• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Porter and Tapscott Polemics - Are there new business objectives and methods to achieve them?

Extracts from this document...


Introduction The tremendous growth of the information and communications technologies (ICT) and its deep penetration in all areas of human activities, is profoundly reshaping the economic, societal and private life landscape of the world of today. The issue of the Internet was actually the core reason for a theoretical division of the economy in two large categories: "new economy", comprised of companies that apply these technological advances up to various extents, and the "old economy", which includes all the others. It has also initiated vivid discussions and theoretical confrontations, due to the sharply dissonant perceptions of the transformational impact of the Internet on the economic activities. The extreme standpoints of this broad theoretical spectrum are varying from oversimplified view of Internet as just one more communication channel, to a glorifying declaration that the Internet is an originator of unthinkably different, new economy and new society of 21st century, whose implications is not possible to anticipate at the moment. Michael Porter, the so called "Strategy-guru" and Don Tapscott, the so called "Cyber-guru', are probably the most prominent exponents of these opposite views on business consequences from the Internet applications. This paper will try to analyse some of the issues, presented in Porter's "Strategy and the Internet" (2001) and Tapscott's "Rethinking Strategy in a Networked World (2001b) articles, in an attempt to come to possible conclusions on their (ir)relevance. PORTER AND TAPSCOTT POLEMICS Are there new business objectives and methods to achieve them? Porter calls for a "return to fundamentals", stressing that there is only one arbiter of the business success: the true economic value, which is "reliably measured only by sustained profitability" (p.65). The only way to be more profitable than the average competitor is "by achieving a sustainable competitive advantage - by operating at a lower cost, by commanding a premium price, or by doing both" (p.70). Tapscott completely agrees with these statements. ...read more.


Dent suggests that the increase of volume, speed and quality of business interactions will ultimately lead to a situation when "the needs, wants and expectations of shareholders, customers, employees, suppliers and regulators will become an integrated whole" (p.4). Sammut-Bonnici and McGee (2002) write that the "increasing importance of connectivity and modularity is forcing a shift form competitive mode towards cooperative mode". This radical shift towards cooperation triggers the question of whether we should soon expect a "Theory of cooperative forces"? Boulton et. al. (2000), introduced a completely new view of value creation called "Value Dynamics", based on the primary principle that "businesses are their assets - all of them". The authors claim that, beside the traditional physical and financial assets, it is the intangible assets such as people, brands, technology, knowledge and relationships that create value in the new economy. Thus, they add three new asset categories: employee and suppler assets (employees, suppliers and partners), customer assets (the end-users, company's distribution channels and affiliates) and organisation assets (leadership, strategy, culture and value, knowledge etc.). According to them, businesses learn to design business models to create value by using assets in all five categories. For instance, America Online, with virtually no physical assets, has largely used customer assets to create value. Similarly, authors consider the suppliers and partners as parts of the extended enterprise and "increasingly critical sources of value". Furthermore, "in the new economy, the ability and skill to partner and / or ally" might even become central to a business success. Chrysler case is quite enlightening in this regard: the company is outsourcing major parts and subsystems to individual suppliers on the basis on long-term contracts. The suppliers are included in cost-cutting discussions and technological development, and they share the financial benefits. This strategy, which is an obvious example of using supplier assets, has increased company profit by hundreds of millions of dollars annually. ...read more.


The ICT and the knowledge economy are so closely interrelated that one could argue that without the advent of ICT, the economy of today would have been still functioning in ways not much different than few decades ago. On the other hand, the knowledge economy strongly stimulates the future ICT advances. When considering the knowledge as a source of value, probably the most proper approach would be to understand the value in a much broader sense than purely economic one. Finally, every business is an organic part of the broader system - continuously influencing and being influenced by the values created in the other parts of the community. CONCLUSION Several conclusions could be derived from the presented discussion: the business fundamentals have not (yet) changed: companies are in business to make money; in order to be successful, the companies must achieve sustainable competitive advantage; the ways of achieving competitive advantage are ongoing radical changes, most notably trough the continuous invention of new business models that increasingly often prove to work in practice; knowledge is a new source of value that is rapidly gaining the significance of the most valuable and maybe even the only valuable source of value; the transformational power of knowledge transcends the frontiers of business community: it reshapes all spheres of the society, often in ways that are not possible to predict; the phenomena of new business models and knowledge as a source of value would not be possible by adequately developed information technology and, finally, the Net as ubiquitous connection infrastructure. Yet, some of these conclusions are being subject to many vigorous disputes. A fully valid judgement of their relevance is certainly beyond the reach of this paper. We could only say that the Net holds an unspoken promise to take us to the world that we never knew before. Whether this world will be a better one will probably be one of the most important decision in the human history. A decision than will be taken by virtually everyone on this planet. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our University Degree Accounting section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related University Degree Accounting essays

  1. Management accounting problem case. The analysis in this assessment is based on the following ...

    The Failings in the Current System and Approaches The weaknesses of the current system: a. Not capable of subassembly costing The current system is only capable of tracing direct cost and allocating indirect cost up to the production departmental level.

  2. Drakensberg Limited Case Report. The main problems are whether to launch a new product ...

    Analysis of three products including Dankie The company has the chance to introduce a new product, Dankie, with the same materials and global demand of 3000units.C-V-Panalysis,value chain and differentiation analysis act as the procedure to solve the problem. i.

  1. Discuss and critically evaluate the role of management accountants in providing relevant information to ...

    ABC assigns costs to cost object like products and services based on the number of records and transactions involved, which is identifying cost pools or an activity centers.This helps to avoid products cost cross-subsidization between high-volume, low complexity outputs and low-volume, high-complexity outputs (Cooper R.a.,1988; Cohen,2005).This allows management accountant to

  2. Accounting Information Systems. Examine the typical computer based information system used in your chosen ...

    What does it do? An accounting information system has financial transactions entered into it and must be regularly updated to make sure it is accurate and factual. It passes on valuable data and information onto the other sections, for example Managerial. By letting the different sections of the Organisation triangle communicate each other's information (in this case through the medium of accounting information systems)

  1. Value Chains Versus Supply Chains

    De vaststelling van de tranches en de bijbehorende bijdragen is een bevoegdheid van het college. De uitvoeringstranches worden echter ook op de agenda van de Commissie van Advies geplaatst, om de Gemeenteraad de gelegenheid te geven haar oordeel te geven.

  2. Analysis Project, I have to decide to make a financial and business comparison ...

    Ratioanalysisdetermines trendsand exposesstrengthsor weaknesses of a firm. Ref 1: Definition A-OPERATIONAL ANALYSIS: From recovery to growth Sainsbury’s have performed exceptionally well in troubled economic conditions, under the leadership of Justin King, with nearly half of the market capital as compared to M&S. Since 2007 the sales have grown to nearly 5.7%: £20,383m as compared to £19,287.

  1. Data Analysis for Business Decision Making Problem Questions

    and the production level and combination of the peripheral devices that help Northern Hi-Tec E. Ltd maximize its profits. My advice to Northern Hi-Tec E. Ltd is looking at the decision variables which are, Number of Internal Modem (IM), Number of External Modem (EM), Number of Circuit Board (CB), Number of CD Drive (CD), Number of Hard Disk Drive (HDD)

  2. The topic I have chosen is the Business and financial analysis of a company ...

    Although Tesco?s Club Card has been a spearhead in its customer retention strategy and ensures low prices, customising service, better choices and meeting customer needs and retains their customer base yet bargaining power of customers for Tesco remains high. Competitive Rivalry Tesco is facing competition from many retailers such as Sainsbury Asda, Wal-Mart and Carrefour.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work