Information system strategies

Information System Strategies

Each of the following four generic approaches to managing competitive pressures is frequently made possible by information technology and systems:

• Low-cost Leadership
  • Information systems are used to achieve the lowest operational costs and the lowest prices. An effective customer response system, for instance, can be a part of a supply chain management system to assist reduce inventory and distribution costs and link consumer behavior to production, supply, and distribution networks.
• Product Differentiation
  • Information systems are used to enable new products and services or, remarkably, to modify how convenient it is for customers to use your current products and services. For instance, Land's End employs mass customization to create clothing that is specifically tailored to each customer's preferences while using the same production resources as mass manufacture.
• Focus on Market Niche
  • Information systems are employed to enable a focused market and provide competitively superior service to this specific target market. The production and evaluation of data by information systems, which allows for finely tuned sales and marketing strategies, also supports this strategy. For instance, The Hilton Hotel makes use of a customer information system and precise information on its current visitors to provide customized services and reward lucrative clients with additional care, benefits, and attention.
• Strengthen Customer and Supplier Intimacy
  • Information systems are used to establish connections with suppliers and foster relationships with customers. For instance, Chrysler Corporation has implemented information systems that provide suppliers direct access to production processes. Suppliers are even permitted to choose how and when to transport goods to Chrysler's factories. As a result, vendors can produce goods with longer lead times. Strong relationships with clients and vendors increase switching costs (the price of moving from one product to a rival product) and customer loyalty to your business.

Internet's Impact on Competitive Advantages

The Internet has seriously threatened more industries and all but destroyed certain others. Additionally, the Internet has formed the foundation for thousands of new firms and opened up a brand-new market. The traditional competing dynamics are still in play as a result of the creation of the internet, but the competitive variance has grown significantly. Because Internet technology is based on widely accepted standards, it is easy for existing competitors to enter the market and for rivals to compete solely on price. Internet users have more negotiating leverage because they can quickly identify the lowest-cost provider online and information is readily available to everyone. Some industries, such as the travel and financial services sectors, have been more significantly impacted than others. Internet-based businesses like Yahoo!, eBay, and Google, however, also create new chances for establishing brands and creating very sizable and devoted consumer bases.

Business Value Chain Model (BVCM)

The value chain model highlights particular corporate operations where ferociously competitive tactics can be applied to their fullest potential and where information systems are most likely to have a strategic influence. According to the value chain concept, a company is seen as a collection of core tasks that add value to its goods and services. These actions fall into one of two categories: primary activities or support activities.

• The production and distribution of the company's goods and services, which create value for the consumer, are the primary activities that are most directly related to one another. Inbound logistics, operations, outbound logistics, sales & marketing, and service are the main activities.
• Support activities, which comprise organizational infrastructure, human resources, technology, and procurement, make it feasible for the principal operations to be carried out.

Note:

• Benchmarking
  • It is the process of evaluating our business process' effectiveness and efficiency against exacting standards and then gauging performance against those standards.
• Industry Based Policies
  • It is typically recognized as the most effective approach or method for problem-solving by consulting firms, research organizations, government agencies, and industries associations for consistently and efficiently achieving business objectives.

Extended Value Chain Model

Value webs, which are highly coordinated industry value chains, are now conceivable because to internet technology. A value web is described as a group of independent businesses that collaborate to provide a product or service for a market using information technology to assemble their value chains. It operates in a less linear manner than the typical value chain and is very customer-driven.

Boost Business Unit Performance Generally

A huge corporation is specifically a group of companies. By boosting synergies and core competencies, information systems can improve the overall performance of these business divisions.

• Synergy
  • Synergy is the term used to describe the combined result of two or more pieces, elements, or people. When the total is greater than the sum of the parts, synergy occurs. In synergies, the output of some units can be used as an input for other units, or two businesses can combine their markets and expertise, which lowers costs and boosts revenue. In this synergy situation, IT is used to connect the operations of several business divisions so that they can function as one.
• Core Competency
  • An activity for which a company is expected to be a global leader, such as being the top designer of small scaled parts in the world, is referred to as a core competency. A core competency depends on both internal and external information that has been acquired via experience. Competency is promoted by any information system that emphasizes knowledge transfer between corporate units.
• Network Based Strategy
  • Utilized as part of this tactic are:
    • Network Economics
      • According to network economics, adding another member or producing a different good has very little marginal cost, but the marginal profit is significantly higher. For instance, the more things that are listed on eBay, the more valuable the site is to all users because more products are advertised and more supplier competition leads to cheaper costs.
    • Virtual Company Model
      • The virtual company, or virtual organization, is another network-based strategy that uses networks to connect people, resources, and ideas to enable it to collaborate with other businesses to produce and distribute goods and services without being constrained by conventional organizational boundaries or physical locations. Even though they are not physically connected, one organization can utilize the resources of another.
    • Business Ecosystem
      • It is described as a network of organizations—including vendors, retailers, clients, and government organizations—that work together and in competition to supply a certain good or service. In the ecosystem model, numerous businesses collaborate to provide value to the client, and IT is crucial in providing a dense network of contact between the taking part businesses.

Reference

Laudon, Laudon, "Management Information Systems Managing the Digital Firm", twelfth edition