The Importance of Litmus Test

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The Three Lenses: Five Forces, Value Chain, and Litmus Test

The three licenses are five forces, value chain and litmus test. The five forces have an industry level focus and clarifies on the impact of IT on the entire industry. Value chain addresses the value creation by a firm against that of rival firms in an industry hence seeks to compare a firm with the rivals. The litmus test focuses on the individual IT assets in a firm and determines how an IT asset sustains a competitive advantage (Tiwana, 2017).

The Importance of the Litmus Test Lens

I believe the litmus test is the most important of the three lenses because of the focus on the company and allows for a more in-depth review of the aspects of a business. The litmus test takes a microscopy view compared to magnifying glass and telescope views in value chain and five forces respectively. The focus of the litmus test is also on identifiable aspects of the business and the business has control owing to its internal focus. The impact is that a business can effectively utilize the results of the litmus test to make changes that promote the achievement of company goals.

Benefits of the Litmus Test

The litmus test is also the most beneficial because it aids not only in achieving but maintaining competitive advantage for a business. The litmus test offers the business a chance of understanding the capabilities that can be improved upon to achieve the most benefit from the information technology department and other areas. The litmus test also aids an organization in understanding the contribution of an IT asset to the maintenance of competitive advantage in a business. The competitive advantage of a firm is the most crucial especially in a fast changing world and an understanding of the contribution of an IT asset to a firm’s competitiveness serves to promote the achievement of organization goals.


Tiwana, A. (2017). IT Strategy for Non-IT Managers: Becoming an Engaged Contributor to          Corporate IT Decisions. Mit Press.

January 19, 2024


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