''Information Technology is increasingly being used by firms in order to achieve and sustain a competitive advantage when engaging with stakeholders.''
The technological change that the world is undergoing is complex and above all at a rapid rate. It is also important to comprehend the fact that technology is one sector that is constantly changing. As Waser (2012, p.41) posited, “the only that is changing the world at a constant rate is the technology.” With the emergence of more and more people coming into the global business filed, the sector of information technology, especially its usage and developments is occurring with the occasion.
Oliveira and Martins (2011) defines the information technology as the study as well as the use of any computers, networking or any other devices related to it, also the processes as well as the infrastructure for processing, creation, storage, exchange and security of data in the electronic form. While Mel and Grance defines it as the skills specially utilized in analyzing, comprehension development, creation, allocation and operation of computer software and hardware, or any other structures related to computers for the control and the management of electronic data. Or in other words, information technology is the usage of all the update technology that world has currently, and uses those technologies to gather information through effective communication, even though some of the aspect requires strong assessment to avoid any errors.
According to Walker and Madsen (2016), almost all the companies use information technology one way or the other. In a recent study conducted in 150 multinational companies in Europe and Australia, it has been affirmed that 98.9% of the companies adapts to various kinds of services from the modern information technology. The study also profoundly points that 99.2% of all the start-ups that are emerging today in Europe and Australia uses information technology as a base for the growth, sustenance and also competitive advantage of their businesses.
Although there are many definitions posited various authors from different field, the concept of information technology is vast. As Schwalbe (2015, p.91) posited, “It is important to understand that the concept of information technology cannot be defined or in other words conceptualized towards a single idea, and this is mainly because with the course of time the technological aspect integrated to concepts are numerous, hence it becomes difficult to cover all that perspective in a single definition.”
Today the time of information technology is changing the entire world, especially the corporate sector. This notion was supported Holtshouse (2013) in his work, and according to him the time of information technology is profoundly changing the way people are approaching the corporate world. This is evident in many of the business activities and operations such as monetary transaction and the communication with various stakeholders. On the other side development and the immense progress that various multimedia as well as programming is achieving is also catapulting the growth and the success of the corporate, and companies like Intel, Apple and Microsoft are few of the best examples.
With the emergence of social media in the late 2000, the entire model of information technology existed those time became more complex and even enhanced in a significant way. Social media pages such as Facebook and Twitter opened new opportunities for the business and the corporate world. As Miller (2012, p. 159) posted in his work ‘Social networking sites’, “When social networking entered into the global business sector, this has opened new ways of innovations and opportunity that they never thought before.” Apart from the social networking sites that offered numerous opportunities for the business world, many other sites and web pages emerged in support of the business sector by offering various kinds of promotion, and some of the examples include search engine optimization, web development and traffic optimization.
Therefore as discussed before, the current context of information technology is not only a limited activity of sharing information or data, since it encompasses a larger perspective. As per Schwalbe (2015), it is not only communication that the information technology is mainly utilized for, rather to comprehend the people’s requirement as well as their necessity.
The sector of information technology is going to make immense difference in the current as well as in the future, since it is all about innovation and progress that integrates human needs and requirements as discussed. It is also becoming a significant platform for the corporate and business world in terms of communication and storage. When it comes to communication, the current information technology has put the business-customer, customer-business and business-business interaction into a whole new level. As Bloom et al (2014) posited, the organization are now using information technology in order to acquire market and business advantage, and they are successful in achieving it in a significant manner. It is indeed a fact that this is mainly due to the much developed level of stakeholder interaction that these organizations could sustain due to the current services and solution that the information technology have offered.
The essay aims to assess and determine the role of information technology as a tool used by the organizations today, for the acquisition and sustainment of competitive advantage within the chosen market, through interacting or in other words engaging with the stakeholders.
