Competitive Advantage

A) Discuss how Porter’s competitive forces model helps businesses use information systems for competitive advantage. [25%]
B) Discuss the ongoing debate regarding the competitive advantage granted by Information Technology. [75%]

      Competitive Advantage is the ability gained through efficiency and resources to perform at a higher level than other competitors in the same industry or market and it usually occurs when an organisation either acquires a way to use available resources more efficiently or they have access to special resources that others do not. Here Porter’s competitive forces model suggests that firms who have competitive advantage in the long run do better in terms of revenue growth, profitability and productivity growth, all of which ultimately turn into higher stock market valuations than their competitors. Therefore it is important for the firm to know and anticipate the factors that can affect the strategic position of the firm by applying appropriate information system to stay competitive and survive in the industry or market. Information systems can be defined as a system that collects, processes, stores and distributes information to support decision making and control in an organisation. In addition, information systems also help managers and workers analyse problems, visualise complex subjects and create new products. In Porter’s competitive forces model, the strategic position of the firm and its strategies are determined not only by competition with its traditional direct competitors but also by four forces in the industry’s environment which are new market entrants, substitute products, customers and suppliers. As a result, firms use information systems and technology strategies to effectively counter these five forces to gain competitive advantage by maintaining low-cost leadership, product differentiation, focus on market niche and strengthening customer and supplier intimacy (친밀).
      In Porter’s competitive forces model, one...