You are starting a market research company with a single business partner and are planning the hardware and software need for the two of you. Which factors should play into your decision of how much to spend on these investments?

Question

What will be an ideal response?

Answer 1

Using the competitive forces model for IT infrastructure investment, the most relevant factors in this decision are:
• The firm's business strategy. What capabilities will we want to have over the next five years?
• Alignment of IT strategy. How does our IT strategy match up with the business plan?
• IT assessment. What are the current technology levels for the services we are offering and our business type? We would probably not need to be at the bleeding edge, but not behind the times either.
• Competitor firm services. What technology-enabled capabilities do our competitors have? We would want to match services with our competitors.
• Competitor firm IT investments. How much are competitor firms investing in their technology?
Because this is a startup, one other factor may not play such a large role: that of market demand for services. However, finding out the market demand for competitor's services may uncover ways that this new company could have a competitive advantage.