exclusive strategic position a business is supposed to adhere to the following fundamental principles; value position, right goal, distinctive value chain, how elements of a company fit, good approaches involve trade-offs and continuity of direction. For any business organization to have a successful business strategy it ought to have discipline and entails having strong emphasis on making profits rather than growth. A business should stay its course even when it is experiencing tough economic times and when improving and extending its unique positioning. Strategy goes beyond search of good practices in a business organization since it entails configuration of specific value chain, which enables a business to provide distinctive value. The moment an organization’s activities can fit well together to become self-reinforcing system competitors who would like to imitate the strategy replicate the entire system and not just imitating few discrete products features or methods of conducting specific activities. Internet is an operative gadget, which can be used by an organization to its advantage nevertheless for entrepreneurs, and executive should capitalize on using it as a strategic potential. The internet replaces specific elements in the industry in the value chain. In the music industry traditional activities, for instance, finding as well as promoting talented artists, producing, recording music as well as securing airplay will be very pertinent. Recently sales over the internet have become very common and many traditional channels that were skeptical have embraced it. Internet has helped in improving business operations since it can be used to inform customers on various issues regarding the business, for instance, processing transactions, informing customers, as well as procuring inputs. Fundamental corporate assets such as proprietary product technology, efficient logical systems, as well as skilled personnel remain intact and in most cases are strong enough to sustain the existing competitive advantages. Usually, internet complements business traditional activities as well as strategies of competing. Business organizations have online platforms that help in marketing and selling their products (Reynolds, 2009). A company’s website has information that is pertinent to the buyer since the buyer can be able to search for products that he wants to buy from the company’s website. Some sites such as Ebay are a good example of this since the site sells various products and customers can choose the various products, the buyer can also call the sellers so that he can seek clarification on various issues. The most important tool for comprehending the impact of information technology on business is value chain. When firms compete in any sector, the firms conducts various discrete but value-creating activities that are interconnected, for instance, operating sales force, delivering products and fabricating component. These activities are linked to activities of customers, channels and suppliers. Since each activity entails creating, processing as well as communication of information, internet has an influence on the value chain. Internet helps in making link between various aspects in a business. 2. The article has been divided into various sections and each section discusses specific elements in detail. In a nutshell the article is about strategy and the internet. The introduction section explains how the internet technology has been pertinent in shaping the business sector in the world (Hill and Gareth, 2012). The article has clearly explained various issues regarding how the internet technology has helped in revolutionizing the business sector in the world. Firstly, it is evident according to the article that internet technology has amplified business opportunities for entrepreneurs and at the same time, it has increased chances of consumers being able to get an array of sellers for various goods and services. Since, one can just click the internet and there he will have many different sellers of the same good, therefore it will be upon the buyer to decide where to shop, this fact has been clearly explained in the article. The article has adequate literature review since it has considered various aspects regarding internet and its impact on the business environment. The paper discuss various aspects regarding the internet, firstly it explains the internet and value chain. It then goes ahead to explain the internet as a compliment to business. The article also explains the internet and its competitive advantage. The paper also does not ignore discussing the future of internet. The article has attained its research goals since it has clearly explained how the strategy and the internet help in attaining business objectives on both the customer and the owners alike. 3. According to Australia Human Rights and Equal Opportunity Commission (2001), Australian Banker’s Association developed an internet-banking standard in 2002. The body recommended specific levels of conformance to the standards between 6 and 18 months. For anyone to have access to specific bank online services its bank page plays a key role since the home page is what helps one to get access to the online services being offered by specific banks and when there are issues accessing the bank home page it implies that customers will be restrained from enjoying online services being offered by the bank. The retail banking sector players in Australia have instituted various mechanisms that will make them more competitive (Mulcaster, 2009). Most players have an integrated and simplified operating model that features streamlined customer management sections, serving different customer segments with a key emphasis on maintaining and improving customer relationships (Samson & Daft, 201). The system has been improved to involve a unit product house that easily coordinates as well as manage product offerings and catapult innovation. Most banks have a centralized support division so that duplication can be eliminated so that there can be consistency (Nag, Hambrick and Chen, 2007). There are also other non-negotiable that banks in Australia have invested in and are pertinent in the success of the business, for instance, balancing balance sheet strength, maintaining focus on risk and compliance, delivering total technology environment transformation, as well as investing in people’s culture as well as reputation (Cunningham & Harney, 2012). The main assumption that drives banks in Australia to choose a specific business level strategy is their target market and what they intend to attain. New community banks as well as full-online banking have been developed so that they can help in improving the business situation in the country. These strategies have helped in increasing access to banking services to various customers in the country provided there is internet connection. Since 2002 there has been tough competition in the banking sector since many banks in Australia have embraced this novel strategy so that they increase the competitive advantage (Gibson, 2014). References Atkinson, C & Draheim, D 2010, Business process technology: A unified view on business processes, workflows and enterprise applications, London, Springer. Australia. Human Rights and Equal Opportunity Commission, 2001, Annual Report, Australian Sydney: Government Pub. Service. Cunningham, J & Harney, B 2012, Strategy and strategists, Oxford, Oxford University Press. Dhunna, M & Dixit, J 2010, Information technology in business management, New Delhi, Laxmi Publications. Gibson, W 2014, The online banking, New York, Bookpubber. Hill, W.L., and Gareth R 2012, Strategic Management Theory: An Integrated Approach, London, Cengage Learning Maumbe, B & Okello, J 2013, Technology, sustainability, and rural development in Africa, Hershey: Idea Group Inc. McGrath, R 2013, The end of competitive advantage: How to keep your strategy moving as fast as your business, Boston, Harvard Business Press. Mulcaster, W.R 2009, Three Strategic Frameworks, Business Strategy Series, vol. 10, no. 1, pp. 68 – 75. Nag, R, Hambrick, D and Chen, M, 2007, What is strategic management, really? Inductive derivation of a consensus definition of the field, Strategic Management Journal, vol. 28 no. 9, pp. 935–955. Porter, M. E, 2001, Strategy and the Internet, Harvard Business Review, vol. 79, no. 3 Reynolds, G 2009, Information technology for managers, Boston, Cengage Learning Samson, D & Daft, R 2012, Management, Belmont, Cengage Learning. Read More