Changing competitive scope. Information technology can alter the relationship between competitive scope and competitive advantage. The technology increases a company’s ability to coordinate its activities regionally, nationally, and globally. It can unlock the power of broader geographic scope to create competitive advantage. Consider the newspaper industry. Dow Jones, publisher of the Wall Street Journal, pioneered the page transmission technology that links its 17 U.S. printing plants to produce a truly national newspaper. Such advances in communication plants have also made it possible to move toward a global strategy. Dow Jones has started the Asian Wall Street Journal and the Wall Street Journal-European Edition and shares much of the editorial content while printing the papers in plants all over the world.
The information revolution is creating interrelationships among industries that were previously separate. The merging of computer and telecommunications technologies is an important example. This convergence has profound effects on the structure of both industries. For example, AT&T is using its position in telecommunications as a staging point for entry into the computer industry. IBM, which recently acquired Rolm, the telecommunications equipment manufacturer, is now joining the competition from the other direction. Information technology is also at the core of growing interrelationships in financial services, where the banking, insurance, and brokerage industries are merging, and in office equipment, where once distinct functions such as typing, photocopying, and data and voice communications can now be combined.
Broad-line companies are increasingly able to segment their offerings in ways that were previously feasible only for focused companies. In the trucking industry, Intermodal Transportation Services, Inc. of Cincinnati has completely changed its system for quoting prices. In the past, each local office set prices using manual procedures. Intermodal now uses microcomputers to link its offices to a center that calculates all prices. The new system gives the company the capacity to introduce a new pricing policy to offer discounts to national accounts, which place their orders from all over the country. Intermodal is tailoring its value chain to large national customers in a way that was previously impossible.
As information technology becomes more widespread, the opportunities to take advantage of a new competitive scope will only increase. The benefits of scope (and the achievement of linkages), however, can accrue only when the information technology spread throughout the organization can communicate. Completely decentralized organizational design and application of information technology will thwart these possibilities, because the information technology introduced in various parts of a company will not be compatible.