Answer

 Introduction

Virtually no organization can be able to escape the sweeping changes that have been brought about by the era of technological revolution, characterized by increased adoption, implementation, and strategic use of Information Technology (IT) to gain competitive advantage. IT has become the foundation and a corner stone through which business organizations are able to achieve the organization’s bottom line[1]. At organizational level, IT strategy refers to the organizations long term plans meant to enable it achieve its goals and objectives in the wake of rapid competition, technological advancements, and the need to obtain sustainable competitive advantage over rivals[2]. Generally, strategic use of IT necessitates business organizations to ensure that their business strategy is well aligned to the IT strategy they wish to employ to withstand competition[3]. Again the logistics of the IT strategy adopted and the tactics used to effect the strategy has great determinant on whether an organization will achieve its intended purpose[4].  Mangers or organizations need to be aware that the adoption of a particular IT strategy or the IT strategy itself does not necessarily imply business success, but rather how the strategy or the technology is used is what determines success and differentiates a firm from its rivals[5]. Gaining competitive advantage through strategic use of IT means rendering services, or providing products in a unique manner that generates more value to customers compared to the competitors[6].  An IT strategy that is not easily copied or duplicated by other organizations is all the more effective in terms of sustainable or long term competitive advantage[7]. There are numerous examples of organizations that have successfully used IT to register milestone success and competitive advantage, top among them including eBay, Facebook, coca cola, Dell, Nestle, Toyota, Google, among other organizations in various industries including oil, construction, just to mention. Despite the many success stories, there are some organizations that are yet to get it right in terms of using IT strategically for their competitive advantage[8]. Failing to align the IT strategy and the business strategy can indeed lead to historic business failures as witnessed in some organizations including Xerox, Kodak, Fox Meyer, just to mention[9]. The rest of this paper shall delve into how organizations strategically use information technology to derive competitive advantage by looking at one success IT strategy story, and one failure.

Information Technology and Competitive Advantage

As mentioned earlier, effective IT strategy that is certain to produce success and sustainable competitive advantage is that which is difficult for other firms to emulate[10]. While the use of strategic IT can bear significant level or degree of benefits to an organization, such benefits do not necessarily result to competitive advantage[11]. Successful firms are those that have been able to transform such benefits strategically so that they become a source of organization’s competitiveness[12]. Strategic use of IT for overall organization success thus involves creating strategic impacts in goal determination, strategy formulation and implementation[13]. Competitive advantage is thus said to have been achieved when an organization uses IT strategically to derive strategic benefits for the organization that are unique and that are not present in rival firms[14]. This uniqueness in strategic use of information technology is what makes some organizations or companies, such as eBay, a success story.

Success IT strategy at eBay

 a) Company Summary

eBay, founded by Pierre Omidyar is one of the companies in the online industry to have effectively and strategically used IT to become a visibly leading and successful company. eBay is an online company, whose mission is to provide its clients with a suitable platform where they can conduct all manner of trading activities and transactions[15]. The company does not have a brick and mortar stores or warehouse, but its presence is felt globally[16]. It operates on formation of communities of customers and individuals, who interact and come together to form the marketplace[17]. The company’s profit is based on the number of this online community, and it increase as the community increases.

b) IT Strategy and Competitive Advantage at eBay

The organization has over the time managed to implement its business strategy through effective use of IT[18]. Through its strategic use of IT, eBay has become a beacon of just how an organization can achieve success when it uses IT strategy as a source of competitive advantage. To keep up to date and ahead of others, eBay engages in persistent upgrades to ensure that the company remains viable, flexible and manageable[19]. This ensures that the company addresses the ever changing customers’ preferences hence retaining existing and attracting even more customers. eBay’s developer program is its IT strategy that is meant to ensure the company’s community of customers have access to modest user fees[20]. eBay also recognizes the fact that its customers are growing and such eBay ensures that it does not let incorporation of new technological infrastructure interfere with the current function of its  operations[21]. It is through IT that eBay has also been able to create such a large pool or community of buyers and sellers who interact together for the profit of the company. The seller tools are also a strategic IT tools that the company uses to make transactions between the community of buyers and seller as simple as possible[22]. The company’s seller tools create a pool of repeat clients since it simplifies functionality for the benefit of the customers which their customers may not come across in similar online companies. To gain competitive advantage, the company also tries as much as it can to ensure that eBay makes strategic use of technology in ways not common among their rivals and thus providing quality, unique, and user friendly online support technologies such as chat rooms[23]. eBay has thus been able to incorporate its IT strategy to its business strategy through constant updates and upgrades, and a development of  a technological pat form that has enabled it to remain flexible, responsive, adaptable, profitable, and above all, kept it on top of its rivals. As can be seen here, eBay’ technology are designed to respond to the changing nature of customers needs and as such, this strategic response has made it maintain a leading position among its rivals.

