The Use Of Technology In Business To Gain Competitive Advantage

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The best businesses today are the ones that are using technology to assist them manage their operations. To use technology in business, you need to research about some things that will make your business much better and even endeavor to answer some fundamental questions like ‘what determines a firms overall performance?’, ‘why do some technology start-ups fail while others succeed?’, ‘what can a manager or an entrepreneur do about it?’ and so on. The businesses that have a sustained competitive advantage are the ones that are able to dominate their competitors for a prolonged period of time especially through the innovative use of Information Technology and other planned innovations like for example Wal-Mart which is the largest retailer in the world was able to outperform its competitors in terms of financial performance through the 1900s and early 2000.  Your business can also do the same to their competitors through technology as we shall see later on but first;


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What is competitive advantage?

We need to first understand this concept before we can go ahead so that everyone can know exactly how helpful this article is. Now competitive advantage refers to a business concept that is used to explain the attribute of allowing an organization be able to outperform its competitors. Now some of these attributes may include; access to natural resources like high grade ores or a low cost power source, geographic location, highly skilled labor, high entry barriers and so much more. In the case of technology in business, it is mainly attributed to access to the latest technology and so on.

In order for us to fully understand how we can use technology in business to gain competitive advantage, we need to first understand the five forces model. Professor Michael Porter explains that a business’s success is driven by the five major forces as illustrated by the diagram below showing the buyer power, supplier power, threat of substitute products or services, threat of new entrants and finally the rivalry among existing competitors.


The five forces model:

An illustration of the five forces model


  1. Buyer power: this power is determined by the amount of choices that a buyer has to choose from and this means if the choices are many then the buyer power will be high and the reverse is true. So when using technology to gain a competitive advantage you need to understand that if the buyers in a certain business hold a lot of power then that business is less attractive to join because once the buyer transfers their priority towards their competition, then the business will be left hanging.
  2. Supplier power: when the buyers have few options of who to buy from then the supplier power will be high and vice versa. So as an entrepreneur you need to understand that if the suppliers of a certain market hold a lot of power then it’s not a good choice to enter such a market. Like for example look at the Oil Industry where its suppliers have a lot of power in that they can decide to hold the supply of oil with the intension of raising its prices.
  3. Threat of substitute products or services: this is usually low when there are very few options to using the product or service; therefore this will be a very profitable industry to join as the customers will have fewer choices. This usually happens when there are switching costs connected with the product or service and some customers will feel hesitant to switch to a different product or service. This is already a competitive advantage to a business.
  4. Threat of new entrants: when it is very easy for competitors to enter the market, then the threat of new entrants will be very high. As a business person, you can use technology to make it hard for others to enter your market because if a market is so easy to enter in, then you should refrain from joining but if it’s hard then that should be music to your ears.
  5. Rivalry among existing competitors: when the rivalry among existing competitors is low then the market is attractive to join and the reverse is true. So make sure that you first consider the strength of competition in any business before you join.

With that brief concept now we can look at;

