Question
Explain how business applications and information technology support a firm’s business process, decision making, and strategies for competitive advantage.
Answer
Information technology (IT) and business applications can support firms’ business processes and decision making by enhancing the speed in which decisions can be made and actions processed. For example, using information communication technologies such as email and instant chat services allows staff to communicate in a much more rapid way than traditional means such a written letter or speaking to other staff members verbally, particularly if the firm’s building is a large one. Information technology can be used to make routine organisational tasks automated. By automating routine tasks business processes can be completed more quickly and efficiently. This also has the benefit of freeing up time and space for staff to focus on more complex tasks that cannot be automated.
Information technology can also be used to help with creating and enhancing strategies for attaining competitive advantage. For example, if a firm’s strategy was to be a ‘first mover’ then IT could be used to help create new products/services. If a firm’s strategy was a low-cost production strategy, then IT applications could be used to find way to reduce production costs and therefore make the overall product cheaper. A final way in which IT can be used to help create competitive advantage is by building in specific technology into a product that makes it hard to be used with other products from different companies. This would reduce the threat of the consumer switching to another company’s product, and can help build competitive advantage as the consumer would be forced to keep using the company’s products.
