| Information technology now has become the back | | | | competitive advantage. But if resource immobility |
| bone of every business. Investment in IT enabled | | | | incurs cost to the firm or brings disadvantages |
| projects has been increasing. But IT is not used | | | | it does not constitute sustainable competitive |
| much for strategic thinking | | | | advantage. Some times, imitation of IT resources |
| Information technology is not mere computer | | | | of successful firm with out ambiguity or social |
| application .Each organization is now aware of the | | | | complexity also brings sustainable competitive |
| effects, benefits and implication of information | | | | advantage. |
| technology in business and also its ability in | | | | Some times, imitation of IT resources of successful |
| creating sustainable and maintainable competitive | | | | firm with out ambiguity or social complexity also |
| advantages. In business, information technology is | | | | brings sustainable competitive advantage. |
| used through the value chains of activities which in | | | | In any organization, Information technology |
| turn enable the organization to optimize and | | | | becomes potential sources of competitive |
| control function of operations for easy decision | | | | advantages in five ways. |
| making. | | | | 1. When supplier becomes monopolist and |
| Strategic importance of IT lies its ability in | | | | IT is unique and essential for |
| developing the concept “value chain” in | | | | customers.-switching cost of customers |
| organization by creating interdependent generic | | | | 2. When capital investment in IT enabled |
| value activities comprising of elements such as | | | | resources increases |
| suppliers, customers, production, finance etc . IT | | | | 3. When technology becomes as |
| creates a linkage between these activities through a | | | | proprietary technology. |
| value chain. It transforms the value chain activities | | | | 4 When Technical skills needed to build |
| and also the product’s physical components and | | | | IT application |
| process either by lowering cost of value | | | | 5. When Managerial skills developed to |
| activities or by product’s differentiation. IT | | | | understand and exploit IT application to increase |
| also transforms the pace of competition itself. | | | | business operations. |
| Information Technology can also add value to firm by | | | | Every information available in the organization can be |
| reducing cost or increasing revenue. Information | | | | effectively converted into the fruitful result and |
| technology’s ability in adding value to firm is | | | | attained sustainable competitive advantage if the |
| different from its ability as being a source of | | | | following steps are observed. |
| sustainable competitiveness. | | | | 1. Assess existing and potential |
| However, Information technology’s potential as a | | | | information intensity of product and process |
| source of sustainable competitive advantage is in | | | | 2. Evaluate the likely impact of IT on |
| dispute and is based on certain assumptions. | | | | their industry structure |
| These assumptions are resulted in emerging two | | | | 3. Identify the rank of activities that |
| theories.The relationship between Information | | | | information first affects |
| technology and Sustainable competitive advantage is | | | | 4. Quantify how information technology |
| initially studied by a theory called Create-capture-keep | | | | brings new business |
| paradigm. It is based on the switching cost of | | | | 5. Generate a plan of action for taking |
| customers. This theory was replaced by resource | | | | advantage of IT |
| based theory which explains firm’s ability to use | | | | Now a day, IT is not at all a supporting system but a |
| IT to leverage the fundamental resources as | | | | way of thinking that contributes substantial |
| advantage as a source of sustainable competitive | | | | competitive advantage having substantial effects and |
| advantage. Under this theory, when a firm posses | | | | implications in firm’s operations. |
| same capabilities or resources which competing firm | | | | |
| does not possess it constitutes a source of | | | | . |