Free Information technology dissertation research: Information Systems in Competitive Advantage Strategy
Information Systems in Competitive Advantage Strategy
The following is a presentation on the importance of information systems in definition and design of competitive advantage strategy. Information systems adoptability in common available literature on competitive advantage is illustrated in a case study of a modern firm within a highly competitive environment. Painting the background of information technology impact in various organizational needs assists in the creation of the position of information systems in decision making in a typical modern day company. A visitation of the Porter’s Model as one of the most celebrated definitions of strategic management tools in definition of competitive advantage highlights the areas that a reader would expect in a company applying information systems to create competitive advantage. The highlight of the model of choice is replicated inside Apple’s operations with a particular highlight of the iPhone, one of its recent products to reach unparalleled successes in strategic production and marketing. Each of the Porter’s Forces of competitive advantage is highlighted in the case study with reference to the iPhone and a few other products that facilitated in catapulting Apple to the highlighted success of strategic advantage over other cellphone and smartphone producers. A section of recommendations and conclusions drawn from the presentation appears on the tail end of the document to sum up the nexus that information systems have with modern day competitive advantage experience.
Information systems are increasingly becoming useful to define the operations opportunities and threats that a company has in its business. In this discourse, information systems application in business is highlighted amid an increase in inclination towards reliance on information to ensure accurate business operations. Besides a visitation of common literature on strategic definition of competitive advantage, this discourse applies a company’s case study to identify it with a model of creation of competitive advantage. In the development of this discourse, the relevant research information was obtained from secondary sources on strategic management as well as primary sources on the position of the case study company of choice, Apple. To identify the importance of information systems in Apple’s strategic competitive approach, theoretical concepts of competitive advantage approaches were considered and Porter’s Model chosen for the illustration of practical replication in actual company operations (Yin 2008, p101). The efficiency of information system to facilitate formulation of a competitive advantage is underscored at the tail end of the discussion illustrating its invaluable input in strategic business management.
In the information age, organization of business objectives heavily relies on the strategic level that has significantly changed to adopt information systems as the most preferred option to remain in touch with market trends. The other two organization levels are operational level dealing with daily business processes and management level that deals with directing resources to various business objectives. Management has middle and senior level managers assigned with oversight responsibilities for business to achieve success through their decisions. Strategy level is perhaps the most important in modern day business since it is the defining aspect of organizational management and operational concepts at the backdrop of a competitive business environment. The arrival of the information revolution presents business world with an environment that relies on precision and accuracy than it was during the agrarian and industrial revolutions of the 18th century (Benson and Tribe 2008, p8).
Typical 21st century business relies on information not only as a strategic tool but also as an asset whole value is synonymous with sustenance and future competitiveness. Computer based data processing and information presentation with respect to various operation needs within a competitive operations environment defines information systems. Managerial functions have been clearly defined by information systems within the competitive market, where success and sustenance of operations are defined by how tactical decisions are made. Using lessons from previous strategic considerations that the management can adopt to remain in operations, information systems have been integrated to deliver the best approach for vantage view for the rest of the market. Decision making under the information systems regime can be useful in responding to critical challenges and highlighting opportunities. For information systems to facilitate a competitive advantage and not only ensure survival but retain sustainable operations, competitive strategies such as those highlighted in Porter’s model must be adopted.
Conceptual Framework: Competitive Advantage (Porter’s Model)
Business strategy under Porter’s model is defined through the consideration of five factors or forces that describe the position of competitiveness that a company possesses. The five forces include threat of existing competitors, threat of new entrants, customers, suppliers and the threat of substitute products. Considerations of strategic positioning are made on the backdrop of these forces as discussed below.
