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Understanding IT for a Competitive Advantage

Competitive advantage is the strategic edge one business entity has over its competitors its industry. Competitive advantage helps a business to thrive within in the face of wild competition. Additionally, whether one is an employee or a business entity, there is the need to have an elaborate competitive advantage as well as communicating this aspect to all the existing and potential customers.  Prior to the being able to determine the competitive advantage, there are three significant determinants to be known. This can be measured through

  • Identification of a set of factors, which makes the management processes capable.
  • Identification of a set of measures as well as indicators, which should be used in management.
  • Development of a framework of measures/indicators, in order to measure/assess the competence of the given management.
  • Cultivate a classification of strategic performance pointers that can be used by management processes, aimed at identifying when the existing business model is threatened.
  • Developing practical audit tool, in order to facilitate quick as well as rigorous valuation of the competence of the processes of management, plan actions to improve this capability and identify development needs.

2. Value chain analysis explains on the activities within as well as outside a firm and then relates these activities towards the evaluation of competitive strengths of the given business. Based on this, value chain evaluates the value for every activity added to the products or services produced by an organization.This plan was highly built on the insight that, a firm is not just a compilation of money, machinery, equipment and people among others. It is clear that, there is the need to arrange these issues into systems and systematic activates, thus attracting and retaining customers.

The idea of the value chain is a frame work for the purpose of strategic thinking on tasks involved in business as well as assessingrole and relative cost in differentiation. The significant difference, which exists between value, that is, the products or services buyer are willing to pay, and the cost of carrying out activities, which are involved in creation of the products or services, all of which determines profitability. The value chain offers an extensive way in understanding sources of value to buyers, which commands the premium price as well as the ways in which services or products substitutes one another. Strategy can be regarded as consistent configuration of duties, which easily distinguish a firm from its rivals in the same field. Information systems can help organizations reduce the cost of products and services and, if designed correctly, assist with differentiation and focus strategies, too. For example, Wal-Mart has been using overall cost leadership strategies successfully.

It is clear that differentiation can be termed as a situation whereby a firm is able to outperform its rivals, in aspects such as product features. There are some benefits, which are achieved by an organization as a result of reduced sensitivity, as this allows the firm to capture greater value resulting from exchange. With focus strategies, organizations concentrate on a specific market segment to achieve a cost or differentiation advantage. Apple has also used this strategy to target iPhones to consumer users rather than business users. Similarly, Macintosh computers are heavily marketed to creative professionals such as designers, photographers, and writers. The other example is Abercrombie & Fitch, targetinghigh-end clothing to teenagers as well as young adults among other low-income customers. On the other hand,Nordstrom targets high-end clothing to the employed among other high-income customers. Therefore, IT can significantly assist these firms to reach their target customers, at a reduced cost.

Business competitive strategies resemble, in no uncertain way, warfare or sports. It is also somewhat similar to the way medical practitioners would maneuver the treatment of a sick patient. It brings on board both offensive and defensive tactics.

  • From a sporting standpoint: offensive strategies purpose to score, while defensive strategies aim at preventing the opponent from reaching the goal line.
  • In the military, it is the same as targeting at attaining victory, while still preventing defeat.

Offensive strategies are proactive strategies, aiming at initiating processes and making things successful. This is synonymous with what happens in both business and war. On the other hand, defensive strategies are somewhat reactive in their nature, aiming to stem the events that may prove harmful to the organization or business. Therefore, a combination of offensive and defensive strategies make a comprehensive combination, with steps to both make the organization move forward and reduce its vulnerability.

Defensive strategies are often expensive, requiring resources to enable. In fact, they often entail giving up the lure of short-term profit so as be sustainable. Inasmuch as they are integral to strategic planning, they may not be easily measured, because they are often too abstract. They can fend off both people and both competitors that are known to the company and those, which the company is not yet very familiar with. The unfamiliar competitors often prove more destructive to the sustainability of the company. They include such forces as those that could render company’s products obsolete. The iPod, for instance, a product of apple, rendered the product of Sony, the Walkman, obsolete. This laid bare the ineffectiveness of the defense strategy of Sony. The iPod today rules the media player market, simply because it did not develop a proper defense strategy. Further, the iPod has developed strong strategies in order to enable it fend off stiff competition from Zune HD, the media player for Microsoft. This has established the iPod as a formidable media player.

Strategic management and planning requires that the vulnerabilities of a company are not only identified, but also minimized. To achieve this end, they would have to start with developing a Risk-Threat Matrix. This is a system with four quadrants, which has generalized responses for charting defensive strategies. In effect, this enables the organization both anticipate and plan for problematic situations well in advance. It also improves the sensitivity and effectiveness of the organization to unforeseen challenges.

In most instances, innovation is one of the ways in which countries can be able to attain competitive advantage.  This is due to the fact that, they approach the issue of innovation in its larger sense and this includes the two new technologies as well as new methods of carrying out their duties.Innovation can easily be seen in the area of new product design and production process, improved approaches towards marketing or new methods of carrying out training activities. Most of the innovation is incremental and depends on accumulation of the small insights as well as advances as compared to a single notable technological breakthrough. This usually involves ideas, which are not vigorously pursued, though considered effective. Some of these ideas include physical assets, brand reputations as well as skill and knowledge.

The Risk -As the use of information technology (IT) has expanded, managers of organizations have come to realize that IT can be used to gain, sustain, or combat competitive advantage. The implementation of IT involves significant risks both from external sources and from the technology and process of implementation. Risk management is the science and art of recognizing the existence of threats, determining their consequences on resources, and applying modifying factors in a cost-effective manner to keep adverse consequences within bounds. Strategies for handling risk necessarily address one or more of the components of risks identified here. The appropriate strategy depends on the nature of the risk and other situational variables that influence the organization's range of choices. This paper discusses approaches to risk analysis appropriate for IT and contains some suggested tools for risk analysis and management.

Firms are usually faces the problem of attaining a competitive advantage over its rivals in the same industry, with the aim of enhancing sustainability. Innovative is having a different perspective on emerging issues, taking risks or being flexible. There is the need to encourage and support employees as this promotes innovation at work place. Extensive and continuous training as well as developing programs are the two strategic ways in which firms can develop the idea of championship. Well-established firms view training as well as development as critical strategy towards the management of the human resource due to the fact that it stimulates innovation from the employees.  The need of training and development not only improves performance in the work place, but also widen creativity and crucial skills towards problem-solving. Further, training and development contribute to flexibility among the employees, especially during the time of change.

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