Well to begin with , economically , the term competitive advantage is described as ” the advantages that a country or economy has, through which it is able to produce a batch of goods or services of the equal value at a much lower cost , more effectively.
What originates competitive advantages are factors that are laid down in cost structures, infrastructure, the supply chain network, the quality of product or good offered. These advantages are further achieved by firms or countries who have advance uses of technology in their systems.The information technology has what led to the increased opportunities for countries to invest in information technology, to get an edge.
Business and business people need to get familiarized with the uses and technicalities of the new technologies to help it work efficiently. It is not merely about getting or using information technology, but how effectively and creatively we use the machines and technology in a way different from their competitors’. Most of the business do a blunder by laying down a creative system which is almost similar to what other businesses are doing. To have an edge means to have a distinctive feature in either their operations, productions, logistics, customer services etc.
Now we shall consider certain factors to which Information Technology has contributed to businesses in creating competitive advantage.
This is not only for a firm which is a highly multinational company, but even a small business or just a Start up needs Information technology to stay ahead of its rivals. The business has to get an edge over its rivals, either by producing at a cheaper cost or producing a better quality.
( https://www.useoftechnology.com/information-technology-competitive-advantage/ )
Firstly, the major ways in which information technology is affecting businesses in a positive ways are listed below;
The structure of the businesses have now been established in a modern way
It gives the firms the means and modes to outperform their competitors
IT has created many new business opportunities even with in the existing businesses.
How is the value of the system or IT calculated? Well if the value produced by a company through a new laid down system is more than the costs incurred, then we can conclude that the firm has gained value and benefits of the advancement.
If we outline the number of various ways in which we can make use of information technology to achieve competitive advantage, there are many that we have in our mind and in practice at many enterprises around the globe . Some of the major areas are;
E-Commerce – the widespread of businesses online has taken a whole new elevation in the corporate world these days. As much as the consumers are facing increased workloads, e-commerce has helped consumers experience shopping from home. Many businesses have now started online retailing , however some has maintained a distinguish and careful customer service support to gain an edge, cause in E-commerce, a customer is one who needs to be satisfied.
Supply-chain management – this is an advanced system of inventory control. It does not really need manual efforts of making and keeping records, instead it uses IT to make sure that there is always enough products and clerical supplies, as per what the demand is.
Privacy – the IT has helped at maintaining the confidentiality of many firms these days. It helps protect data of clients and employees, this can definitely gain a competitive edge.
Collaborative software -many automated quality program softwares helps motivate teamwork. It helps share documents and major files among the group member’s easily. This is less time consuming and economically less costly.
Automation software – this is where the company is able to automatically keep a track of the number of sales, purchases, customers and transaction details. It can make these documents available for various departments and make its use in Financial accounting related tax calculations.
Besides the areas of competitive advantage mentioned above, some new innovative design or creative software could what help businesses stand out and gain an edge over rivals. The giant companies are usually those able to utilise resources in capturing the latest ever technologies and implement in their system.However, small companies could be innovative and distinctively come up with a new software to enhance the functionality and efficient of their productivity.
Eventually, the assessment of the topic comes down to the part whether information technology really helps at gaining firms competitive advantage or not. This topic is subject to many arguments and different perspectives altogether. But if we weigh the advantages of IT, we can see that the investments by firms in IT and its major role at strategic management functions and other value added systems, have contributed to a firm’s sustainable growth, thus competitive advantage. Also one of the most important idea behind IT is not merely investing into the machines, but the additional inputs that are required are equally essential, of which, the most crucial is the “human element” or “human capital” as we may call it. Without an expert or skilled human staff, the machine is likely to remain idle and useless. So some scholars argue that it is still in human’s capabilities to look for the businesses competitive advantage and not solely a matter of IT.Moreover, some also argue that since IT is available to all the firms and business, it cannot be a source of competitive advantage.
Nevertheless, there may be loopholes in any theory supporting IT as the tool for competitive advantage, but it does primarily help achieve competitive advantage by cutting costs down and help in differentiating.
( http://ojs.ebrjournal.net/ojs/index.php/ebr/article/viewFile/167/pdf )