Information Technology and Competitive Advantage:
The revolution of information technology is changing the global economy. As Porter and Miller (1985) stated earlier in their work, “Soon the information revolution would sweep our economy, and no organization would be able to escape from its impact.” It is evident now, on how this change is really taking over, the effect that is bought forth, especially by bringing down the cost of processing, transmitting and obtaining of the information, which in turn is dramatically changing the business sector.
Jones and George (2015) defines competitive advantage as an ‘advantage’ that an organization gains through offering a service or a product that a customer values; or in other a condition that allow an organization to manufacture specific goods or serves at prices that are lower or in a more desirable way a customer needs. Through these scenarios the companies would be able to generate more sales and profit, hence by acquiring the advantage over its rival. Understanding this aspect, it is important to comprehend the very fact that it the role of information technology not as a direct contributor to the competitive advantage, rather indirect. As Jones and George (2015) pointed out that it is the effective use of information technology that creates the competitive advantage or the difference. Therefore it is important for the company to utilize the tool of information technology in a creative and effective manner to gain competitive advantage.
Innovation plays a crucial role in devising the information technology suitably for the advantage of a particular business, since innovation demand to do things in the creative and above all simplest way. As Breznik (2012) stated in his ‘economic and business review’, using the information technology in the most traditional way to do business would not solve the issue or would help the organization to achieve competitive advantage. He also asserts that is significant for an organization to create, develop and implement unique ways to use information technology in order to acquire competitive advantage over their rivals in the industry, and one of the ways is to improve the interaction between different stakeholders.
Bilgihan et al (2011) affirms that the existence as well as the evolution of the global information network is changing the commerce and this especially for the consumers as well as for the business. Through the term ‘change’ the authors are asserting more on the vanishing gap between the two entities; that is the customers and the company. As Bilgihan et al (2011) added to his notion that customers are not limited with the remoteness today and the difficulty on communicating the company directly is possible in the current scenario. With ease and speed the customers can communicate their issues, requirement, necessity and even desires to the organization using the information technology.
In another perspective, the competitive advantage gained by the companies through information technology can be analyzed through the ‘Five Force’ framework of Michael Porter. According to Michael Porter, and industry can be analyzed through five competitive forces that moulds it (Baltzan and Phillips, 2010), and they are; Power of the competitor, threat to new entrants, threat of the new substitutes, customers bargaining power and the suppliers bargaining power.
As Porter exerted on the five forces, it is important to any organization to synthesize and implement strategies that could effectively and efficiently counter the five competitive forces. According to O’Brien and Marakas (2011), companies could adapt to any of the five competitive strategies, which are directly related to the three of the Porter’s strategies of broad differentiation, focused strategy and the broad cost leadership.
When it comes to cost leadership the companies could use the information technology to basically shift the costs of operating the business says Booth et al (2011), or in other words, to decrease the costs incurred by the business, then there by decreasing the costs towards the customers and the suppliers. For, example the companies could utilize online services such as business to consumer, or business tto business systems to reduce the costs in the operation.
When it comes to differentiation strategy, the business organizations could use the information technology in order to synthesize differentiation attribute towards their products or services or by reducing the differentiation advantage of the rivals as per Booth et al (2011). For example, a company could utilize online chat-services as well as various social networking sites such as Facebook and Twitter to comprehend the consumer necessity and requirements, and in turn serve them better. Also information technology can be created to develop inform-diaries, and there by offering value-added services to the customers, and maintain their retention towards the company; and to apply advanced tools to measure various online and offline activities (Booth et al, 2011).
