frames can be accommodated without manual adjustments to the machines. After installation of a “smart” manufacturing system, BMW can build customized cars (each with its own tailored gearbox, transmission system, interior, and other features) on the normal assembly line. Automation and flexibility are achieved simultaneously, a pairing that changes the pattern of rivalry among competitors.
The increasing flexibility in performing many value activities combined with the falling costs of designing products has triggered an avalanche of opportunities to customize and to serve small market niches. Computer-aided design capability not only reduces the cost of designing new products but also dramatically reduces the cost of modifying or adding features to existing products. The cost of tailoring products to market segments is falling, again affecting the pattern of industry rivalry.
While managers can use information technology to improve their industry structure, the technology also has the potential to destroy that structure. For example, information systems now permit the airline industry to alter fares frequently and to charge many different fares between any two points. At the same time, however, the technology makes the flight and fare schedules more readily available and allows travel agents and individuals to shop around quickly for the lowest fare. The result is a lower fare structure than might otherwise exist. Information technology has made a number of professional service industries less attractive by reducing personal interaction and making service more of a commodity. Managers must look carefully at the structural implications of the new technology to realize its advantages or to be prepared for its consequences.