Blog #2

Is information technology a source of competitive advantage?

            I would argue yes. I think the biggest evidence of IT being a source for competitive advantage is within small business. Not too long ago a small business start-up required a good business plan and renting or buying a building in a high traffic location. Gone are the days of brick and mortar stores being a requirement to start a business. Information technology has allowed anyone with a work ethic and a good idea to become a business owner. There are thousands of successful businesses around the country that do not have a physical location for customers to visit and yet they are thriving because of the online market place.

            When I was 21 years old I opened my first business. I went to work straight out of high school and saved nearly every penny for four years. My brother in-law was one of the best local farmers in the area and I took on the challenge of selling his produce. I took the money I saved and rented a building, had a porch constructed and started advertising. We operated for almost a year without losing any money. I felt like we had established a customer base and were beginning to grow. I was looking forward to turning a larger profit and even hiring an employee to run the store so I could have a couple of days off a week. However, one day I learned the largest produce market in the area was building a new store down the road from me. This competitor was well established and had a large bank roll. I had zero competitive advantage. This news scared me and I decided to close my store instead of trying to take on the giant.

            I share my story because I believe if my business had been online I could have continued to operate by building a web presence and making transactions online. Information technology allows people from around the world to view and buy your product or service. A large part of my operating cost was rent, utilities and the time spent at the physical store. Not having all of these expenses could allow a business to have a competitive advantage. Also, automated transactions cut time and cost out of the buying process. I spent a large amount of time checking out my customers at the register and wasted a lot of time waiting for customers to enter my business. With an automated service customers can make transactions at any time of the day or night only requiring an employee to fill the orders.

            Information technology also allows a small business owner to forego the fear of sinking a large amount of cash into a start-up business. Anyone can create a website now days at little to no cost. This gives the owner the ability to focus on the product or service. If the business does not work out minimum loss was incurred by the owner.

            I hope to own another business one day and I believe having a store run by information technology will give me a competitive advantage that I did not have my first time around.