Information Systems - Essay Example

Paper Submitted by: XXXXXX Number: XXXXXX of XXXXXXX XXXXXX XXXXXX XXXXXXX Submission: XX - XX – 2010 Introduction: Information systems play a major role in the current business world and in the current competitive world. There have been a number of different models and theories that have been developed over the years to help companies improve the competitive advantage and value of the companies. This paper will provide a brief explanation of the terms value and competitive advantage, following which two models of competitive advantage have been discussed to learn how the information systems can be incorporated to improve the models. Value and Competitive Advantage: Value in the case of businesses refers to the benefits that a customer gets from the company and from dealing with the company. Creating value for the customers simply implies that the company works towards development of the products and services to help the customer gain more for the money that they spend. This is very different from the concept of competitive advantage which has been discussed below. Competitive advantage can be explained as the edge that a company has over the other businesses. For businesses to be competitive and creating value in the market, it is essential that the business has some form of competitive advantage which helps the customers gain better value from the company. The competitive advantage of a company is a factor that makes the company different from the others in the same field and which creates more demand for the product or service. One of the best examples for this is KFC. KFC differentiated their product by taking a normal food product, and preparing the pieces with special recipes, packaging, branding and marketing. Although a number of other companies do produce similar chicken, KFC still has a competitive advantage for the overall process that the company has built over the years and the well marketed products (Nobilis, 2008). Models of Competitive Advantage: There have been a number of different models that have been developed for the improvements of business and the competitive advantage. The two models that will be discussed here in this paper include Porter’s Five Force Model and the Sustainable Competitive Advantage. According to Porter (1996), strategy is about being different. This means that a different set of deliberate chosen activities are require to deliver a unique mix of value. Over the years, there have been various strategies and theories designed and discussed by scholars and experts in the field. Bromiley (2004) highlighted that the genres of strategic management can be classified into four main areas to include the various theories and approaches developed over the past years. The classifications are the classical approach, the evolutionary approach, the process approach, and the systematic approach. Porter’s five force model highlights the risk that a company is faced with within an industry (Porter, 1999). Michael Porter has devised a framework which provides a better understanding of the industry and how companies can be affected by forces within the markets. The five forces that he has described are: a) Threat of new entrants, b) Determinant of buying power, c) Threat of substitutes, d) Determinants of supplier power, and e) Rivalry among the firms. The figure below explains the five force model: The second model in discussion here includes the sustainable competitive advantage. Here the main idea is to differentiate itself from the other companies, and operating at lower costs and gaining higher levels of profits. As explained by the author, ‘The source of sustainable competitive advantage is found firstly in the ability of the organization to differentiate itself, in the eyes of the customer, from its competition and secondly by operating at a lower cost and hence at greater profit’ (Nobilis, 2008) Sustainable Competitive Advantage (Nobilis, 2008) Information Systems and Porter’s Five Forces: Porter’s five force model can be improved a great deal by including the information systems. The main focus that needs to be incorporated is the implementation of information systems in sync with the five forces. Using the information technology along with the five forces will allow the threats to be more accurate and will also keep a complete record of all the threats that are involved in the business. This is very helpful for an overall improvement of the businesses. Information Systems and Sustainable Competitive Advantage: Using the information systems in the sustainable competitive advantage will allow the companies to rightly sustain the competitive advantage by learning more of the marketplace and not leaving the sales of the goods to be based on the products alone. Use of the information systems will help improve the quality of the market information and will also allow a more focused and well designed price plan for the company. This will help improve the value of the products as well as the competitive advantage (Andreu, Ricart & Valor, 1992). Gaining a clear and focused competitive advantage simply implies that the company has an upper hand over its competitors and that there is a differential ‘plus’ that the company offers. Similarities and Differences: Porter’s model is aimed at focusing on the various factors that impact the performance of the company. Both the models aim at helping companies improve their overall competitive advantage and also sustain their competitive edge when compared to the competitors. The main difference however between the two models is that Porter’s model is more focused on the external analysis of the company where as the sustainable competitive advantage is more focused on the internal as well as external analysis of the company (Andreu, Ricart & Valor, 1992). The two models although aims at the same outcome have different approaches and different views on the how the companies should use the available information. Conclusions: In conclusion it is safe to say that the information systems have a major impact on the overall business and also play a very important role in the improvements of the various models of value creation. The value of the various models is increased to a great extent with the inclusion of the information systems by large. Bibliography Nobilis, L., 2008, Sustainable Competitive Advantage’, Accessed on 13th April 2010, Retrieved from http://www.biz-development.com/SupplyChain/6.2.Sustainable-Competitive-Advantage.htm Porter, M. (1996), What is strategy?, Harvard Business Review, 74(6), 61-78. Porter. (1999). Creating advantage. Executive Excellence, 16(11), 13, Retrieved from http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=2483781&site=ehost-live&scope=site Rafael C. Andreu, Joan E. Ricart & J. Valor, 1992, ‘Information Systems: Strategic Planning: A Source of Competitive Advantage’, NCC Blackwell Read More