Slide 3 of 35
Porter, Michael E and Victor E. Millar, “How information gives you competitive advantage.”, Havard Business Review, July-August, 1985, pg. 149 - 160.
Information intensity Matrix illuminates the differences in the role and intensity of information among various industries.
Information Revolution is affecting competition in 3 vital ways:
1) it changes industry structure and therefore alters the competitive rules
2) it creates competitive advantage by giving firms new ways to outperform their rivals
3) in spawns whole new businesses, often from within the firm’s operations
The Internet especially affects competitive advantages through new information flows, creating opportunities for linkages throughout the value chain, both inside and outside organizations.
- The Internet increases the power of buyers in industries assembling purchased components.
- IT investments raise barriers to entry
- IT creates linkages in supply and distribution channels, but Internet creates “open exchanges” due to ubiquity of the technology; cross company linkages, changes boundaries of industries
- Large scale production is no longer essential to achieve automation, (i.e BMW plant, etc.)