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Uunderstanding the development of IT strategies
. Given the large amount of investment in IT, companies need to receive high IT business value. To do that, a good IT strategy is essential especially when doing business in various parts of the world. Review the readings on the Background page about the digital economy.
Using IT to compete on the world stage has become increasingly important in the global economy. Choose multiple industries and provide an example company for each industry in which IT plays a strategic role by adding value and providing a competitive advantage through innovative application of IT on the global stage and how these firms are meeting the concerns noted in the Global Information Technology Report 2021. prepare a short (4- to 5-page) paper addressing the IT strategic roles for your selected firms. Submit your paper upon completion. Use information from the modular background readings as well as any good quality resource you can find. Please cite all sources and provide a reference list at the end of your paper.
Creating Value You have your strategy in place, and you have your prioritized list of projects to pursue. But, wait! What happens if one of the projects proves to be more expensive or less impactful than originally assessed? What happens if one of the strategic pillars is called into question—due to a change in the economy, for example? One of my favorite quotes about planning comes from the famed German military strategist, Helmuth von Moltke, who said, “No battle plan survives contact with the enemy.” You do not have enemies per se, but you do have a variety of realities that may logically require changes to either the strategy or to the project list. What then? Strategies should be created with the anticipation that they will need to be changed. There are events that may lead to change. And the simple passage of time should lead to changes as well. Examples of events include an economic downturn, but may also include the acquisition or divestiture of a business, a competitor beating you to the creation of a new product, a new market that is to be opened, and the like. Each of these, and other changes like them, should lead to a rethinking of the strategy. Mind you, none of these is likely to require canceling the entire strategy and starting anew, but it will be necessary to at least review the strategic plan to see if there’s anything that’s less relevant (or irrelevant) because of the event. This is likely to be at the tactic level, rather than the objective level, but the entire plan should be reviewed. The simple passage of time is another reason to review the plan. Many people falsely believe that if there is not an event then the plan should continue to be enacted. As time moves on, aspects of the plan will be accomplished that should be reflected as changes in the plan. Likewise, new strategic opportunities may present themselves. They may need to be incorporated into the plan. And in some cases, you may replace past tactics or objectives to do so. There’s also a tendency to think about the prioritized list of projects (that have been agreed to once the budget for IT is finalized) as set in stone. There are many reasons why a project might need to be canceled, even after it commences. Those might include a significant increase in the cost to develop the project, a reduction in potential value from implementing the project, or the vendor that was to partner with you on it goes out of business. These are three of many examples that would apply. Companies often fall for the sunk cost fallacy. They might say, we've already spent a million dollars on the project, we should see it through to its conclusion. But why throw good money after bad? Cutting your losses and redirecting funds to something of greater value is paramount. It’s also important to note that as projects arise outside of the budgeting cycle, they should be put through the same prioritization criteria, strategic fit, cost/benefit analysis, interdependency analysis, and risk analysis. Again, you may include another category or two of your own choosing. By using objective criteria to reprioritize, you can help avoid the situation that many CIOs and their teams find themselves in, where someone, especially when they are outside of IT, requests a project mid-year and suggests that it is their new top priority. What they often mean is, “Drop everything and work on this.” By having an objective set of criteria, you can at least speak about how the project ranks relative to projects that are in process, based on those criteria, and counterbalance this argument. Priorities and events will naturally lead to changes in your plan. But by having a sound process in place to ensure that you can handle these changes, you can be flexible enough to seize new opportunities as they arise.
Full Answer Section
The Strategic Imperative of IT in the Global Economy
The readings on the digital economy underscore a paradigm shift where digital technologies are not just enablers but drivers of business models, market creation, and competitive differentiation. Companies operating on a global scale face unique challenges, including data localization laws, cybersecurity threats, varied digital literacy levels, and the need for seamless cross-border operations. The Global Information Technology Report (GITR) 2021 (or similar contemporary reports) typically highlights concerns such as the widening digital divide, the imperative for digital trust and security, the need for agile digital governance, and the importance of fostering inclusive digital transformation (World Economic Forum, 2021). Consequently, IT strategies must be agile, resilient, and forward-looking, capable of adapting to rapid technological advancements and unforeseen market disruptions. As von Moltke famously stated, "No battle plan survives contact with the enemy," emphasizing the necessity for strategic flexibility in IT planning.
1. Entertainment Industry: Netflix
Company Overview:Netflix is a global streaming entertainment service, offering a vast library of films, TV series, documentaries, and games across a wide range of genres and languages. It operates in over 190 countries, demonstrating a truly global footprint.