How to use technology in business to gain competitive advantage

  1. Bridge the gap: now in order to use technology in business to gain competitive advantage, you will have to bridge the gap that is between business people and the technical people. First of all, you as an entrepreneur need to understand the importance of information technology to gain competitive advantage and that is when you will start working hand in hand with the technical people to accomplish this goal. Through technology, both parties will be brought together and their relationship made stronger. While creating an information system, you will need a minimum of two things that is; understanding of the business problem that you are trying to solve and then understanding the technologies available so that you can use in constructing a creative solution for the business problem. As a business person, you could also study Management Information Systems to assist you analyze issues when need arises.
  2. Use Technology in creative designing: when you use an Information Technology in creative design then it will also be very easy for you to be able to solve business problems in a way that is new and greatly effective instead of solving it in a way that other people usually do. Make sure not to come up with an ordinary design like most people but rather develop a new concept and idea that is different from other competitors and that is how you will be able to quickly gain competitive advantage while using technology. An example is which has twisted and added value to their existing technology to service its users and this way it has gained a high competitive advantage. Another example is Bing and Google in a way that Bing is a new search engine that is owned by Microsoft but it is using the same technology as Google so as to index and suggest data. It didn’t only stop at that but went ahead to add some more value like a glamorous home page, relevant suggestion of key words and record all past searches allowing it compete with Google.
  3. Use technology to increase buyers’ power: this is in regards to a specific product or service because usually in competitive markets the buyers have very many choices to pick from. If you are a small business owner in such a wide market, you should endeavor to use technological tools that will assist you attract the attention of customers towards your services or products. Like for example you can use the internet to assist you promote rewards and coupons to their customers. There are some services such as that can assist you set up coupons and reward on different social media networks. These rewards can be set in such a way that every time a client uses a service or purchases a product then they can obtain points that can be converted into shopping points. You can also use social networks to give out shopping coupons to your clients so as to attract their attention so that each client that comes to your store with that coupon gets a certain discount.
  4. Create entry barriers using technology: In order for your business to succeed or any other, you will have to create an entry barrier to its market while making use of technology. This is because it is nearly impossible for a business to survive for long if it’s so easy to enter its market. Make sure that you plan from the beginning on ways in which your business will be able to rule on the market a lot longer and implement those ways. If you look at the most successful companies like Facebook, Apple, Google, Microsoft, Amazon, Coca Cola, and so many more, you will notice that they made use of technology so as to maintain the top position on the market and have discovered ways of blocking competition thus gaining then a competitive advantage. So an entry barrier refers to a service or product that clients have come to expect from companies and this way make it extremely difficult for competitors to enter that specific market. For instance Google uses technology to gain competitive advantage over Facebook in a way that lately Google has introduced a new social network known as the Google plus + in its search results of This has in a way therefore enticed many business owners to join and create profiles for their businesses.
  5. Reduce supplier power using technology: earlier on in the ‘five forces model’, we explained how a high supplier power can greatly affect a business mostly when the supplier makes a decision to hold the services and goods with the main objective of increasing their prices. So if you want your business to succeed then you will have to look for ways in which you can minimize the supplier power. You can start by locating the alternative sources of supply while using technological tools such as the internet to find more suppliers in their niche. Technology is a very wide area to search for these suppliers and luckily the internet contains a chain of business to business (B2B) marketplaces that can assist the small businesses be able to find their alternative suppliers. A business to business (B2B) marketplace is defined as an internet-based service in which buyers and sellers are brought together. This way the supplier is the seller while the business owner is the buyer and an example is the,, and so on.
  6. View business problems using technology: if you decide that you want to use technology in business to gain competitive advantage, then you will also have to make use of Information Technology to view problems in business from another point of view. This point of view refers to the customer’s perspective as well because they are the owners of the business and not you in a way that without them, the business definitely won’t be successful. In this case, whether you are the C.E.O or manager or whatever else you call yourself, you will have to humble yourself to the position of a primary user of the system. When at that, make sure you come up with ways in which the user will not be served alone but will also be very delighted by the system that they are using. Make sure that while viewing from the customer perspective, you ask yourself questions like ‘how would the information system be designed in a way that it will improve the customer’s experience?’ then work hard to resolve that answer.
  7. Attitude of the CEO towards technology: finally let’s look at the attitude of the CEO towards the use of Information technology to gain competitive advantage in a business. Now in most companies, the manager’s thoughts towards the company are greatly influenced by the vision of the CEO. Like for example if the CEO has a great understanding of technology and how it can be used powerfully as a competitive tool then the entire team will get the message and people will come up with creative ideas that will make the company be more successful as the customers will be satisfied. So if you are a CEO and don’t really have any knowledge about technology in business, then it is about time to do some research or enroll for a course so that you can take your business to the next level through technology.


  3. Wikipedia

Vanilla Farmer, Amazon Retailer & Tech Researcher. Yosaki is my personal blog but I'm working on some big tech project back doors. I will keep on posting various topics on things I have knowledge about.

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