Strategy and the Internet

Today it is better for companies to wait and make sound decisions about how IT should impact its competitive structure. Many companies have rushed to implement IT to stay ahead of others and have found themselves in a trap: They must constantly continue to update their systems. Companies that do not use IT as a strategic advantage will find themselves only competing on price which will utimately prove devastating to them. As seen with the Internet, buyers possess high bargaining power when comparing companies over the Internet. In addition, switching costs are low which allows buyers to find the product that offers the best price assuming all products are similar in quality, performance, service, etc. However, a way in which companies can really help increase switching costs for buyers is by ensuring that they have a strategic initiative when it comes to IT. Rather than rushing to implement IT into their industry they should make sure that they get the right fit for the company. This will prove invaluable. If companies do not carefully consider how IT will affect their industry they will untimately end up with IT being used as a commodity rather than as a competitive advantage. This could have disastrous results for companies including going under.