Gaining competitive advantage through effective use of technology

To gain competitive advantage, a company might choose to focus on either cost or differentiation. Cost advantage refers to how the company should implement strategies of lowering the cost of production to be profitable while differentiation is more of adding extra services to existing products or shifting focus to unique customers to gain competitive advantage.

With the concentrations that the company might choose, there are five (5) major frameworks that Micheal Porter mentioned to identify how the company could gain its competitive advantage over its rivals such as: 1) bargaining power of buyers 2) bargaining power of sellers 3) threat of new entrants 4)substitute products or services and 5) rivalry among existing competitors.

competitive advantage

Historically, these points depend on the industry the company belongs. However, Information Technology is changing the way the company could gain its competitive advantage. And one of the prominent examples is the rise of e-Commerce which is dramatically gaining its popularity.  

Today, the use of online services such as moving servers to ‘cloud’, using pre-developed software applications and hosting services to technology providers signal the continuous restructuring of business processes among different industries. Information Technology automates processes, build products in a shortest possible period of time and ensures that the quality of products is achieved. Affected by these rapid changes are human resources, quality of products and the length of time the products are released in the market. However, companies that have not been innovative as others are left behind in the competition.

The use of technology is integral part of most businesses. Its essential implications on how businesses  operate today is highly evident as transactions become faster. For instance, order processing can be completed online. This can include payment and delivery which can save customers’ time and it is more convenient for them. At the same time, company’s inventory management can be effectively managed as the process becomes organized.

Nowadays, investors have the ability to manage their cash transactions using online facility. This entails that their decision-making would be faster as before as they can easily see all they need to make moves.


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