c) Success Factors at eBay

One of the key success factors of eBay’s leading position has been its focus on ensuring that its IT strategy is in sync with its business strategy, goals, missions and values. Since it aims at delivering quality online platform where a community of traders from all walks of life can interact, the company has maintained constant change, upgrades, updates and restructuring that meets their client’s changing needs[24]. eBay’s success is also as a result of providing its clients with unique and rare type of products and services in its website compared to its competitors. Strategic use of technology has thus enabled the company to differentiate itself by creating a platform that is capable of providing services and products not common or that cannot be emulated with ease[25]. eBay’s technology is designed in such a way that it enables the formation of communities of persons with similar or common interests, thereby capturing only the rightful customer profile it needs. This enables it to have better bidding possibilities than its rivals hence out competing them. The company’s interface system is based on simplicity and enables anyone to access its physical world and objects instead of information like its rival’s websites[26]. The ability of the company’s website to lead anyone searching its website for objects rather than information is said to be the most distinguishing strategy and a secret behind the company’s leading success.

IT Strategy Failure at Kodak

Existence of information technology in itself does not necessarily guarantee an organization’s competitive advantage, but rather, how an organization put into use a certain information technology to its advantage is what contributes to success[27]. At Kodak, there was a failure to put IT into effective use, a blunder that led to the demise of a once successful company[28]. Kodak had strategically used analogue technology to establish itself as a leading photography company globally but its failure to incorporate innovation and change saw the company left behind with the introduction of digital photography[29]. The irony with Kodak is that while it contributed to the creation of digital technology, the company’s strategy in utilizing the technology was a total disaster since it did not strategically and fully utilize the new technology that was disruptive to the market[30]. Kodak also failed to utilize the technology to capture the changing consumer preferences when it comes to photography. Kodak illustrates a good example where existence, even invention of a strategic technology in itself is not the end of the story[31]. An organization needs to make strategic use of technology not just to its advantage, but in unique ways that will differentiate it from other similar players in the industry and thus be a source of competitive advantage[32].  Kodak also failed to link its IT strategy to its business strategy and therefore it failed to see how the technology could transform its business, meet consumer’s needs and use the technology strategically to survive competition. Its half utilization and lack of updating of its strategy cost it a great deal.

a) Lessons Learned from Kodak’s IT Strategy Failure

One important lesson that can be learnt from Kodak’s failure even after contributing to the creation of a digital technology with the capacity to disrupt the market is that existence of technology alone does not guarantee business value or competitive advantage[33]. There is need to create unique benefits from information technology that do not exist in other rival organizations. Innovation is also essential when it comes to effectively using technology for competitive advantage. Kodak need to have incorporated innovation in its IT strategy so that it is better placed to solve and meet the changing needs of its consumers[34]. Kodak failed to capture and realize its customers changing needs and such strategic blunders can cause irredeemable failures as in the case of Kodak, which was forced to file for bankruptcy in 2012[35]. Full utilization of IT is just as important as integrating it into an organization’s business and IT strategy. Failure to integrate a disruptive technology, as was the case in Kodak, can lead to massive business failure.

Factors Influencing Success of Failure of Organization’s Efforts to gain Competitive Advantage

As earlier explained, competitive advantage refers to those distinguishing activities, or strategies that make an organization’s product or services to be rated highly by customers than its peers in the same industry. Organizations are usually in constant attempts at ensuring that their businesses succeed by devising strategies that enable them achieve competitive advantage in their respective industry[36]. A host of internal and external factors come into play in the organization’s efforts to achieving competitive advantage, and these factors may lead to failed or successful efforts.

a) Internal Factors

Internal factors are those that result from within the organization itself including managerial, individual, and organizational factors. Generally, organizations whose resources are valuable, rare, inimitable, and organized (VRIO), stand a better chance to succeed in their attempts to enhance competitive advantage compared to one with ordinary or common resources[37]. The peoples, individuals or employees in an organization can have an influence of organizations success or failure in the efforts to achieving competitive advantage, not just with strategic use of IT, but with any other organizational strategy for that matter. Individuals in organizations have the ability to enhance an organization’s competitiveness through possessing of unique competences such as skills, knowledge, and other capabilities[38]. Individuals are also responsible for innovativeness, and displaying ethical standards, and adhering to organization’s culture. An organization with individuals who possess all these unique qualities and attributes are certain to succeed in achieving competitive advantage than a firm with individuals with banal skills and competences[39]. Management can also influence the competitive advantage efforts to succeed or fail based on the extent to which they provide the needed support to employees and organization’s strategies. Organizational factors such as availability of finance can also have a bearing on competitive advantage in organizations. For example, an organization may not implement a certain strategy for achieving competitive advantage if it does not have the financial muscle to do so. Attempts to implements such strategies meant to enhance competitive advantage without sufficient financial resources may stall efforts and lead to failure.

b) External Factors

These are factors outside the organization that may actually determine success or failure of organizations attempts to enhance competitive advantage. Changes may occur in the market, the economy, technology, and political situations in ways that may favor or disfavor an organization to achieving competitive advantage. Changes in these factors for example technology, may also bring with it myriads of opportunities for an organization to tap to its advantage[40]. Organizations that are quick to notice and appropriately respond to the changes in political, economic, social, and technological (PEST) factors are generally better placed to succeed in their attempts to enhance their competitive advantage, than do those who are unresponsive and unaware of the changes in the PEST factors[41]. A god example is given by that of Kodak that failed no notice technological shift and thus could neither create value for the changing needs of their customers nor capture their interest or needs hence the company’s failure.

