Competing with Information Technology
Strategic IT
Information systems must be viewed as more than a set of technologies that support efficient business
operations, workgroup and enterprise collaboration, or effective business decision making.
Information technology can change the way businesses compete. For this reason, you should view
information systems strategically, that is, as vital competitive networks, as a means of organizational
renewal, and as a necessary investment in technologies that help a company adopt strategies and
business processes that enable it to reengineer or reinvent itself in order to survive and succeed in
today’s dynamic E-business environment.
Competitive Strategy Concepts:
The strategic role of information systems involves using information technology to develop products,
services, and capabilities that give a company major advantages over the competitive forces it faces in
the global marketplace. This creates strategic information systems, information systems that support
or shape the competitive position and strategies of an E-business enterprise. So a strategic information
system can be any kind of information system (TPS, MIS, DSS, etc.) that helps an organization:
Gain a competitive advantage
Reduce a competitive disadvantage
Meet other strategic enterprise objectives
According to Michael Porter, a firm can survive and succeed in the long run if it successfully develops
strategies to confront five competitive forces that shape the structure of competition in its industry.
These include:
Rivalry of competitors within its industry
Threat of new entrants
Threat of substitutes
Bargaining power of customers
Bargaining power of suppliers
A variety of competitive strategies can be developed to help a firm confront these competitive forces.
These include:
Cost Leadership Strategy
- Become a low-cost producer of products and services
- Find ways to help suppliers or customers reduce their costs
- Increase the costs of competitors.
Differentiation Strategy
- Develop ways to differentiate products and services from competitors
•Reduce the differentiation advantages of competitors
Innovation Strategy
- Find new ways of doing business:
a) Develop of unique products and services
b) Enter into unique markets or marketing niches
c) Establish new business alliances
d) Find new ways of producing products/services
e) Find new ways of distributing products/services
Growth Strategies
- Significantly expand the company’s capacity to produce goods and services
- Expand into global markets
- Diversify into new products and services
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