How It Can Be Used To Increase Or Enable Competitive Advantage
How IT can be used to increase or enable competitive advantage
University of Phoenix
Competitive advantages are strengths and strategies that keep a company ahead of its competitors. It is hard to measure competitive advantage and harder to maintain it. Any time a product or service creates more value for the consumer than a competing product or service, it has a competitive advantage (Heide, 1992).
A way to achieve competitive advantage is to use IT as organizational support for a company's products or services, by attempting to develop less costly products or services. The company expects the IT investment to create a competitive advantage as it works towards a more efficient and effective organization.
A company can achieve competitive advantage through IT by providing customers with terminals to enter orders directly and using information technology to target potential customers for other products.
According to Michael Porter, a firm can survive and succeed in the long run if it successfully develops strategies to confront five competitive forces that shape the structure of competition in its industry. These include the rivalry of competitors, the threat of new entrants, the threat of substitutes, the bargaining power of customers and the bargaining power of suppliers. The more these forces combine in any instance, the more likely firms will seek competitive advantage and the more dramatic the results of such an advantage will be (Stair & Reynolds, 2006).
According to Stair & Reynolds (2006), several companies have attempted to gain a competitive advantage. Netflix changes the industry structure with it's use of online ordering for DVD's, Apple introduced an easy-to-use iMac computer that can create and edit home movies, Ameritrade and other discount stockbrokers offer low fees and research on the internet, investors and traders of the Chicago Board of Trade (CBOT) put pressure on the institution to...
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