Gaining Competitive Advantage Through Information Systems
Gaining competitive advantage is critical for organizations. Competitive advantage as a product or service that an organization’s customers value more highly than similar offerings from its competitors that your competitors do not. Competitve advantage are typically temporary as competitors often seek ways to duplicate the competitive advantage. In order to stay ahead of competition, organisations have to continually develop new competitive advantages. Informations Systems for gaining competitive advantage discuss about how an organization can analyse, identify, and develop competitive advantage using tools such as Porter’s Five Forces, three generic strategies and value chains.
Porter’s Five Forces Model is a simple but powerful tool for understanding the competitiveness of your business environment, and for identifying your strategy’s potentital profitability. For example, you could take fair advantage of a strong position or improve a weak one, and avoid taking wrong steps in future. Part of Porter’s Five Forces Model are Rivalry of competitors within its industry, Threat of new entrants into an industry and its markets, Threat posed by substitute products which might capture market share, Bargaining power of customers, Bargaining power of suppliers.
To survive and succeed,a business must develop and implement strategies to effectively counter the above five competitive forces. The five competitive strategies are: cost leadership, differentiation, innovation, growth, and alliance. Meanwhile, information systems could be a critical enabler of these five competitive strategies. Cost leadership is where organizations can use information systems to fundamentally shift the cost of doing business or reduce the costs of business processes or and to lower the costs of customers or suppliers. Differentiation is where Organizations can use information systems to develop differentiated features or and to reduce competitors’ differentiation advantage. Innovation is where organizations can use information systems to identify and create (or assist in creating) new products and services or and to develop new/niche markets or/ and to radically change business processes via automation design to reduce the time and cost to the market. Growth is where organizations can use information systems to expand domestic and international operations or/and to diversify and integrate into other products and services. And Strategic Alliance where is organizations can use information systems to create and enhance relations with partners via applications, such as developing virtual organizations and inter-organizational information systems.