- Threat of Traditional Competitors
During the entire life of operations of a company, there are business rivals that compete for the same market space that a particular organization. In terms of the nature of the competition, the rivals are in constant attempts to produce the best products in the best possible channels while at the same time try to win all the customers (Ritson 2011, p33). Although the deliberations of the appropriate decision are constituted from external forces, the approach adopted is particularly composed of internal solutions to match and exceed the competition conditions in the environment. The marketing approach by rivals is targeted at presenting them as the most attractive option in the market such as through developing a pleasant. To ensure that the rivals’ threats are neutralized and a competitive advantage taken above them, research on the threat that they pose in the market must deliver information about how to minimize their domination and expand strengths to overcome them.
- Threat of New Entrants
The freedom of a capital market enables equal opportunity of investment into various lines of production making it favorable for labor and capital mobilization and entry of new players into any industry. However, existing businesses would not welcome this phenomenon since it translates into a disadvantageous position in operations, since the fewer the players, the more the opportunities of retaining profitability. Barriers of entry into a particular line of production define the level of comfort that the existing players have, which implies the possibility of more competition is dependent on absence or presence barriers of entry. As an illustration of such barriers, high costs of buying new operation plant and machinery as well as inexperienced labor which the existing firms boast of. Competitive advantage can be increased by ensuring that new production strategies make it difficult for new entrants by uniquely positioning production in a niche difficult to be occupied or copied by newcomers by the use of information systems.
- Customers’ Bargaining Power
The sustenance of operations of a company is dependent on the success of attracting and retaining customers thereby blocking them to direct that benefit to the competitors. Customer’s bargaining power to drive the market presents the competition trajectories with an unfavorable condition which must be handled for strategic realignment. To reduce the bargaining power, customer satisfaction must be increased while reducing possibilities of satisfaction from rivals.
- Bargaining Power of Suppliers
Production is dependent on the suppliers whose role in determining the company’s say in the supplies affects the advantage held over rival companies. When the supplier has a lot of bargaining power, the company must consider strategic interventions to facilitate continued market supply without disruption. Such interventions may include increasing supply routes and ensuring that the supplier’s bargaining power is reduced. Reducing the cost of supplier switch may include diversifying the type of supply lines and channels in use and gaining control over pricing decisions. The arrival of information system solutions in this respect brought the possibility to understand how supplier bargaining power can be controlled for competitive advantage (Ritson 2011, p34).
- Threat of Substitute Products and Services
The availability of similar products in the market and the possibility of the customer base shifting choice to their advantage define competitive advantage among firms. With the advancements in technology in the information age, new frontiers are constantly created for producers to engage in production of products and services that substitute those that are available in the market. Awareness of the available substitutes and their possible impact on the market opportunities of a company must be assessed all the time and flexibility in handling their threat subsequently devised. Competitive advantages using information systems employs collection of such availability and assists in dealing with the threat posed for continued operations.
Application of Information System in Competitive Advantage: Apple’s Strategy
Apple is perhaps the best example of a name to reckon with in technological circles in its electronic products business, particularly its iPhone brand. One of the most important points to note for Apple’s strategy is the market presence that makes all competitors in its line of business concerned with the popularity that the company has on the global market (Mootee 2011, para.3). There are several areas of competitive strategy that Apple has done right, particularly as led by its efficient information systems that covers its market pretty well. In terms of the strategy, it is also important to describe the industry in which Apple trades in, which is perhaps one of the most crowded in business world but the success of the company demonstrates what important difference such strategy makes. This can be reproduced using the above discussed Porters Forces of competitive strategy.
Tackling the Threat of Traditional Competitors at Apple was the best move that the company made in positioning itself as one of the most sought after producer. Before the iPhone hit the market, Apple had set the ground ready for further innovations through quality products such as the iPod that had left a multiplier impact in the electronics market. Apple did not only make a statement to the electronics market competitors but also to the music market. Building a market empire through astonishing technology and a perfect brand name caught the competitors with a surprise. Having held its head high and above the most important competitor segment, Apple had just made it possible to take advantage of the market needs using the market information gathered in as much time of iPod and other hit products such as the iTunes.
