1The use of IT allow competition based on lower cost and bas

1.The use of IT allow competition based on lower cost and based on differentiation. Explain each basis of competition. Look for an example of each from the real world.

Solution

Considering the value chain of any business, they are:

If Information Technology is used in the Primary and the secondary activities of the businesses then the business can become cost effective. With the low cost activity would also make sure that the business will be cost effective and the product and the services that will reach the customers are efficient.

The use of IT allows a lower cost competition as with the extensive use of the new and latest technology; the firms can produce and deliver and reach out to the consumers in a much more effective manner. By a successful implementation of IT a company can directly link to its customers and directly link consumer behaviour to distribution and production and supply chains, helping lower inventory and distribution costs. Or implement an efficient customer feedback system that would allow the company to get feedback easily and efficiently. Online system where customers can enter their order and receive the ordered goods can decrease the cost of the company. Cisco and Nimble are the company that used effective technology to overtake their competitions. Wal-Mart uses IT to acquire goods and products and has a highly technologically equipped Information System.

The use of IT as a basis of competition based on differential, as in the case of service industry if the interaction between the customer and the business owner is free and uninterrupted, the company will be able to understand the needs and wants of the customer and design products according to their needs. The company that has used IT to differentiate itself are Client Heartbeat and Oscar Health Insurance.