Strategic Role of IT and Competitive Advantage: Netflix's entire business model is built on an innovative application of IT, which provides its core competitive advantage:
Content Delivery Network (CDN) and Global Infrastructure:Netflix's proprietary CDN, Open Connect, optimizes the delivery of video content globally, ensuring high-quality streaming even in regions with less developed internet infrastructure.This robust global IT backbone minimizes buffering, scales efficiently with demand, and provides a consistently superior user experience across diverse geographical locations (Netflix, n.d.). This directly addresses the "digital divide" concern by attempting to provide quality streaming even in areas with bandwidth limitations, thereby fostering digital inclusion.
Data Analytics and Personalization: Netflix is a pioneer in using vast amounts of user data (viewing history, search queries, ratings) to power sophisticated recommendation algorithms. These algorithms provide highly personalized content suggestions, significantly enhancing user engagement and retention. This data-driven personalization is a key differentiator, creating a unique experience for each subscriber globally (Ghaffari & Yigitbasi, 2021). The ethical use and security of this data are crucial for building "digital trust," a key GITR concern.
Cloud Computing and Scalability:Netflix leverages extensive cloud computing services (primarily AWS) to handle its massive and fluctuating global demand.This allows for rapid scalability, enabling the company to absorb millions of concurrent users during peak times or major content releases without service interruption. This agility ensures business continuity and customer satisfaction on a global scale.
Localized Content and User Interface:Beyond its global infrastructure, Netflix strategically uses IT to localize its service. This includes localized user interfaces, subtitles, dubbing, and critically, investing in local original content production. IT systems manage the complex workflows of content acquisition, translation, and metadata tagging to ensure cultural relevance and accessibility across its diverse subscriber base (Netflix, n.d.).
Meeting Global Concerns: Netflix's IT strategy directly addresses several GITR concerns. Its investment in Open Connect helps bridge the digital divide by optimizing streaming for varied internet speeds. The personalized recommendation engine, while a competitive advantage, places a high premium on digital trust and data privacy, requiring robust security measures and transparent data handling practices. Furthermore, its global scale necessitates a sophisticated digital governance framework to comply with diverse national content regulations and data protection laws (e.g., GDPR in Europe).
2. Logistics and Shipping Industry: A.P. Moller – Maersk
Company Overview:A.P. Moller – Maersk is a global integrated container logistics company, involved in ocean and inland transportation, port operations, and supply chain management. It operates in over 130 countries, managing a vast network of ships, terminals, and land-based logistics.
Strategic Role of IT and Competitive Advantage:Maersk, traditionally a "physical" industry player, has undergone a significant digital transformation, using IT to create competitive advantage in a complex global environment:
Digitizing the Supply Chain and End-to-End Visibility: Maersk is investing heavily in IT to create a seamless, end-to-end digital platform for its customers.This includes real-time tracking of containers (leveraging IoT and GPS), digital booking systems, automated documentation, and predictive analytics for vessel arrival times (Maersk, n.d.). This transparency and predictability significantly add value for customers by reducing uncertainty and optimizing their own supply chains. This directly addresses the digital divide in terms of sophisticated digital tools and also enhances digital trust by providing verifiable information.
Blockchain Technology for Enhanced Trust and Efficiency: Maersk partnered with IBM to create TradeLens, a blockchain-enabled shipping platform. This platform aims to digitize and automate paper-based workflows, enhance transparency across the entire supply chain ecosystem (shippers, ports, customs, freight forwarders), and reduce the risk of fraud and delays (IBM, n.d.). The immutable nature of blockchain fundamentally builds digital trust by providing a secure, shared ledger of transactions, streamlining complex international logistics processes and enhancing overall supply chain efficiency.
Artificial Intelligence (AI) and Machine Learning (ML) for Optimization: Maersk uses AI and ML to optimize vessel routing, predict maintenance needs, manage fuel consumption, and forecast demand.This allows for more efficient operations, reduced costs, and improved service reliability globally (Maersk, n.d.). AI-driven insights enable more agile decision-making, crucial for navigating global disruptions like port congestion or geopolitical events.
Cybersecurity and Data Resilience: As a critical infrastructure provider in global trade, Maersk is acutely aware of cybersecurity risks.Following the 2017 NotPetya cyberattack, Maersk made significant investments in strengthening its cybersecurity posture and disaster recovery systems. This focus on IT resilience is crucial for maintaining operational continuity and protecting sensitive customer data, directly addressing the GITR's emphasis on digital trust and security.
Sample Answer
Leveraging IT for Global Competitive Advantage in the Digital Economy
The digital economy has fundamentally reshaped global competition, making Information Technology (IT) an indispensable strategic asset rather than merely a support function. With substantial investments poured into IT infrastructure and capabilities, companies are increasingly pressured to demonstrate clear business value. A robust IT strategy is paramount, especially for multinational corporations navigating diverse regulatory landscapes, cultural nuances, and market demands. This paper will explore the strategic IT roles of two leading global firms from distinct industries – Netflix in the entertainment industry and Maersk in the logistics and shipping sector – illustrating how they leverage IT for competitive advantage and address pertinent concerns of the global digital landscape.