Information Technology Strategies: How Leading Firms Use IT to Gain an Advantage

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But it continued its leadership — even after dozens of other companies jumped into the overnight shipping business — by doing it very well. For individuals, this may mean creating systems of operating or new ways to analyze data.

How HR Strategy Can Help You Gain a Competitive Advantage

When you do what you do very well, you gain a competitive advantage over those doing it the longer and slower way. Technology Based Competitive Strategy. Since the time Henry Ford revolutionized the auto industry with the assembly line, companies have sought for a competitive edge using new technology or technology in a new way.

Computers and applications continue to… perhaps briefly… give companies an advantage over the competition. Workers who embrace new technology and learn to master it nearly always redefine or increase their competitive advantage over those who resist new methods. As markets, economies, and other factors change in this increasingly unstable and unpredictable environment, companies that can adapt have a distinct advantage.

Typically this includes smaller or trendy companies, however even Apple has successfully negotiated the waves of change. Executives can bring adaptability to their core strength by being open to change. They can cross train and bring new and more current skills to the table. Perhaps, adaptability is foremost a state of mind. Almost all the other strategies benefit from excellent information. The definition of competitive advantage is the skills needed to outpace your rivals.

Most of those come through knowledge and information.

7 Strategies to Define your Competitive Advantage

There are four generic strategies used to manage competitive forces, each of which often is enabled by using information technology and systems: Use information systems to achieve the lowest operational costs and the lowest prices. For example, a supply chain management system can incorporate an efficient customer response system to directly link consumer behavior to distribution and production and supply chains, helping lower inventory and distribution costs. Use information systems to enable new products and services, or greatly change the customer convenience in using your existing products and services.

For instance, Land's End uses mass customization , offering individually tailored products or services using the same production resources as mass production, to custom-tailor clothing to individual customer specifications. Focus on market niche: Use information systems to enable a specific market focus and serve this narrow target market better than competitors. Information systems support this strategy by producing and analyzing data for finely tuned sales and marketing techniques.

Hilton Hotels uses a customer information system with detailed data about active guests to provide tailored services and reward profitable customers with extra privileges and attention. Strengthen customer and supplier intimacy: Use information systems to tighten linkages with suppliers and develop intimacy with customers. Chrysler Corporation uses information systems to facilitate direct access from suppliers to production schedules, and even permits suppliers to decide how and when to ship suppliers to Chrysler factories.

This allows suppliers more lead time in producing goods. Strong linkages to customers and suppliers increase switching costs the cost of switching from one product to a competing product and loyalty to your firm. The Internet has nearly destroyed some industries and has severely threatened more. The Internet has also created entirely new markets and formed the basis for thousands of new businesses. Because of the Internet, the traditional competitive forces are still at work, but competitive rivalry has become much more intense. Internet technology is based on universal standards, making it easy for rivals to compete on price alone and for new competitors to enter the market.

Because information is available to everyone, the Internet raises the bargaining power of customers, who can quickly find the lowest-cost provider on the Web. Some industries, such as the travel industry and the financial services industry, have been more impacted than others.

However, the Internet also creates new opportunities for building brands and building very large and loyal customer bases, such as Yahoo!

Then using the menu you go to management by exclusion and you can see data about sales on your screen that is exclusively different from the other days. This is very important because the executive should find the purpose for it. If the sales have decreased strongly, maybe a competitor has gained a competitive advantage.

Of course this information can be extracted without using a computer and it is still called information technology.

William V. Rapp

But now I will not comment what the benefit of computers is. Of course if the area is quite competitive, analysis of the use of information should be made: Information begins to be shared within the organization as a corporate resource.

Database capabilities begin to be exploited as users value information. Strategy making is related with maintaining comparative strategic advantage and monitoring future as well as interactive planning. Every organization must have some form of strategic management if it is considering "where is the organization going?

And "where should the organization be going? Consideration of these questions is essential, given the changes and uncertainties of the business environment. Conventionally, in 'consultancy speak', the process of strategic management has involved managers answering questions such as: Where is the organization now?

