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

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

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Abstract

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.

Introduction
Porter and Tapscott Polemics
1. Are there new business objectives and methods to achieve them?
2. The internet: Evolution or revolution?
Knowledge as a new source of value
Conclusion
References

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[...] When criticizing the consequences from partnering, especially such as lower barriers to entry and erosion of company distinctiveness, it seems that Porter is somehow neglecting the fact that the business competitiveness is not only a matter of proper production or assembly of product components. What truly distinguishes the company is the knowledge and capabilities brought in by the people. Even if the technical know-how would become available to (would-be) competitors, in this fast changing world it is the leadership, proactive attitude, ability to learn, flexibility and capacity to generate innovations (representing just a part of company's intangible assets that are extremely hardly - if at all - copied) that are becoming convincing sources of the competitive advantage. [...]

[...] Additional negative effects are lower barriers to entry, as the new entrant only has to assemble the purchased inputs, and also strengthened power of suppliers who are adopting the core company's experience. Porter agrees that the Internet technologies are easing and fostering the partnering, and also make possible the creation of “virtual enterprises” - based on “purchased products, components and services” - as the most extreme form of partnering (p.69). However, due to Porter's resistance towards partnering, one could conclude that, in his eyes, these virtual enterprises erode industry profitability. [...]

[...] Similarly, authors consider the suppliers and partners as parts of the extended enterprise and “increasingly one more technology, Porter implicitly denies its potential to bring anything fundamentally new. Tapscott vigorously rejects this derogation of the Internet. The Net, he says, “represents something qualitatively new - an unprecedented, powerful, universal medium”. Its technical capabilities are far excelling all other communication technologies, which will inevitably become integrated in Net structure. More importantly, Net is becoming ubiquitous” connection technology in global terms, and in all business functions. [...]

[...] 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. [...]

[...] (2000) Cracking the Value Code: How Successful Businesses Are Creating Wealth in the New Economy. Harper Business. Available from: http://www.lorencolin.com/valuecode/private/imk/downloads/PressKit_AA_ 2.1 .pd f [Accessed 9th March 2004]. Dent, Stephen M. (2003) The New Economy and Partnering [online]. Available from: http://www.refresher.com/!partnering1 [Accessed 12th March 2004]. Drucker, Peter (2001) Survey: The Near Future. The Economist. Friday, November Available from: http://www.cfo.com/printarticle/0,5317,5641 ,00.html?f=options [Accessed 10th March 2004]. Irsfeld, Mitch (1997) Interview. InternetWeek [online]. 11/17/97 Issue 690, p 2c. Available from: http://search.epnet.com/direct.asp?an=9711301090&db=buh [Accessed 10th March 2004]. Kotelnikov, Vadim (no date). Managing Tacit Knowledge. Available from http://www.1000ventures.com/business_guide/crosscuttings/knowledge_tacit.htm l. [...]

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