How Porter can help to define an ICT providers strategy
- on 01.09.09
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Porter provides a sound basis for an ICT service provider’s strategy implementation. In his book about competitive advantage he analyses the effects technology and technological change may have on the value chain. The value chain is the complete set of value creating activities a firm performs and their linkages.
“Information systems technology is particularly pervasive in the value chain, since every value activity creates and uses information.” (p.168)
Porter also asserts that “A firm creates value for a buyer that justifies a premium price (or preference at an equal price) through two mechanisms:
- By lowering buyer cost (or buyer risk of failure)
- By raising buyer performance”
This means that the ICT service provider’s products and services must help the customer to maintain or reconfigure its value chain in a way that a competitive advantage is created or sustained.
The ICT service provider must understand the customer’s value chain and how integration of its services impact the customer’s competitive position. Thus, its ability to analyze the customer’s value chain and linkages can become a major success factor in the ICT services industry. The wide variety of possible value chain configurations and opportunities to improve the customer’s value activities suggests that differentiation strategies may be more sustainable for ICT Service Providers than the cost leadership strategies pursued by some firms today.