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Computers Have Influenced Business & the Commercial Work Environment
This paper considers how computers have influenced the workplace environment, how they may give a competitive advantage or add value. The paper also considers how the value may not be as great as perceived by considering the productivity paradox. The bibliography cites 10 sources.
Computers in the Work Environment
The commercial environment has changed over the last few decades. One of the most influential factors has been the development of the computer. The technology has created a social and commercial revolution, increasing the speed and accuracy of communication reducing man hours for tedious tasks and creating new methods of analysis and business practice. However, there are many conflicting reports regarding the way that computers have been used and the benefits they may bring. Therefore, computers in the workplace may be seen as essential, but the value they add is sometimes questionable. In this paper we will consider the way that computer technology may be used and some of the problems we may find in seeking to assess the way it will adds to the value chain. However, when we look at computers, we must understand that it is not only computers that we need to consider, but the programmes that they run, as without these they have no value.
Computers have provided new ways of analysing and utilising information and well as communicating. Some companies have sought to develop their computer technology to create a competitive advantage. The need for a company to have a competitive advantage is well established. Michael Porter has argued this and has defined two sources of competitive advantage, that of cost advantage, where an organisation can produce the goods or services at a lower cost than that of their competitors, or advantage by differentiation where the company can be seen as a different from the competition either in the product they make or other aspects of the business such as customer services. Where the advantage is only temporary such as with a first mover advantage there is a continual struggle to create and maintain new advantages, but where an advantage can be kept and is sustainable this gives the company a strategic advantage. In the search for a sustainable competitive advantage we can see that many have argued that information technology can play a vital role (Thompson, 1998, Mintzberg et al., 1998).
The use of technology can help in attaining an competitive advantage by aiding the reduction or elimination of trading barriers and improving supplier or customer relationships. However, just as it brings advantages it must also be recognised where there is a reduction in barrier this may also herald the entrance of new competitors.
There have been many studies regarding the connection between information technology and competitive advantage. In general terms they have been examined in two ways, the economic results and the practical outcomes where it is added value and strategy that is noted. In both ways of measuring the advantage there are proven successes, however the economic advantage appears to last only for a couple of years after the investment whereas the practical advantage appear to continue for longer.
Therefore, we must argue that sustainable competitive advantage will not lie in the cost advantage outlined by Porter, but in his second paradigm by way of aiding the creation and maintenance of differentiation (Thompson, 1998). If this is the case there is much to lend credence to the idea that the competitive advantage will require continual development and evolution in order to remain an advantage (Thompson, 1998).
It is here that there may be problems in terms of the financing of the development of a competitive advantage, as the formulation and the continued development all require some capital investment in terms of facilitating the research. For the smaller companies this may be difficult and it is for this reason we see an interesting phenomenon. It is well-known that in information technology developments often emanate from smaller companies, it is for this reason we often see innovative designs and potential tools for competitive advantage developed in a collaborations where a larger firm may provide the funds and the smaller company the more specialised knowledge. An example of this can be seen as the way that AT&T in the United States have formed many partnerships with smaller companies, in this way they spread the risk, however, if a development is a success they will usually buy out the smaller partner due to the inequality of power in the partnership (Thompson, 1998). This way they gain the best of both worlds, the development of the advantage with experts and shared risks, but by buying the smaller company out they retain the competitive advantage may create.
Although the potential increase in productivity has been noted by many commentators the question still remains although a theoretical advantage, does the theory translate its perceived benefits to actual tangible results. Technology has impacted in some way on practically every business, and a global or international company cannot avoid it. In order to understand the range a possible implications and increased productivity the various way it can be implemented and used requires examination. However whilst reading this it may be advisable to beware the perils of to heavy a reliance on information technology, if were remember the stock market crashes of the 1990's many of these were blamed on intelligent computer systems which had been set up to but and sell shares at set limits. When stock markets fell these information systems and the resultant actions from the computers compounded the falls. It id also worth remembering that the information system will only be as strong ads its weakest point, and that this will be determined by it human designers, programmers, and engineers. Therefore, potential increased productivity does not come without risks. In order to examine this in more detail a case study will be used of a company that has used information technology in a variety of ways. For the purposes of this paper a well-known global company will be used; Royal Dutch Shell, otherwise known world-wide as Shell.
Shell is the third largest oil company in the world (Davis, 2000). The globalisation of Shell can be argued to have started in earnest in 1915 when the first United States office was opened in California (Davis, 2000). At this time the twentieth century looked like a new commercial era, new communications technology and transportation was available, and although this may seem basic and hardly technological in the modern sense that we perceive when entering the twenty-first century it was to herald what was to follow.
Shells fortunes have risen and fallen over the intervening decades. It was the seventies which would see Shells position suffer. In the decade of the seventies there were seven large influential oils companies. Shell was the weakest (Mintzberg et al., 1998). Arguably Shell, with Exxon are now probably the strongest (Mintzberg et al., 1998). This new strength is now reflected in its use of information technology to its advantage. However there are still many macro factors which it cannot control or influence. The information technology structure and programmes it uses must be able to cope and adapt to these externalities which can include political economic social and economical changes in addition to environmental demands and legalities. Therefore information is of primary importance in order for the company to make the most advantageous decision regardless of whether it is a public relations exercise or a decision on which part of a sea bed to explore for oil.
The first major change in Shell's management strategy was in 1971 when the analysts predicted major changes in the steady growth that the industry was currently benefiting from. The planners informed the decision makers but the organisation failed to change so that it would be able to adapt. The planners were frustrated and their goals changed from planning for the future; "Our real target was the microcosm (the "mental model") of our decision makers" (quoted in Mintzberg et al., 1998). In doing this we see a use of information technology in a subtle and innovative way. To change this individual and cultural attitude the scenario tool was used. Operations managers were asked to consider a variety of situations and circumstances. They then projected the way they would manage and control the situation (Mintzberg et al., 1998). The planners did not need the managers to believe the results in an absolute sense, only that they would be involved in the consideration of the process and in doing this they would be ready for change (Mintzberg et al., 1998). The technology was a tool to facilitate development rather than the development, but in facilitating this type of scenario planning it was to indicate one of the effective ways in which Shell would continue to use communications information.
This started the process of change and the new structure and style of management which was almost inadvertently based on a learning organisational…[continue]
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