Information and Competitive Advantages

On first of October I learn about Information System for Competitive Advantages. First of all, I would like to thanks to Dr. Nur Naha because of giving clear explanation about this topic.

This topic discusses three main point consist to role of information technology, competitive forces and competitive strategy. Nowadays, information technology play important role in reengineering business process. We can see that, in many industries IT enables some business to differentiate themselves from their competitors. IT also important to improves communication process. For example, most of companies using email as a communication way between employees, suppliers and customers.

Now I will turn to competitive force. Porter identified five factors that act together to determine the nature of competition within an industry. So, in order to make sure the successful of a business, the company must develop strategies to counter these forces. These are the:

1.      Rivalry of competitors within its industry.

2.      New entrances into an industry and its market.

3.      Substitute products that may capture market share

4.      Bargaining power of customers

5.      Bargaining power of suppliers

In this topic I’m also learn about competitive strategies. From my understanding, competitive strategies refer to a plan how an industry or a firm competes to others. So the firm must identify the strengths and weaknesses compare to its competitors. There are five competitive strategies that can be applied by a firm in order to be a successful in a market. First is about cost leadership. From my understanding, cost leadership means the lowest cost of operation in the industry segment. A firm must become low cost producer in order to maintain their customers. For example here is Wall-Mart Store Inc. that has been successful using low price strategy to attract customers.

Second is differentiation strategy. For this strategy, a firm needs offering highly unique product to the entire market. For example is Apple’s iPhone. We know that a lot of hand phone producers exist today, so Apple must develop a strategy how to compete to others competitors. 

The third competitive strategy is called ‘innovation strategy’. Innovation strategy ensures that the products or services that design and offer in market is aligned with client’s want. Differentiation is making an improvement on existing product while innovation implies something new that will change the nature of business. Foe an example is Ford Motor Company that produce profitable small car.

Next strategy is growth strategy. Most of companies have planned to grow their business to global market. Growth in business can include product expansion. A market expansion growth strategy, often called market development, entails selling current products in a new market. For example, Pakistan State Oil (PSO) developing new market by exporting oil to Afghanistan.

The last strategy is alliance strategy. This strategy refers to an arrangement between two companies that have decided to share resources to undertake a specific, mutually beneficial project.  For example airline industry in Malaysia, Air Asia has incorporated Thai Air Asia and Indonesia Air Asia into its brand name.

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Reference

Michael E. Porter, ‘Competitive Strategy”, the Free Press, 1980.

Mahmood Hemmatfar, Mahdi Salehi, Marziyeh Bayat,. (2010). Competitive Advantages and    Strategic Information Systems. International Journal of Business and Management , 5 (7), 158-169.

http://www.time.com/time/magazine/article/0,9171,2007401,00.html