Competitive Advantage

             Information from the virtual chain can then be used to achieve competitive advantage by adding value to a final product or service beyond that possible within a wholly physical chain. In essence, Rayport and Sviokla identified that effectively managed information allows for improved interaction between, and better exploitation of, linkages that form a value chain. Information then becomes a crucial resource itself, possessing genuine value.
             2. The Value Chain.
             Recognition that IT can add value for the customer while simultaneously reducing the costs of producing an end product or service has revolutionised the role of technology and information in organisations (Porter & Millar, 1985). For most of industrial history the focus of technology was on improving the physical component of any process. The use of information to coordinate a process was secondary to physical concerns. This has now been reversed, with the information component of any process advancing faster than the physical counterpart. Especially in creating added value for customers.
             Rapid improvements in IT and data management has allowed organisations to improve procedures for gathering, analysing and utilising information to increase their competitive advantage (Clemons & Row, 1991). Managers can now gain important insights into any aspect of a procedure through analysing functional-related information. This allows better monitoring and control of value-adding procedures; in turn providing the opportunity for continual improvement within the overall value-adding process (Rayport & Sviokla, 1996).
             When new practices also allow cost reductions, firms have the opportunity to gain competitive advantage by either lowering prices or increasing profits. Which they choose will depend on their business strategy.
             Rayport & Sviokla (1994/95/96) broadly identified three ways in which information collected from physical value chain procedures can be analysed and used to leverage competitive advantage following the formation of a virtual value chain:-.