Question 1 DIGITAL FIRM digital firm is a company in which almost all significant business relationships with customers, suppliers, and employees are digitally enabled or mediated. This means that all the procedures relating to core business processes are completed through the use of digital networks that cover the organisation as a whole. These networks also link the organisation to other business organisations and ultimately to the whole world. A company is formally defined as a digital firm when it uses the internet to drive every aspect of its business processes. THE CAPABILITIES OF DIGITAL FIRM Question 2 COMPETITIVE ADVANTAGE – can be defined as a substantial or long-term strategic benefit an organisation can obtain over competitive forces in the market place. Competitive advantage is a product or service which is offered by an organisation which is more desirable by consumers than that of any other organisation. “A firm gains a competitive advantage either through lower cost offerings (cost advantage) or through product differentiation”. STRATEGIES The following are competitive advantage strategies: Cost leadership- is defined as how the cost of the businesses (product or services) processes can be reduced by using I.T. by delivering the lowest cost for products and services. Differentiation strategy- Refers to ways in which a product or service can/should be developed to be different than that of your competitors’ products and services. This strategy can involve producing a verity of products customers can choose from or delivering high quality products and services. Innovation strategy- Entails creating new products and services that are created using I.T. introducing new products and services frequently. Growth strategy – Entail national, provincial and global market business opportunities that can be managed by using I.T. Alliance strategy- A strategic alliance also known as strategic partnership, is an agreement between two or more companies joint together to produce and distribute good and services.