J. Xu and M. Quaddus, Managing Information Systems, DOI: 10.2991/978-94-91216-89-3_2, Ó Atlantis Press 2013
Information Systems for Competitive Advantages
This chapter will review competitive forces and competitive information systems strategies for gaining competitive advantages, explain concepts of value chain, value web and business eco- systems & co-opetition, and discuss innovation strategy.
2.1 Competitive Strategies
Gaining competitive advantage is critical for organisations. Baltzan and Phillips (2010,
p. 16) define competitive advantage as 'a product or service that an organization's cus-
tomers value more highly than similar offerings from its competitors' (in other words, you
have something useful (i.e. products, services, capabilities) that your competitors do not
have). Competitive advantages are typically temporary as competitors often seek ways
to duplicate the competitive advantage (Baltzan & Phillips 2010, p. 16). In order to stay
ahead of competition, organisations have to continually develop new competitive advan-
tages. This section discusses how an organisation can analyse, identify, and develop com-
petitive advantages using tools such as Porter's Five Forces, three generic strategies, and
Michael Porter's Five ForcesModel is a useful tool to assist in assessing the competition
in an industry and determining the relative attractiveness of that industry. Porter states that
in order to do an industry analysis a firm must analyse five competitive forces (Baltzan &
Phillips 2010, p. 17):
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.
28 Managing Information Systems: Ten Essential Topics
To survive and succeed, a business must develop and implement strategies to effectively
counter the above five competitive forces. O'Brien and Marakas (2011, p. 49) suggest
that organisations can follow one of five basic competitive strategies, which are based on
Porter's three generic strategies of broad cost leadership, broad differentiation, and focused
strategy. The five competitive strategies are: cost leadership, differentiation, innovation,
growth, and alliance. Meanwhile, information systems could be a critical enabler of these
five competitive strategies (see Table 2.1).
Table 2.1: Competitive Strategies & Roles of Information Systems
Strategy Roles of Information Systems
Organizations can use information systems to fundamentally shift
the cost of doing business (Booth, Roberts & Sikes 2011) or reduce
the costs of business processes or/and to lower the costs of customers
or suppliers, i.e., using online business to consumer & business to
business models, e-procurement systems to reduce operating costs.
Organizations can use information systems to develop...