Summary

“Artificial Intelligence is a branch of science and technology that creates intelligent machines and computer programs to perform various tasks which require human intelligence. It is a system that mimics various functions which a human can do. AI uses external data like big data in order to achieve excellent performance for the given tasks.” (Ergen, Mustafa 2019) AI has the potential to help businesses flourish and gain competitive advantage, and improve businesses in various aspects. Nonetheless, every new technology prompts us to ask questions. How would AI help businesses gain a competitive advantage? What are the ethical and security concerns that come along with it? What are the Financial impacts of that technology? What is the development plan and expectation? These aspects will be discussed in detail in the paper.

Michael Porter’s Five Forces Model analysis the dynamics of competitive advantage in an industry by studying five major aspects of that dynamic. The five forces are threats of new entrants, suppliers’ power, buyers’ power, threats of substitute products, and competitive rivalry. Utilizing AI will help any company in any industry achieve a competitive advantage. We will examine how AI can do that using the Five Forces mentioned in Michael’s Model.

AI can assist a company build a sting barrier of entrance for new competitors looking to enter the market. The high cost of implementation and development, the massive data infrastructure requirements, and the technical expertise required to obtain and maintain an AI system can put a toll on new companies and give already established companies a competitive edge. Established companies should leverage their existing advantage, for example, data resources, knowledge, expertise, and monetary capability to invest in creating an advanced AI system to help them expand their competitive advantage. Having advanced AI on the companies’ side will make it extremely difficult for newcomers to compete with their AI-generated solution and AI-data infrastructure.

AI will increase the power of suppliers in many ways, for example, enhance communications with buyers, and data driver supply chain management. Enhancing communications with buyers is based on using data-driven insight to build inventory and recommend products. Amazon is an example of a giant company that uses AI to analyze customers’ data and recommend products to them (L. M. Aiello et al 2012). Moreover, AI will help suppliers optimize the supply chain management process by providing automated quality control, and data-driven decisions. Overall, AI will create a superior advantage for a supplier utilizing it over other suppliers.

Giving buyers or customers more power and freedom will create loyal customers that make the best decisions. AI can create a seamless shopping experience by providing information and helping buyers with their journey. Companies are using AI to help their buyer either by creating recommendations or by providing help like a chatbot or AI help engine. Including more technologies like NLP makes it more convenient and fun for buyers which will create a favorable experience and make them more likely to come back to the company for their future needs. AI helps create a positive experience that will enhance customer satisfaction which creates a loyal customer base.

The threat of substitute products or services will decline with the help of AI. Companies that adopt AI in the product or service development stage create an innovative and data-driven environment for the product or service to grow, which makes them unique, and very difficult to replicate. Moreover, AI has the potential to disrupt traditional products by creating AI-driven products that are backed with data and AI-generated patterns. AI will help companies produce outstanding products by optimizing communication between data, knowledge, experience, and creativity. All the above-mentioned will contribute to building an extremely hard-to-duplicate product.

Companies that adopt AI early and use its capability to collect data, analyze trends, create products, and personalize the customer experience, have the power to dominate markets and obtain a superior advantage over existing rivals. Tesla used AI in their manufacturing to improve efficiency and lower costs. Plus, they used AI in their operations systems to develop more advanced products that disrupted the card manufacturing industry as we can see in the study cited below. (Ajitha, P. V and Ankita Nagra 2021).

Undoubtedly, AI technology has benefited businesses in a number of ways, including increased productivity, better decision-making, and improved customer experience. However, in recent years, ethical concerns about how AI benefits businesses have grown in importance. While AI technology has many advantages, there are also possible drawbacks that should be considered.

The protection of personal information and privacy is one of the main ethical issues with AI in business. Large volumes of data are frequently needed for AI systems to be trained and to function properly. However, issues with privacy infringement are raised by the gathering, storing, and analysis of personal data. Companies must make sure that the right safeguards are in place to guard against unauthorized access to or exploitation of customer data. One major concern associated with this is AI-assisted cyber attacks. A recent example of this would be the data breach at TaskRabbit where 3.75 million customers’ financial and personal information were taken as a result of the data breach. Analysts think that a botnet with AI capabilities was used. The servers of TaskRabbit were subjected to a DDoS attack on TaskRabbit’s servers. (N.A., 2023).

Another major concern of the potential misuse of AI in businesses is the use of deepfake content. Deepfake’s are convincingly fake audio or video produced by AI. It uses deep learning which imitates human brain functions to modify genuine video and sounds. Deepfake technology can have a significant impact on not only businesses, but society as well. For example, a British CEO suffered a $240,000 loss as a result of a Business Email Compromise assault in 2019 (N.A., 2023). Analysts concluded that deepfake technology was used because the attack featured a voice imitating the company’s CEO. This incident demonstrates the real-world consequences of AI-driven deception, when cyber criminals use deepfakes to trick people or businesses to steal money. It is clear that deep fakes raise a number of ethical concerns. They are able to damage credibility and morality. Cyber criminals are able to create content that seems real by manipulating films and audios, potentially harming business reputations.

Security concerns resulting from the use of AI are numerous. As more companies begin to use this new technology to increase productivity as well as profits, they need to be aware of the new threats that will accompany its use. According to an article by Terence Jackson onwww.forbes.com titled “Exploring the Security Risks Of Generative AI” (https://www.forbes.com/sites/forbestechcouncil/2023/04/19/exploring-the-security-risks-of-generative-ai/?sh=218174fa3594), “… multiple renowned companies, including JPMorgan, prohibit the usage of ChatGPT… in the workplace.” The concern is based on ChatGPT’s privacy policy. Supposedly, Chat GPT stores a user’s IP address as well as their browsing habits. As most of know already know, many companies collect and sell this information to third parties. What happens if those third parties include your competitors? Not good for business! This is just one example of how the use of AI can create security concerns for an organization.

Another example would be AI misuse. With the advent of AI comes the exploitation of this technology by would-be criminals. If you think the issue of malware and phishing attempts are bad now, wait until the hackers begin to use AI to develop more sophisticated malware and phishing techniques. Not only will the use of this technology by hackers and the like have individual consequences, but it could be bad for society as a whole. We are already faced with data breaches and ransomware with the use of our current technologies, but these inconveniences will likely become more numerous with the use of AI.

Finally, deepfakes (as previously mentioned) are not only an ethical issue, they also pose a significant security concern. Deepfakes can have serious consequences for an organization in a number of ways. First, confidential data can easily be retrieved if a hacker uses a deepfake to impersonate someone at the executive level of an organization. Additionally, a deepfake can be used to produce political consequences for an organization. Say, for example, a deepfake is created of a company’s President using racial slurs or demonstrating sexist behavior. The public will be outraged if the deepfake was published online and this could cause the ousting of an innocent person.