#3 : Topic 2 : IS For Competitive Advantages

Strategic planning in utilizing information systems is the key to gaining a competitive advantage. Managerial decision makers do not want to purchase new systems for the upgrade unless there is a plan to maximize its capabilities. Thus, I think that IS should be viewed as assets and a means to gain a competitive lead in the industry, not as a commodity. There are three strategies to maximize the IS. These are Cost Leadership, Differentiation Strategy and Innovation Strategy.

In Cost Leadership, Porter (1985) stated that the firm sets out to become the lowest cost producer in its industry. Hence, this strategy is about minimizing the cost to the organization of delivering products and services. It must seek out every source of potential cost advantage.

According to Hill (2008), a business that selects a Differentiation Strategy would offer something to its customers that no one else provides. A business can easily increase its customer’s base by providing a unique design that makes the customer more attract to buy its products from its competitors.

Companies that use Innovation Strategy concentrate on particular niche markets and by understanding the needs of customers within it (Stamm, 2003). They also develop a uniquely low cost or well-specified products or services for the market. Because they serve customers in their market uniquely well, they tend to build strong brand loyalty amongst their customers.

Thus, I can conclude that Cost Leadership works best when there are not many ways to achieve product differentiation that have value to the buyers and when buyers are price-sensitive and are prone to shop for the best price. I think it is important to take the time to assess what my customers really want when developing my strategy. I won’t get any profits when giving prices too low just because I want to be a price leader. In addition, I will take into consideration of time and location when implementing Differentiation Strategy. It is because introducing a product at the right time can helps me to create product differentiation. I should be the first mover to introduce my products before all other companies. Plus, if my company is located close to my customers, or in a location that is easy for my customers to get to, it may have a product differentiation advantage compared to the other companies too. Furthermore, I have to get connection with my customers frequently so that I can gain their opinions about my product. If there are any complaints, I have to rethink and solve it to improve my product. Thus, quality is when my customers come back, not the product.

                                                                        
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references :

1.     Porter, M. E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. New York: The Free Press.

2.   Stamm, B. V. (2003). Managing Innovation, Design and Creativity. USA: John Wiley & Son Ltd.

3.  Beamen, K. V. (2002). Boundaryless HR: Human Capital Management In The Global Economy. USA: Rector Duncan & Associates.