Given the external trends, where does the organization want to be? What actions must be implemented to achieve the specified goals?

7 Strategies to Define your Competitive Advantage

As part of this process, information is gathered and used in management formulating an explicit plan of priorities for action with appropriate allocation of resources that will take the organization forward. Explicit attention must be given to the changing nature and scope of the industry, together with the particular competencies of the organization. Situation analyses are completed, such as SWOT analysis Strengths, Weaknesses, Opportunities and Threats , as are portfolio analyses to determine an organization's best mix of business and of products and services.

Strategy formulation is undertaken at different levels, usually: Strategy has become an over-used and much-abused terms, being frequently made unnecessarily complicated. At a simple level, the following Figure captures the underlying and interrelated dimensions of any organization's strategy formulation and implementation: The essence of strategic management should be action rather than the process of developing the strategy or the document itself, with the ability to cope with uncertainty, devolve responsibility and to retain control.

Many managers who devise formal mission statements, specify long-term objectives and prioritize implementation plans, not only waste enormous amounts of time and resources, but also delude themselves into believing that they are managing strategically, even though the strategy is never implemented.

While some additional flexibility can always be introduced into this process, if only by last minute revisions, the real business issues and competitive assessments are frequently not examined sufficiently thoroughly. All too often, because of unanticipated changes in the business environment managers are obliged to make hasty decisions, without consideration of their strategic consequences and sometimes in contradiction of the strategy.

Criticism of the traditional formal strategic management process could, but should not, be interpreted as abdication of responsibility by management. The essential ingredients are vision, leadership and, increasingly, information which is both useful and actionable.

In any event, strategic management is not a separate kind of management at all, it is simply management. Effective day-to-day management requires tight, short-term control, state of the art Management Information and Control systems. Without them there will be little management time for the strategic and there will be no tool to implement it. Such systems provide some short-term order in what is fundamentally a disorderly situation. As information shifts away , business risks increases.

Business can reduce the risk involved by developing effective support strategy expertise. Information resources management plays a very important role in this. Information is quite important regarding the following: Managers should have the advantage of being able to identify and analyze strategic options in considerable depth, possibly sooner than competitors and there should be more precise control over the implementation of the selected corporate business strategy.

Because of the quickly changing environment, the process of strategy formulation transforms from an apparently formal and systematic set of procedures for analysis and planning to an adhoc reaction by the senior management of an organization to perceived problems and information about them. In strategy formulation, managers must consider both information about internal and external forces.

The opportunities and threats in the industry must be considered within the context of the organization's strengths and weaknesses, all of which cannot be divorced from the broader social setting and the leadership and vision of the key people for implementation. Influenced by the early Harvard Business School strategists Michael Porter illustrates aspects of organizational positioning and the factors affecting an industry's overall profitability.

The model of the five forces in competition is used for defining the competitive strategy in an industry. This model has been greatly influential especially in the development of corporate business strategy. Also the model shows how information and communication technologies can influence the kind and strength of competitiveness.

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Porter used the word industry but he means strategic groups in an industry e. He thinks that competition is bigger in this group of enterprises. The influence of information and communication technologies on the different competitive forces shows the direct relation of information with the potential business advantages of the company. This influence is related with the increase of information that is used for decision making and infrastructure support in respect of information technologies. The competitive forces are changing continuously influenced not only by external socio-economic and political factors but also by the changing business structure influenced by the development of information and communication technology.

Information about the five factors of Porter's model: In short, information is the center of strategic management and it helps the firm to decide the type of competitive advantage it seeks to attain and the scope within which it will attain it. Being "all things to all people" is a recipe for strategic mediocity and below-average performance because it often means that a firm has no competitive advantage at all. Understanding risks is the first step to manage them.

Understanding is, in turn, a two-phase process-describing in advance and in detail the industry level changes and determining the potential impact of these changes on the company. These views of the future are likely to be cloudy and their probabilities are likely to be rough estimates.

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