It appears that the use of the information gained from the market of a market opportunity to exploit the market for other products presenting rare technologies defined the competitive advantage over existing market players. The arrival of the iPhone into the market found Apple already established in command of the market in exciting technologies that the computer crazy market wanted to hear about. To illustrate this hype, the recent speculation of release of iPhone 5 which subsequently led to release of iPhone 4S paints the picture of an anxious product launch. Sooner, the competitors were running after Apple replicating the touch technology of the iPhone. Leadership at Apple was determined to establish an empire of past success with met promises of future excitement creating suspense of its products while the competitors watched (Kunz 2010, para.1).
In tackling the threat of new market entrants, Apple had almost handled it successfully by penetrating through top market players in electronic technologies creating a shield of giant players such as Samsung, LG, Nokia and Sony Erickson among others. Edging into new technologies and promising exciting products in the future and subsequently living up to them left it uncertain for new entrants. This concept of uncertain exciting technology made the threat of new entrants virtually inexistent since new entrants can only speculate what Apple is up to. Information systems enabled Apple to collect and disseminate such information as would lead to newer heights of production that new entrants could only wait to replicate.
In terms of handling customer bargaining power, Apple significantly employed information systems to collect clues of the market expectations leaving the customer at ransom of its decisions. Under the circumstances of the suspense that Apple’s products are presented to the market particularly the iPhone, the customer was sure that it was going to be Apple’s decision to produce newer and better product. As an illustration of the reduction of the customer bargaining power by Apple, new products were introduced after processing of the market information on the suspense and subsequently using it to price the iPhone. The uncertainty of the valuation of suspense led to Apple’s design of reference pricing where new products are significantly priced higher than the actual price Apple would like to price its products (Kunz 2010, para.13). After some time in the market, Apple would the significantly adjust the product to capture the market that would prefer lower prices than the reference price. However, sending the message that quality in new technologies is not easy to value, apple would take advantage of the suspense and hype just before release of a new product.
Handling supplier bargaining power is equally expertly done at Apple through the reliance of the information system taking advantage of online marketing as well as a growing popularity across the globe driving up demand of the iPhone. By diversifying its products across a number of computer products enables the iPhone to have a diverse supply channel that is ready to be associated with Apple. Perhaps one of the trickiest questions that Apple faces in its operations and dealing with iPhone is the threat of substitute smartphones. New iPhone players such as Huawei with the IDEOS smartphone present a threat to the Apple’s market particularly with the cheap aspect of their products. These players paint a risky future which must be handled with diversification of the approaches in iPhone production such as price reviews and revival of older versions of the product.
Recommendations and Conclusion
Apple can expect operations and competitiveness to face challenges with innovativeness on the increase across major competitors as illustrated by entry of competitors in line of smartphone production. It is recommended to Apple to diversify the suspense aspect to other products as well as new other products too continue edging past competition. Handling overseas market better in distribution of its products could open the avenue to exploit untapped opportunities in emerging markets such as Africa and Asia for the iPhone. This is possible since its brand name in the market presents a rare opportunity to edge past its rivals. Pricing for these markets need to be revisited since the development gap places some markets at a disadvantage, unless the Apple products are targeted for the upper market segments for the rich. Considering takeovers and joint ventures with some of the most competitive markets will also prove to be a worth consideration at Apple in the future.
Before information systems, manual market research and unclear competition information characterized business approach which was prone to many errors of judgment and estimation. In formation technologies enable data collection and processing at a better speed and accuracy with simulation applications of how operations can be under different perspectives. Raw facts about the market and operation environment in the 21st century are referred to as data and while it remains important, it needs processing to make it precise and accurate in the form referred to as information. Data collection in the market is conducted with equally precise and accurate procedures that are integrated with processing components thanks to the innovation that information systems present. As mentioned above, the information age makes application of this asset in definition of market cues for operations and management decisions. Modern businesses rely on the information research findings in all critical decisions particularly formulation of strategic approaches that present businesses as competitive as possible. Information systems designs handle business needs through presentation of a pool of information that can be used to define success by isolation of the most favorable business tactics under particular circumstances.
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