I attempt to blend scholarly concepts with real-world applications. I place a great deal of emphasis on the literature of information technology and corporate strategy as two significant indicators for financial success. This article adds to a relatively small body of literature but pays homage to the scholarly contributions. I highlight the direct impact of these organizational internal resources factors on financial performance.
Executives will also see that I expand upon the subject matter of a firm’s internal resources. Insufficient consideration of the impacts of these internal resources on financial performance has been exposed and I attempt to address this concern. This article can portray a more detailed picture of the effects of information technology and corporate strategy on financial performance that have been not placed in a model in the past.
Information technology encourages employees to embark on technological facilities, such as shared electronic workspaces, to provide new ideas and possible solutions for solving organizational problems. Information technology plays a critical role in creating a competitive advantage and is therefore aligned with the resource-based theory. Information technology is necessary to build high-performing companies and also may be necessary as global market demands are increasingly difficult to adapt and sustain profitability.
Financial performance in global markets is dependent on continuous learning. Corporate learning plays a critical role and is a strategic prerequisite for increasing sales and market share in today’s knowledge-based economy. Effective corporate learning can enable companies to actively respond to environmental changes and customer needs and organizational members’ growth needs. Thus, information technology is a key factor that should be embraced at the senior level of organizations to enable financial performance in globalized markets by building a learning climate and empowering organizational members. In the absence of effective information technology management, companies cannot implement successful plans in order to adapt to today’s global business environment.
Information technology is a key factor to improve financial performance for companies. Earlier studies clearly indicate that effective IT implementation significantly contributes to a company’s’ financial performance. These researches acknowledge that information technology is an important enabler to effectively manage business processes. Information technology can reduce paper-based transactions for companies that can potentially decrease costs and subsequently improve profitability for companies.
Furthermore, it can be seen that information technology enables companies to effectively identify opportunities in an external business environment that leads to identifying the best opportunities for investment that potentially improves financial performance in terms of return on investment. Information technology can also help companies to effectively create more innovative solutions for their organizational problems. More innovative solutions and better ideas can improve the quality of products and services, which in turn increases sales and market share for companies.
Business success for companies in today’s global business environment can be, therefore, achieved when information technology is effectively applied and widely used to achieve a higher degree of financial performance. When information technology can create a learning workplace and inspiring vision for future expansion into global markets, companies will secure a foothold in the ever-expansive global marketplace. Thus, I recommend that executives should consider information technology as a key driver for improving financial performance in today’s hypercompetitive environment.
Executives view organizational strategy is a sum of objectives, plans, and procedures designed to efficiently and effectively upgrade organizational capabilities and interact with their environment more effectively. In particular, strategy defines a pattern to deploy organizational capabilities and interact with both the internal and the external environment. Executives, therefore, manage their knowledge assets to create new ideas and knowledge aimed at achieving commercial objectives. First and foremost, just as one organization is holding knowledge back from competitors they are following suit. Knowledge could be the most important component of success in this ever-changing technological environment of today. Thus, the organizational strategy is an organizational internal resource affecting knowledge and in most cases, knowledge is the most strategic factor of competitive advantage.
Executives are aware that corporate strategy mainly encompasses four aspects: analysis, pro-activeness, defensiveness, and futurity. Analysis strategy is regarded as the tendency to search for problems and their root causes and generates better alternatives to solve them. Analysis strategy, an academic term that is very applicable to the executive span of control is also concurrently aired in the academic circles of higher education. For instance, the analysis strategy is highly related to firms’ capacity to generate new ideas and knowledge and plays a crucial role in acquiring knowledge. Therefore, I appeal to executives across the globe that analysis strategy could improve the quality of products and services, which can in turn enhance profitability and market share.
I also feel that as executives use the pro-activeness strategy which refers to finding new opportunities and proactively responding to current challenges in external environments, they are also enhancing their span of control. Therefore, the pro-activeness strategy can provide a higher degree of knowledge through developing interactions with external environments. As executives effectively use knowledge management for projects and organizational investments they require a continuous investigation from external business environments. The pro-activeness strategy enables companies to identify changes in external environments and accordingly help them to actively respond to these emerging rapid changes.
Some executives feel that a defensive strategy, while necessary, sets a negative connotation on their span of control. However, it is believed that a defensiveness strategic approach enhances efficiency through cutting costs which in turn increases organizational revenue and company’s financial performance.
Futurity strategy can also enhance financial performance by providing a series of clear guidelines for companies to track future trends in the business environment, and accordingly, conduct “what-if” analysis and allocate organizational resources. My explanation of this is clearly within the executive span of control and potentially limits operational risk. My conclusion for executives is that organizational strategy has a positive association with financial performance. Therefore, I suggest that a firm’s ability to enhance financial performance can be highly affected when executives develop and implement an effective corporate strategy.
This article may be the answer executives need but may also lack the fundamental fortitude necessary to be an all-encompassing model to predict financial performance. Executives can contribute to meet dynamic market needs, through reshaping a firm’s internal resources (i.e. information technology and corporate) to meet the needs of customers in the marketplace. This article has been focusing on thus far is the needs of companies for enhancing financial success. This article also presents executives with organizational internal resources that can be effectively manipulated to improve financial performance and become more profitable.
Mostafa Sayyadi works with senior business leaders to effectively develop innovation in companies and helps companies—from start-ups to the Fortune 100—succeed by improving the effectiveness of their leaders. He is a business book author and a long-time contributor to business publications and his work has been featured in top-flight business publications.