Do you have access to quality IT infrastructure and want to dominate your niche? If YES, here is how to gain competitive advantage using information technology. The term competitive advantage refers to a unique advantage a company has over other companies that are offering similar goods and services. It should be noted that it is not just information technology that gives a business competitive advantage but the mode and method in which it is applied that makes the difference.
“If you don’t have a competitive advantage, don’t compete.” – Jack Welch
Thus, you must use information technology in an innovative way if you would want to make a difference in your business. Using information technology to solve problems in the same way and manner as your competitors will definitely not lead you to achieve competitive advantage.
A business needs to use the technology that is available at its disposal to create something that is not only unique but something that their competitors do not have. To unravel your competitive advantage, you should ask yourself these three important questions;
- What can your business be the first at?
- What is that unique thing only your business can offer
- What can your business be the best at?
Any one of the above questions should be able to give you an idea of your competitive advantage. Once you can identify it, you must be able to communicate it to your employees and your customers. The information technology revolution is sweeping through our economy and thus affecting all businesses in both positive and negative ways. Information technology is affecting businesses in three main ways. They are;
- It has modified the structure of the business industry and has thus changed the rules of the game.
- It gives a means by which a business can outperform its competitors thus giving it competitive advantage.
- It has created new business opportunities even within existing businesses.
Since the start of the information technology revolution, it has succeeded in changing the way companies run and do their business, the products they produce, and even how the products are produced.
The value that is created by a company is gauged by the amount of money that the buyers are willing to exchange for that product or service. Thus, a business is said to be viable and profitable if the value that is created by the business is more than the cost that is involved in running the business.
So for a business to get a competitive advantage over its rivals, it has to either perform these activities at a cheaper cost or perform them in such a way that the business will stand out to the extent that customers will not mind paying a premium price in order to get it.
Every firm can benefit from the latest technological advancement whether they are an established multinational, a small business, a startup, or whether it is a high tech industry or not. In today’s economy, a business needs every advantage it can get to stay ahead. Here are some tips on how you can gain competitive advantage in business over your competitors using information technology.
How to Gain Competitive Advantage in Business Using Information Technology
Table of Content
1. Using information technology to gain a new perspective
It is of utmost necessity to view a business problem through the eyes of the customers of the business. This is because the customers are the most important people in a business, without them a business will not exist. So it is advisable to take the perspective of the customer in a business and ask how the information system would be designed to enhance customer experience and thus make your customers happier with your product or service.
2. Don’t automate a mess
Here is a common scenario, you realize the need to use technology to improve your operation, you contact a vendor, the vendor convinces you that you need a particular solution, you purchase it, implement it and it fails.
The underlying problem in this scenario may be that the process that you are trying to automate was overlooked and indeed it may be flawed. So before you implement an information technology solution, first understand the processes in your firm, and only then can you determine how information technology can help to improve what you already have on ground.
3. Know what there is to know
So what do you need to know in order for your business to succeed? By answering this question, you will be able to identify the main process that you need to pay the most attention to and the information that is necessary to support these processes. This tip along with the previous guideline will help you to get the right technology for your business that will go a long way in giving you the competitive advantage you need.
To know what there is to know, you will need to identify the factors that are necessary for the success of your business. Once you do this, you will come to realize that there are things you know but there may also be things that you do not know for which you will need to implement an information technology solution in order to tackle.
4. Creative designs
When new businesses are able to implement new information systems, a lot of businesses go for familiar designs that are similar to what other companies have on ground. This is very wrong. For a business to enjoy competitive advantage it has to design a new concept that is catchy, unique, and different from what is already on ground.
5. Creating new business
The implementation of information technology can help to give rise to new areas of business. It can make businesses that were seemingly impossible in the past to be feasible now. It can also create new businesses within old ones.
6. Lowering cost: information technology can help to reduce the cost that a business spends in production. This can be achieved by using technology to enhance the production process and thus making it more efficient.
7. Enhancing differentiation: information technology also comes in handy in the differentiation of produces through customization of the product. This further differentiates a business and its products from what its competitors have on ground.
