Investing in the It That Makes a Competitive Difference

Because of this, there is a case that companies like Google, look forward to making sure that they penetrate the market in order to produce better outcomes, which also leads to a fast growth for the organization.

A majority of the attractiveness stems from the abnormally low buyer and supplier power. However, this gain is offset by the current low barriers of entry and high competitive rivalry. In order to remain competitive, incumbents must (1) invest heavily in research and development, (2) secure technology via patents, (3) market heavily to monetize products, all of which will diminish bottom line results.

The firm’s structure helps them to continue on the path of innovation and stay a leader in the industry.

Porter, Michael. 1998. “Competitive Advantage: Creating and Sustaining Superior Performance.” 26 Dec, 2011. Free Press, 1998.

In the New Millennium, leaders must be ever aware of the changing landscape in which they operate. In developing an understanding of the global marketplace in which humans must coexist, it would be futile to underestimate the impact that information technology (IT) has had in defining how objectives are achieved. While technology has made our lives more efficient, it also presents interesting challenges when it does not function as expected or does not provide immediate benefits to hasten our thinking. Creighton University’s Seminar: Business and IT

Nicholas Carr, in his article “IT Doesn’t Matter” (HBR, 2003) raises a point that IT can no longer create a competitive advantage for any business. Even though Carr understands that IT cannot be ignored, he asserts that strategic importance of IT is diminishing and advises his readers to think before investing in IT. He argues that any advantage provided by IT will be available to an entire industry, and a single firm cannot rely on using those systems as a differentiator. Moreover, Carr writes that companies are running into the risk of overspending without considering alternatives or whether it will give the company a return on their investment. Readers can see this over the last few years at IVK, a fictional financial service company discussed in The Adventures of an IT

McKeen, James D; Smith, Heather (2012). IT strategy: Issues and practices (2nd ed.). Boston: Prentice Hall. Kindle Edition.

Every new product is a chance for new profits. So it is not surprising that  many companies have already invested

On the other hand, companies such as IBM, GE and Apple, at least the company that I know of, have greatly capitalized on maintaining focus on the areas they are good at and innovation so they can be competitive and able to stay “afloat” alongside competition if not above them.

In the growing industry, the company has the higher potential to grow in the future.

Samsung always spend more money on R&D than Apple. For example, in 2012, Samsung spends 11.18 billion dollars, but Apple only spends 3.38 billion dollars. In 2014, Apple increase its spending to 6.04 billion dollars, but the amount of Samsung is even larger than that (13.94 billion dollars). Both graphs also demonstrate clearly that both Apple Inc. and Samsung Electronics have increased their spending for R&D over time. Even though Samsung Electronics spends a lot of money for R&D, they don’t obviously get what they pay for. On the other hand, Apple Inc. spends less money but wisely, so their R&D brings back large amount of profit. After doing the analysis, R&D of Apple Inc. indicates its ability to generate profit thorough new researches and spending money wisely.

In 2003 when Nicholas Carr wrote the article “IT Doesn’t Matter” companies were just beginning to utilize information technology as a competitive advantage. Mr. Carr contends that technology is not a permanent advantage because in time the competition will acquire the same resources and Information Technology (IT) just becomes another commodity. For the majority of companies throughout the world IT resources have become easily accessible and affordable. If Mr. Carr’s opinion is correct then the equality of IT access has just become a cost of doing

Competitive advantage is explained by Mahoney and Pandian (1992) as the function of industry analysis, organizational governance and the firm’s effects in the form of resource advantages and strategies. In order for a firm to be competitive it must adapt to the volatile business environment and through strategic management decisions establish a competitive advantage that will ultimately produce superior performance relative to its competitors (Akimova 2000).

A company that pursues and achieves strategic outcomes that boost its competitiveness and strength in the marketplace is in much better position to improve its future financial performance.

This is shown by the fact that their decisions support financing the procurement of modern technology that can improve the firm’s production quality.