How to Sustain Competitive Advantage Gained Through IT

There are arguments that competitive advantage gained through IT may not be sustainable since they may easily be neutralized by rivals or worse still emulated with ease [42]. However, an organization can ensure such acquired competitive advantages are sustained through engaging in continuous improvements of the IT so that more strategic benefits are realized over time[43]. Making the competitive factor as inimitable for competitors can also make an organization sustain its competitive advantage. An organization also needs to have sufficient amount of individuals with IT competences, having knowledge, skills and operations as its components[44]. This will ensure that an organization engages in a continuous process of upgrading and refinement of technology to sustain the competitive advantage[45]. Developing a continued culture of innovation around the competitive advantage and in IT will also ensure that the organization is always ahead of its pears hence sustaining the competitive advantage.

Conclusion

Information technology can be source of sustainable competitive advantage to a firm that strategically implements and incorporates it in its business strategy. Organizations will achieve long term competitive advantage especially if their strategy is one which is rare, unique, and difficult to be copied by its rivals. Care needs to be taken during strategic use of IT to enhance competitive advantage because a wrong strategy cal lead to failure of an organization as was the case with Kodak Company.

[1] P.I, Cakmak, & T, Elcin, “The Use of Information Technology on Gaining Competitive Advantage in Turkish Contractor Firms.” World Applied Sciences Journal Vol. 18, No 22, 2012, pp.273

[2] Ibid

[3] W.E, Halal,  “Business strategy for the technology revolution: competing at the edge of creative destruction.” Journal of the Knowledge Economy Vol. 6, No.1, 2015, pp31

[4] Ibid, pp33

[5] R.G, McGrath,  The end of competitive advantage: How to keep your strategy moving as fast as your business. Harvard Business Review Press, 2013 pp2

[6] Ibid pp3

[7] L, BreznIK,  Can information technology be a source of competitive advantage?. Economic and Business Review, Vol., 14, No, 3, 2012, pp 255.

[8] J, Haucap, &H, Ulrich, “Google, Facebook, Amazon, eBay: Is the Internet driving competition or market monopolization?.” International Economics and Economic Policy Vol., 11.No, 1-2, 2014, pp 49

[9] Ibid pp51

[10]W.E,  Halal,  pp33

[11] P.I, Cakmak & T, Elcin , pp284

[12] Ibid pp 277

[13] Ibdi

[14] Ibid, pp279

[15]L,  BreznIK, pp 262

[16] Ibid, pp263

[17] G.R, Jones,  eBay and the Online Auction and Retail Sales Industry in 2011. Strategic Management Cases: An Integrated Approach, 2001, pp284.

[18]R.B,  Ferguson, “How eBay uses data and analytics to get closer to its (massive) customer base.” MIT Sloan management review Vol. 55, No 1,  2013,  pp2.

[19] Ibid pp3

[20] G.R, Jones, pp284

[21] Ibid

[22] R.B,  Ferguson, pp3

[23] Ibid

[24] S.S, Durmuşoğlu, & B, Gloria,  “The use of information technology tools in new product development phases: Analysis of effects on new product innovativeness, quality, and market performance.” Industrial Marketing Management Vol 40, No.2, 2011,  pp327.

[25] L, BreznIK,  pp 262

[26] J, Haucap J , and H, Ulrich, pp53

[27] T.H Davenport,  Process innovation: reengineering work through information technology. Harvard Business Press. 2013, par, 1

[28] J, Kotter,  “Barriers to change: The real reason behind the Kodak downfall.” Forbes, May 2 (2012). Par2

[29] Ibid

[30] H.C Lucas,  The search for survival: Lessons from disruptive technologies. ABC-CLIO, 2012.Par 2

[31] J, Kotter,  Par 5,

[32] Ibid

[33] H.C Lucas, par 4

[34] Ibid

[35] J, Kotter,  Par 4

[36] Y.B., Kraja,  and O, Elez,  “Importance of External And Internal Environment in Creation of Competitive Advantage to Smes.(Case of Smes, in the Northern Region of Albania).” European Scientific Journal Vol 11No.13, 2015, pp 1

[37] Y.B., Kraja,  and O, Elez, pp2

[38] C, Bartlett & S, Ghoshal,  Building competitive advantage through people. Sloan Mgmt. Rev, Vol 43 No.2, 2013 pp2

[39] Ibid

[40] Ibid, pp3

[41] Ibid

[42] R.G., McGrath, par1

[43] Ibid

[44] L, BreznIK, L, pp 266

[45] Ibid