As discussed before innovation has always been a major part of the competitive advantage that the company could acquire through information technology. For the identification as well as the creation of new products or services, information technology can be used, and at the same time it can also be used in the creation of the market. As Chui and Flemming (2011, p. 8) posited, “For the development of niche or a new marker or to radically bring change to business operations through automation information technology is an effective tool.” The same can be used in the development new initiatives for the establishment of any kind of online operations or businesses, since the telecommunication and internet services is capable of providing better and smarter opportunities for innovation. According to Robert and Grover (2012), open innovation and combinational innovation are two of the most effective examples. It is also important to understand that many of the infrastructural requirements of a business organization has been replaced by new components that links to information technology, and made the overall operations and activities much efficient and effective. Robert and Grover (2012), affirms this by pointing out that today the companies could combine and recombine various components or the parts to develop innovation linking to information technology. Meanwhile, the companies have numerous opportunities to co-create with its various stakeholders that are linked through various means of technology such as laptops, smart-phones and other mobile devices connected to the internet.
Information technology can also be used to integrate with growth strategies. As Rigby (2011) stated that the companies could utilize the information technology to enhance their domestic or the international activities and also used in the integration and diversification with other services and products. As an example, Rigby (2011) points out the establishment of worldwide intranet and operation base that many of the multinational companies have, and also through the establishment of omni-channel strategy to benefit growth and sustainability. On the other side, the companies could also use the technology to develop and encompass their relations with their business partners through specially catered applications, such as creating inter-organizational information system and virtual organization.
There is a common notion on the very concept of stakeholder engagement, mainly as a concept or a term used for the corporate social responsibility of an organization. However, in the relative business context, the term has various meanings or aspect to it. For some scholars and the business communities it is an idea that hovers within the cavity of CSR, while for the others it is a concept that generalize interaction between the companies and its stakeholders.
According to Noland and Philips (2010), stakeholder engagement is the process utilized by the companies to interact with the significant stakeholders in order to acquire the organizational objectives. While Ayuso et al (2011) defines it as a very important element of corporate social responsibility or CSR, and achievement of it is very important for the organizations. For Ayuso et al (2011) the stakeholder engagement is mainly for the purpose of discussing matters that are concerning society and the environment, mainly the businesses’ role in contributing to the betterment towards these two factors.
Although CSR has been exalted as an accountability element of an organization towards the society and environment more than a strategic operation, in the current context most of the companies are using CSR as a strategic tool for gaining competitive advantage. As Russo Spena and De Chiara (2012) stated, “the CSR has now evolved into a whole new paradigm, and has been used a integral part of competitive advantage for growth and sustainability in the industry.”
It is an evident factor that the current information technology would allow the top management of a company to access various financial data and information from any part of the globe. This would ensure to a certain level the care and diligence from the companies part, and also assure the active involvement of all internal stakeholders without any reason or cause. This indeed would help the company to create certain value towards its stakeholders by binding strong ethics with it. As line Louche and Idowu (2010) pointed out, the directors or the top-management within a company are positioned in such a way that it would assure a certain level of solvency, which in turn would guard the company against any kind of wrongful trade.
It is a common practice within an organization to gather effective advices from the experts by a director or by a company manager, especially a range of designation from financial advisors to accountants to auditors. In order for the better engagement and indulgence for these advices and guidance, the directors or the company top management always relies on the information technology. And through this there would be greater harmony in the operations as well as the intelligent utilization of the labor. Line Louche and Idowu (2010, p. 71) supports this by stating, “The internal stakeholder interaction and engagement is extremely valuable for the organization’s growth and sustainability; therefore through this, all the necessity and requirements of the internal stakeholders are met and in turn it would empower them in the contribution towards the organizations growth and sustainability.”
When it comes to corporate governance, growth and competitive advantage within the industry, the role and significance of investors are very high. Since they have certain amount of investment or shares they possess of the company, they have the rights over the governance of the company. According to Noland and Phillips (2010), the ownership over the shares provides the investors with certain power over the company, and also they have the right to analyze the performance of the top management and even replace them with the system of voting.” Investors also plays a significant role in the embedding the company with a strong and good corporate governance and practices. In order to enable this in its entirety and efficiency, information technology becomes the pivotal component. “The information technology becomes the primary platform for the investor interaction,, especially allowing the investors to monitor the company activities” says Noland and Philips (2010).
