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Summary of presentation
The Concept of Competitive Advantage Information Technology and Competitive Advantage Conclusion
2001). The information revolution continues to sweep through the economy and it is impossible to exist as an organization and escape the effects of Information Technology. 7-3 . Many companies regardless the industry are making investments into Information Technology in order to remain innovative and on the cutting edge of competitive advantage (Porter. most organizations regardless of their location or sector of industry are fundamentally dependent on Information Technology.INTRODUCTION Today.
Introduction Contd IT is the study. development. 7-4 . Scott. 2011). support or management of computer-based information systems (Proctor and K. implementation. application. design.
(2004).. Y. Positive correlation between the amount of investment and the sales performance of these companies Bloch. Pigneur.Introduction Contd Evidences indicate that implementation of successful business strategies using information technology has led to the improvement of organizational efficiency and effectiveness. A.. M. & Segev. 7-5 .
7-6 . 1985) Competitive advantage occurs when an organization acquires or develops an attribute or combination of attributes that allows it to outperform its competitors.The Concept of Competitive Advantage Competitive advantage theory suggests that states and businesses should pursue policies that create high-quality goods to sell at high prices in the market (Porter.
The Concept of Competitive Advantage These attributes include access to natural resources. highly trained and skilled personnel and new technologies including Information Technology either to be included. (1999). 7-7 . The term competitive advantage also refers to the ability gained through attributes and resources to perform at a higher level than others in the same industry or market (Chacarbaghi and Lynch.
a company needs to look at its strategy.2003).The Concept of Competitive Advantage "A firm is said to have a competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential player"(Clulow et al. 7-8 . Information Technology and Competitive Advantage To gain competitive advantage using IT. In simple terms “doing what places you above competitors”.
3 important questions-strategy Where are we now? Where do we want to go? How can we get there? 7-9 .
3 Opportunities that can arise from IT Helping an organization to improve the efficiency and effectiveness of the current status Assisting companies to out-maneuver other participants in a competitive rivalry Creating a big barrier for new companies to find it difficult to enter an industry 7-10 .
Michael Porter identified five strategies for competing in the marketplace successfully: Overall cost leadership Differentiation Focus Innovation Alliance 7-12 .Using Information Technologies to gain Competitive Advantage Organizations of all sizes are using various information technology tools and applications in order to become more competitive.
Overall Cost Leadership IT focus of a bottom-line strategy is to improve efficiency by reducing overall costs. for a subscription fee of around $30. one can download the software and get updates for a year. A top-line strategy focuses on generating new revenues by offering new products and services to customers or increasing revenues by selling existing products and services to new customers. 7-13 . Antivirus vendors are using the Internet to distribute software.
customer relationship management. Many organizations use enterprise systems. such as supply chain management. inexpensive distribution. enterprise resource planning. and collaboration software. The goal of these systems is to use information technologies to create the most efficient. 7-14 . effective link between suppliers and consumers. to reduce costs and improve customer service. vendors couldn’t afford to offer software at such a low price.Overall Cost Leadership Without the Internet for easy.
Amazon. 7-15 . Example: Apple has been successful with this strategy by designing its computers to look much different from PCs and focusing on its computers’ ease of use.com has differentiated its website by using certain information technologies.Differentiation Organizations try to make their products and services different from their competitors. such as personalization technologies to recommend products to customers based on their previous purchases.
7-16 . the differentiation of which can help build up customer loyalty. one of the most powerful competitive weapons in catching market and customer share.Differentiation Contd IT also provides an opportunity for a firm to establish its brand image. Firms can use Web sites to reinforce their identities.
Information technologies could assist these companies in reaching their target market segments more cost effectively. 7-17 . Macintosh computers are heavily marketed to creative professionals such as designers. Example: Apple has also used this strategy to target iPhones to consumer users rather than business users.Focus Strategies: Organizations concentrate on a specific market segment to achieve a cost or differentiation advantage. Similarly. and writers. photographers.
quality control. also the use of workstation software’s for pay roll analysis etc. services. MINITAB and EPIDATA for analyzing demographic data and frequencies of people in a particular community. but also reduces product cycle time.innovation An innovative advantage can make firms to cover products and process R&D. purchase and transport raw materials. marketing. sales. The use of statistical software such as SPSS. testing. wholesale distribution. and retailing. and processes. IT adoption can offer firms an opportunity to experiment with new products. IT not only reduces information distribution time. 7-18 .
customers can enter credit card numbers and addresses once to make a purchase.com also uses the oneclick system for fast checkout.com has differentiated its website by using certain information technologies. such as personalization technologies to recommend products to customers based on their previous purchases. Amazon. With this system. without having to enter information again 7-19 .innovation The Amazon.
Alliance IT helps to create many new inter- relationships among businesses and expanding the scope of industries in which a firm must compete to achieve competitive advantage. To maintain a successful alliance. 7-20 . Sharing relevant information and delivering on promises are important in managing the relationship. communications between partners play a significant role.
7-21 .Alliance contd IT in a firm can improve its alliance advantage by providing an efficient and cheaper communication channel among alliance partners. independent means for alliance partners to exchange information. Further. IT provides suitable access to information and offers a proposal.
To define business opportunities on the basis of IT. 7-22 . in order to create sustainable competitive advantage through information technology we must know how: This technology influences the business and performance of organization. To assess technological innovations. To design the new technology in the form of a business model.In all.
Gaining a competitive advantage is not only about purchasing the technology but finding what technology can be used to help in production and marketing and works best 7-23 . IT must be utilized to reduce the cost of products and services and. if designed correctly.Conclusion Information Technology can be used to create a competitive advantage once a business can effectively and efficiently utilize it to achieve its goals. assist with differentiation and focus strategies. too.
These characteristics could improve organizations competitiveness in local and international markets as well as facilitate relationships with other firms within the same value chain. growth.Conclusion Even if the technology is used all over. 7-24 . communication and alliance patterns. alliance. a firm adopting IT can also enjoy innovation. it must be utilized by the business in such a way that it has a competitive advantage. cost reduction. IT enhances information processing. Further. and differentiation advantages generated by the IT.
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