Technology's Effects on a Competitive Advantage

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Technology delivers competitive advantage wherever employees work.
Technology delivers competitive advantage wherever employees work. (Image: BananaStock/BananaStock/Getty Images)

Information and communication technology (ICT) can affect competitive advantage in many different ways. By making vast amounts of information available to all employees, ICT enables the organization to respond effectively to change or business opportunities. It supports communication among teams, enabling them to quickly deliver strategic projects that contribute to growth. Technology also improves supply chain efficiency by enabling communication and information sharing throughout the chain.

Customer Service

ICT systems are capable of storing and communicating vast amounts of information. That gives employees the ability to provide service based on comprehensive customer information. In a telephone call center, for example, an operator can view the caller’s entire purchase history, profile and preferences during the call. This gives the operator the opportunity to deal efficiently and effectively with the call and to improve customer satisfaction.

Project Teams

Organizations use project teams to work on product development and other strategic initiatives. According to the website Effective Meetings, using technology to hold virtual project meetings over the Internet reduces wasted travel time and enables the teams to make faster decisions, regardless of where members are located. Faster decision making reduces time to completion, enabling teams to get new products to market ahead of competitors.

Supply Chain

Linking members of a supply chain with a communications network allows an organization to respond rapidly to business threats or opportunities. Communicating an increase in market demand enables all supply chain members to adjust their production schedules in line with the change and deliver on time without disruption.

Mobility

Mobile communication technology enables employees working away from the office to access the same data and applications as their office-based colleagues. That means field service technicians or sales representatives can provide a high-quality service to customers, regardless of where they are, giving the organization a further competitive advantage.

Switching Costs

Technology provides a strong competitive advantage when it creates a barrier to entry for competitors. For example, say an organization provides a customized online ordering system to a major client. A competitor would have to build a matching system from scratch to provide the same benefits, giving the incumbent a strong advantage. This type of advantage is known as a switching cost. According to a research paper from the IESE Business School, switching costs are becoming strategically important in the increasingly networked ICT environment.

Resources

According to a 1997 article in the “Strategic Management Journal,” information technology (IT) alone does not deliver competitive advantage. However, combining IT with other corporate resources such as innovation and talented people can create a powerful competitive advantage that is difficult for competitors to match.

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