Lecture Mail: Lesson 2 Day 3
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When Porter was writing about competitive advantage and the five forces, information
technology was unheard of. Think about how IT has changed things! Successful
use of IT can become a powerful competitive advantage as well as create barriers
to entry for competitors. A great example is Proctor and Gamble’s relationship
with Wal-Mart. P&G created an Internet connection that monitors Wal-Mart’s
inventory levels. Whenever the computer signals that supplies have fallen to
a certain level, P&G’s computers automatically create an order and
arrange for shipping. This has saved Wal-Mart hundreds of thousands of dollars
in logistics expenses. Of course, there is nothing to stop Wal-Mart from using
the same technology with other suppliers, many of whom might be P&G’s
competitors, so P&G must continue to develop new technologies and strategies
that it can share with Wal-Mart. IT has accelerated the rate of change and innovation
and successful companies will be those that monitor the environment and develop
new IT applications.
Exhibit 2.8 provides a summary of the impact of technology on the five forces.
It can be used either to create or get around barriers. Think about how technology
has changed car buying and selling. Using Honda Cars of Aiken as an example,
does their Internet web-site provide them with a competitive advantage? Could
the Internet also be used by the supplier, Honda Cars USA, to create a powerful
advantage? How could buyers use the Internet to their advantage when negotiating
with a local dealer?
Technology is a two-edged sword. Those firms that don’t manage technology
are more likely to be sliced and diced by some other firm that does.
*****Key Links*****
http://hondacarsofaiken.com/