Explain information technology's role in business
IT plays a significant role in all functions of business. It is a key component in business communication, particularly between departments. The three key goals of IT in business are: reducing costs, improving productivity and to generate growth.
IT can assist in reducing costs through the implementation and management of efficient and effective IT systems throughout the business.
IT can improve productivity through its role in online sales and promotions. It departments are responsible for the functionality and usability of the business website. Advancing online aspects of a business can improve productivity through increased sales.
A core goal for all businesses is growth. IT can enable business growth through support of communication networks between domestic and international departments and clients. IT such as web conferencing allows employers and clients to communicate across the world dispute great distance and time differences.
What are efficiency and effectiveness metrics? Provide some examples of each
Efficiency metrics aim to get the most out of each resource. A business will track averages and data for aspects such as transaction speed, system availability, response time, throughput, web traffic and information accuracy. This data can be collected to form graphs and useable information to assess areas needing adjustment or improvement. The video below is an example of the type of data which can be collected and what aspects can be focused on.
Effectiveness metrics are a businesses way to setting goals and tracking their success. Metrics are compared to benchmarks. For example a business may conduct customer satisfaction surveys and compare results between different years. A sample survey is shown below.
What does Porter’s Five Forces Model attempt to explain? How does the internet affect each of the five forces?
Porter's Five Forces Model is a tool used to identify the threats and strengths associated with a business' position. The internet can have positive and negative affects on each of the five forces.
Buyer power- the internet makes it harder for businesses to maintain loyalty because consumers are exposed to a wider range of alternative brands. The internet allows buyers to be more informed about the available options which allows them to find the best deal.
Supplier power- the internet allows buyers to browse domestic and international businesses, this means the supplier has a far wider range of potential customers than without the internet.
Threat of substitutes - The internet creates a very high risk of buyers finding a substitute product. Buyers are able to browse and find the best deal to suit their needs which may be from a substitute product or brand.
New entrants - the internet provides an opportunity for all businesses, large and small to sell online to a domestic and international market. An online business has smaller running costs than a shop front and so new entrants can easily set up online.
Rivalry among competitors - The internet can increase rivalry among existing businesses and also allow existing companies to increase their market share because they are able to target a broader target market.
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