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Competitive Advantage

About Nicholas Carr (the author of It doesn’t matter)

Nicholas Carr is a famous writer whose major areas of focus are on the social, economic, and business implications of technology. He was born in 1959 in and is a resident of America whose prowess in writing has led to his publishing of several books and articles on technology, business, and culture. Among the many books, he is known for includeThe Shallows: What the Internet Is Doing to Our Brains which was a finalist for the 2011 Pulitzer Prize in General Nonfiction. Others include ‘It doesn’t matter’ which has garnered a lot of controversial reactions from many readers, authors and scholars though the HBR staff voted it the best article to appear in the magazine in 2003.

It doesn’t matter: Nicholas Carr’s Position

In the book ‘it doesn’t matter’, Nicholas says that information technology has been a very important and integral part of business today. For a brief period, infrastructural technologies have opened opportunities for forward-looking companies to gain strong competitive advantages. Time after time, their availability has increased, and their costs have decreased. As time goes by It has become prevalent, ubiquitous, and part of the status quo. People have become used to IT and are no longer considered something unique for anyone. According to him, information technology has become a common feature in a non-proprietary technology infrastructure and has therefore lost its significance in the provision of a competitive edge or strategic advantage for business growth and profitability at the company level. Though used by organizations, from a strategic business standpoint, It gradually become invisible and do not longer matter anymore. He points here that if a company is to be profitable, IT does not matter anymore. The company’s vision and strategy are all that matters. If this can get interpreted from a non-biased standpoint, what Carr means is that IT is no longer a strategic resource for companies. They should also focus on others things and not overspend on IT alone as a feature to lead them to success.

My position
I do not agree with Carr’s position. Saying that IT does not matter is not correct. My differing side from his argument gets based on the fact that IT has today become an integral part of the organization which has helped it in conducting very many daily duties and transactions. IT infrastructure is imperative as it speeds and makes efficient many activities of the company taking care of duties that a man could do in the whole day within seconds. Today, managers make deals with others business partners at the comfort of their desks. Marketing of products has also been made easier through IT which does so through creating social threads via social media. Today, one does not have to appear physically in the shops but only does the ordering from the comfort of his/her home and relax waiting for delivery. IT has created a lot of opportunities and transformed the vast world into a small global village. Thanks to IT that communication between two people located in extreme corners of the Arctic and Antarctic can speak and do business. Apparently, its use is still needed today as was in the past. It matters and is very crucial.

Verifying the variance

Variance shows the change from a particular period to another which can be in months, quarters, or years. According to Garrison, Noreen, and Brewer (2003), variance analysis is necessary when evaluating the financial statements and departmental level budgets for the overall financial health of an organization or department. The calculation of variance helps to establish whether an organization is growing or not and at what rate. Variance analysis provides the management team with concrete information on how to make business decisions that would strengthen the financial position of an organization (Garrison, Noreen & Brewer, 2003). The Northeast Health System appears stable in various financial aspects but with normal changes between 2010 and 2011. The health system income statement shows that there was a decrease in the total unrestricted revenue and support in 2011 as compared to 2010 though the total expenses reduced from 2010 to 2011. However, the changes in unrestricted net assets show that year 2011 ended with negative (-) changes as compared to 2010 probably due to huge pension and post-retirement remittances in 2011.

From the variances data obtained, the major positive variances between 2010 and 2011 are observed in cash and cash equivalents (41.3), excess of revenue and gains over expenses (223), net assets from restrictions of purchase of property (68.3), and pension and post-retirement related adjustments (390.3). The significant negative variances are observed in prepaid expenses and other current assets (-87.9), non-operating gains (-197.4), change in net unrealized gains and losses on investments (-170.9), total other changes in unrestricted net assets (-578.1), and a decrease in unrestricted net assets (-283.6). The variances show that there were significant differences in particular aspects of the financials of Northeast Health System both positive and negative.

According to the proportional allocation analysis data, the most significant positive proportions are net patient service revenue for both 2010 and 2011[98.0 (2011); 97.7 (2010], income from operations in 2011 (211.9), change in net unrealized gains and losses on investments in 2011 (167.1), and decrease in unrestricted net assets in 2011 (158.1). The most significant negative proportions from the analysis data are non-operating gains in 2011 (-111.8), and pension and post-retirement related adjustments in 2011 (-76.4).

Most of the financial aspects of Northeast Health System are not heading in the right direction since most of the variances are negative. It shows that the financial health of the firm in 2010 was better than that of 2011. However, the variances in pension and post-retirement related adjustments and excess of revenue and gains over expenses shows that there were more expenses on the two items in 2011 than 2010. Regarding the firm liabilities, the changes were not significant that showed a level of stability. The firm’s assets appear to be on a downfall trend which reveals of some losses or depreciation. For the proportion allocation analysis, it is evident that unrestricted revenues and support decreased in 2011 as compared to 2010, total expenses also reduced in 2011 thereby making the gains over expenses to increase in 2011 as compared to 2010. The major problem experienced in 2011 was the increase in pension and postretirement adjustments as well as fluctuations in unrealized gains and losses on investments.

I would recommend certain actions to the Northeast Health System regarding decreasing or increasing the significant variances and proportional allocations. First is to reduce the accrued wages and vacation payable, the accrued pension liability, and professional liability reserves. The Health facility ought to diversify on the mechanisms of revenue generation to ensure there is an increase in cash flow. The allocations for pension and post-retirement adjustments ought to be controlled to avoid the rapid changes in unrestricted net assets.