On final note, businesses that intend for their operations to grow and succeed should make an effort to unearth how they utilize their information technology, time-wise and energy-wise. If most of the business’ resources are spent in maintaining their technology, then it is clearly evident that the business is doing the wrong thing and thus is missing out on the benefits that information technology has to offer.
Frequently Asked Questions
What Does Competitive Advantage Mean?
According to Investopedia, “competitive advantage simply means the unique factors that allow a company to produce goods or services better or more cheaply than its competitors. Note that these factors let the productive entity generate more sales or superior margins compared to its market rivals.”
What Is Sustained Competitive Advantage?
Simply put, a sustainable competitive advantage signifies a company’s unique abilities, assets, or attributes that are hard to recreate, duplicate, or surpass in success. These advantages are company assets, attributes, or abilities that are difficult to duplicate or exceed; and provide a superior or favorable long-term position over competitors.
How Does Competitive Advantage Work?
Competitive advantage is a unique trait a company has that may not be easily recreated. This is because the competitive advantage is an attribute that a business cultivates over time. There are three primary factors that can play a role in how a business might shape and develop its competitive advantage: a thorough understanding of the target market, implementing strategies, and monitoring progress and performance.
Why Is Having A Competitive Advantage Important?
- It helps you more explicitly measure progress
- Helps your organization grow certainty
- Lets you focus resources (time, talent, and treasure) for maximum ROI
- Inculcates constancy and predictability to your revenue streams
- Helps you achieve organizational momentum
- Reduces unnecessary marketing, recruiting, and fundraising expenditures
What Is Competitive Advantage In The Field Of Strategic Management?
Competitive advantage in the field of strategic management is more or less anything that a firm does very well when compared with rival firms. Have it in mind that it accrues to a firm when it does something that the rivals cannot do or owns something that the rival firms desire.
How Is Competitive Advantage Different From Comparative Advantage?
Comparative advantage happens when a company or country can produce a product or service at a relatively cheaper rate than their competition or other countries. Meanwhile, Competitive advantage happens when a company surfaces as a leader in its market sector owing to the ability to produce a product or deliver services at higher profits than the competition and at a lower cost to consumers. Have it in mind that the primary difference remains that competitive advantages are decided by higher profits and lower costs to consumers, while comparative advantages are decided by the ease of production.
What Are Some Common Strategies For Achieving Competitive Advantage?
- The Information Advantage.
- Cost Leadership
- Adaptability Competitive Advantage.
- Innovative Strategy.
- Operational Effectiveness Strategy.
- Technology-Based Competitive Strategy.
How Do You Know If A Company Has A Competitive Advantage?
Have it in mind that a company has a competitive advantage once it can increase its market share through increased efficiency or productivity over its competitors.
When Does A Company Achieve A Sustainable Competitive Advantage?
According to a business professor at Harvard Business School, a company achieves sustainable competitive advantage once it attains one (or more) of the following three criteria: Cost leadership — providing extensive value at a lower rate than competitors, Differentiation — offering better (or unique) products and service than others, Focus — acknowledging, understanding, and committing to a target market in a way no other company can.
What Is The Source Of The Google’s Competitive Advantage?
Although Google is well renowned for having many competitive advantages, it possible to narrow Google’s competitive advantages into three main categories, and they include;
- Technological infrastructure
- Innovative services
- Market share
How Can A Strong, Positive Culture Enhance A Firm’s Competitive Advantage?
According to experts, a positive corporate culture tends to help companies meet significantly higher organizational effectiveness, including heightened productivity, employee engagement, financial performance, and customer satisfaction.
What Is Supply Chain Management?
Supply chain management is more or less the process of merging the supply and demand management, not only within the organization but also across all other members and channels in the supply chain so they work together most cleanly and successfully.
Why Do Larger Companies Tend To Have Competitive Advantages?
- Opportunities for Economies of Scale
- More Attractive Compensation Packages
- Diversified Ways to Generate Revenue
- Greater Brand Recognition
- More Repeat Business
- Greater Access to Funding
Will Privacy Be The Source Of Competitive Advantage Blackberry Needs To Succeed?
Yes, every company has a substantial interest in protecting and respecting the privacy of their employees and customers. Note that the inability to secure these kinds of crucial data and be transparent can cause an existential threat to business and brand reputation. Reputation can take years to build, but only minutes to lose.
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