Question

Many well-known examples of the use of information technology for competitive advantage involve systems that link an organisation to suppliers, distribution channels, or customers. In general, these systems use information or processing capabilities in one organisation to improve the performance of another or to improve relationships among organisations. Declining costs of capturing and using information have joined with increasing competitive pressures to spur numerous innovations in use of information to create value. The ideas do not constitute a procedure leading inexorably to competitive advantage. However, they have been of value when combined with an appreciation of the competitive dynamics of specific industries and a grasp of the power of information.

Name the three key

Answer 1

Information and communications technology has shaped the size and scope of firms, enabling small firms to operate globally while also benefiting large firms with efficient management of diverse operations. The digital transformation has led to the rise of online markets and a shift away from traditional manufacturing jobs. These changes are pivotal for the economy, affecting competition and market dynamics.

Step-by-step explanation:

The impact of information and communications technology (ICT) on the size and operations of firms is multifaceted. Small firms now have the capability to extend their reach well beyond local markets, suggesting a future with many small competitors due to lower barriers to market entry. Conversely, ICT can also foster larger firms with more efficient management of numerous plants and operations, leading to potential 'winner-take-all' markets where one or few companies dominate, as seen with giants like Microsoft and Amazon.

In the face of such technological advancements, products and services now take the digital form and are easily transported over networks, revolutionizing traditional industries and creating online markets. This transition to a more information-centric economy brings about a decrease in manufacturing jobs, outsourcing of labor to other countries, and the rise of industries that operate almost entirely online, like the music and film industries.

Ultimately, ICT blurs the lines between local and global markets and has a profound impact on competition and market dynamics. As ICT continues to evolve, economic models will adapt, creating a rich area of study for economists, policymakers, and business professionals.