Information for Competitive

Advantage
Competitive Advantage
– Strategic advantage:

• Using a strategy to maximize strength

– Competitive advantage:

• The result of the use of a strategic

advantage
 Competitive advantage
• Competitive advantage occurs when an
organization tries a strategy that no one
has tried before.

• Eg. Dell was the first PC manufacturer to

use the Web to take customer orders.
 Competitive Advantage
Improving Core Competency
– Employee productivity
– Operational efficiency

Information and competency

Information provides support in a way
that enables the firm to gain or sustain
competitive advantage over rivals
 I.T for Competitive
Advantage
Innovative applications: Create innovative
applications that provide direct
strategic advantage to organizations.
Changes in processes: IT supports changes
in business processes that translate to
strategic advantage
Links with business partners: IT links a
company with its business partners
effectively and efficiently.
Cont…………………………….
Cost reductions: IT enables companies to
reduce costs through new methods
Relationships with suppliers and
customers: IT can be used to lock in
suppliers and customers, or to build in
switching costs.
 Cont………………………………….
Competitive intelligence: IT provides
competitive (business) intelligence by
collecting and analyzing information
about products, markets,
competitors, and environmental
changes .
Strategic Information
System
Any information system--EIS, TPS, KMS--
that changes the goals, processes,
products, or environmental relationships
to help an organization to gain a
competitive advantage or reduce a
competitive disadvantage.
– Information systems that help seize
opportunities
 Strategic Information
Systems
Definition:
• Any kind of information system that uses
information technology to help an
organization gain a competitive advantage,
reduce a competitive disadvantage, or meet
other strategic enterprise objectives.
– An IS that helps achieve long-term competitive
advantage
Porter’s Competitive
Forces Model
Competitive Forces and
Strategies
 Porter’s Competitive
Forces Model
To survive and succeed, a business must
develop and implement strategies to
effectively counter the:
• Rivalry of competitors within its industry
• Threat of new entrants into an industry
and its markets
• Threat posed by substitute products which
might capture market share
• Bargaining power of customers
• Bargaining power of suppliers
 Competitive Strategies
• Cost Leadership
• Differentiation
• Innovation
• Growth
• Alliance
 Cost Leadership
Strategy
• Becoming a low-cost producer of products and
services

• Finding ways to help suppliers and customers reduce

their costs

• Increase costs of competitors

Differentiation Strategy
• Developing ways to differentiate a
firm’s products and services from its
competitors’

• Reduce the differentiation

advantages of competitors
 Innovation Strategy
• Development of unique products and
services
• Entry into unique markets or market niches
• Making radical changes to the business
processes for producing or distributing
products and services that are so
different from the way a business has been
conducted that they alter the fundamental
structure of an industry
 Growth Strategy
• Significantly expanding a company’s
capacity to produce goods and
services

• Expanding into global markets

• Diversifying into new products and

services
• Integrating into related products and
services
 Alliance Strategy

• Establishing new business linkages

and alliances with customers,
suppliers, competitors, consultants,
and other companies
Competitive Strategy Examples
IS in a Customer-
Focused Business