Which of the following statements about technology is true? Select all that apply
Relying on technology triggers high development cost and uncertainty
Technology can play a critical role in creating and strengthening strategic differences
Technology always creates competitive advantage that the competitors cannot match
Technology can improve the operational effectiveness
The correct answer and explanation is :
The correct statements are:
✅ Relying on technology triggers high development cost and uncertainty
✅ Technology can play a critical role in creating and strengthening strategic differences
✅ Technology can improve operational effectiveness
Explanation (300 words)
Technology is a double-edged sword in business and strategy. While it offers numerous benefits, it also presents challenges and uncertainties.
- Relying on technology triggers high development cost and uncertainty
Developing or adopting new technology often requires substantial financial investment. Research, development, testing, and implementation are expensive processes. Additionally, technology evolves rapidly, leading to uncertainty about its long-term relevance or success. Businesses face risks such as obsolescence, compatibility issues, and unexpected failures, making technology adoption a complex decision. - Technology can play a critical role in creating and strengthening strategic differences
When used effectively, technology can provide companies with a unique value proposition. Firms that leverage technology innovatively can differentiate themselves in the market. For example, Tesla’s advancements in electric vehicles (EVs) and battery technology set it apart from traditional car manufacturers. Similarly, Amazon’s sophisticated logistics and AI-driven recommendations create a distinctive customer experience, reinforcing its strategic advantage. - Technology can improve operational effectiveness
Technology enhances efficiency by automating processes, reducing costs, and increasing accuracy. Businesses use software, robotics, and data analytics to streamline operations, improve productivity, and reduce waste. For instance, companies use enterprise resource planning (ERP) systems to integrate business processes, while AI-powered chatbots improve customer service. This leads to better decision-making, faster execution, and higher profitability.
Why “Technology always creates competitive advantage that competitors cannot match” is incorrect
While technology can create a competitive advantage, it is not always sustainable. Competitors can often imitate or innovate around it. For example, Apple’s iPhone revolutionized the smartphone industry, but competitors quickly caught up with similar technology. True competitive advantage comes from a combination of technology, business strategy, and continuous innovation.