Conclusion:
The role and significance of information technology have increased for the past a two decades. Today information technology is not only looked upon as a tool for corporate or the business communication, but also as a tool that aid in the governance of the corporate and business sector as well. Today a business enterprise gains its competitive advantage through various means, and information technology is one of the pivotal ways it is achieved. It is also important that all the major strategies or the strategic framework that exists today in the business field can be integrated with the information technology for its effective result. On the other side, it has also taken the stakeholder engagement to a whole new level. For these reasons, it can be affirmed that the Information Technology is increasingly being used by firms in order to achieve and sustain a competitive advantage when engaging with stakeholders.
References:
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Walker, G. and Madsen, T.L., 2016. Modern competitive strategy. McGraw-Hill Education.
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Ayuso, S., Ángel Rodríguez, M., García-Castro, R. and Ángel Ariño, M., 2011. Does stakeholder engagement promote sustainable innovation orientation?. Industrial Management & Data Systems, 111(9), pp.1399-1417.
Baltzan, p. & Phillips, A. 2010, Business Driven Technology, 4th edn, McGraw-Hill Irwin, Boston, USA.
Bilgihan, A., Okumus, F., “Khal” Nusair, K., & Joon-Wuk Kwun, D. (2011). Information technology applications and competitive advantage in hotel companies. Journal of Hospitality and Tourism Technology, 2(2), 139-153.
Bloom, N., Garicano, L., Sadun, R., & Van Reenen, J. 2014. The distinct effects of information technology and communication technology on firm organization. Management Science, 60(12), 2859-2885.
Booth, A., Roberts, R. & Sikes, J. 2011, ‘How strong is your IT strategy?’, McKinsey on Business Technology, Number 23, Summer 2011, pp. 2–7.
Breznik, L. 2012. Can information technology be a source of competitive advantage?. Economic and Business Review for Central and South-Eastern Europe, 14(3), 251.
Chui, M. & Fleming, T. 2011, ‘Inside P & G’s digital revolution’, McKinsey Quarterly, November 2011, pp. 1–11.
Holtshouse, D. K. 2013. Information technology for knowledge management. Springer Science & Business Media.
Jones, G., & George, J. 2015. Contemporary management. McGraw-Hill Higher Education.
line Louche, C. and Idowu, S. eds., 2010. Innovative CSR: From risk management to value creation. Greenleaf Publishing.
Mell, P., & Grance, T. 2011. The NIST definition of cloud computing.
Miller, D. 2012. Social networking sites. Digital anthropology, 156-161.
Noland, J. and Phillips, R., 2010. Stakeholder engagement, discourse ethics and strategic management. International Journal of Management Reviews, 12(1), pp.39-49.
O’Brien, J. A. & Marakas, G. M.2011, Management Information Systems, 10th Edition, McGrawHill, New York, USA
Oliveira, T. and Martins, M.F., 2011. Literature review of information technology adoption models at firm level. The electronic journal information systems evaluation, 14(1), pp.110-121.
Porter, M. E., & Millar, V. E. 1985. How information gives you competitive advantage.
Rigby, D. 2011, ‘The Future of Shopping”, Harvard Business Review, December 2011, pp. 65–76
Roberts, N., & Grover, V. (2012). Leveraging information technology infrastructure to facilitate a firm's customer agility and competitive activity: An empirical investigation. Journal of Management Information Systems, 28(4), 231-270.
Russo Spena, T. and De Chiara, A., 2012. CSR, innovation strategy and supply chain management: toward an integrated perspective. International Journal of Technology Management, 58(1/2), pp.83-108.
Schwalbe, K. 2015. Information technology project management. Cengage Learning.
Walker, G. and Madsen, T.L., 2016. Modern competitive strategy. McGraw-Hill Education.
Waser, R. (Ed.). 2012. Nanoelectronics and information technology. John Wiley & Sons.
