IT and competitive advantage
The article “Investing in the IT That Makes a Competitive Difference” by Andrew McAfee and Erik Brynjolfsson investigates a relationship between investments of a company in IT infrastructure, Information Systems and the competitive advantage thus achieved. There exist a strong relationship between ICT investments and the competitiveness of a firm since the advent of internet in 1990. This relationship is explored using three major indicators of competitiveness; concentration of market share, turbulence of top ranking among competitors, and performance spread being the greater difference of performance among companies based on their fixed investments in ICT.
In this connection the Consumer Value Stores (CVS) investment in IT and relative competitive advantage is researched. CVS is a market leader in United States for retail business of prescribed drugs. The firm is running over 7000 drugstore in throughout the country. CVS has successfully launched, operated and maintained high scale ICT infrastructure to gain concentration of market share remained a leader in the turbulent environment and has displayed a superior performance spread through its sustained investment in innovative IT enabled processes. Net revenues of the company have never gone below the previous year’s net revenues since 1998. (CVS, 2010). Moreover, the company was able to raise the customer satisfaction from 86% to 91% percent through implementing a simple change of a processes sequence throughout its retail stores. (McAfee & Erik, 2011). CVS has proved the worth of ICT technologies in achieving the competitive advantages among businesses.
- CVS, “Statement of Operations, Retail Pharmacy Segment.” phx.corporate-ir.net Caremark, 2010. Web. 10 June, 2011.
- McAfee, Andrew & Erik Brynjolfsson. “Investing in the IT That Makes a Competitive Difference”. hbr.org, Harvard Business Review, 2011. Web. 10 June, 2011.