According to Porter (2008), there are five competitive forces that shape every business and market. These five forces are The rivalry of competitors within the 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, and Bargaining power of suppliers.
To survive and succeed a business must develop and implement strategies to effectively counter the above five competitive forces such forces help to carry out an analysis of the organization’s current position ranging from the level of the competitor it faces, its profitability and attractiveness. According to O’Brien & Marakas (2011) organizations can follow one of the five basic competitive strategies these are cost leadership, differentiation, innovation, growth, and alliance.
Cost Leadership: Organization can use the information system to reduce the cost of the business process and to lower the cost of customers or suppliers. Using online business to consumer and B2B models, E-procurement systems to reduce operating costs. In Nepal have many online stores like daraz.com, sastodeal, and Hamrobazzar etc. These online store doesn’t need a showroom and seller representative to sell the product and they also have a flexible payment system. You can pay from your e-Sewa Account. So it reduces the cost of operation and product as well.
Differentiation: Organizations can use the information system to develop differentiated features or to reduce competitor’s numbers. Using online live chatting systems and social media networks to better understand and serve customers to create information at real time. In Kings has Social site King’s communication which gives the overall information about our daily academic activity like class routine, seminar, and other information. Similarly, our Prof. Rajib sir shared his experience when the earthquake had happened and all communication network was down and his team developed Nepal police twitter account for emergency response. These two examples show, By using technology how we make our service or product different than others.
Innovation: Organization can use information systems to identify and create new products and services. Innovation driven and enabled by new technology (IT) and system (IS) has affected business process and firms operations resulting in a substantial change in productivity and efficiency (Bughin & M. & Johnson, 2012). For example, the recent development of E-Commerce is a sign of how companies have prospect brought by widespread adoption and use of the Internet (Chui, 2011). How Amazon and Alibaba are doing really good business. Another example, In Australia the Commonwealth Bank strives to be the market leader in online banking with its Net Bank offering real-time banking and introducing innovative app like Kaching (including Facebook payment) (Manyika, 2016).
Growth: Organizations can use the information system to expand domestic and international operations to diversify and integrate into other products and services i.e. establishing global internet and global operating platform.
Strategies Alliance: Organizations can use information systems to create and enhance relations with partners via applications, such as developing virtual organization and inter-organizational information system. Slack is the popular example of intra - organization communication and GitHub is popular for code sharing tools in the software business.
New technologies and their use change the competitive dynamics of industries which changes the buyer’s power, the supplier’s power, new entrants, substitute products and existing rivals.
References
Bughin, J. C., & M. & Johnson, B. (2012). The next step in open innovation. McKinsey Quarterly , 1-8.
Chui, M. &. (2011). 'Inside P & G’s digital revolution. McKinsey Quarterly , 1-11.
Manyika, J. (2016). Google’s views on the future of business: An Interview with CEO Eric Schmidt. McKinsey Quarterly , 12-16.
O’Brien, J. A., & Marakas, G. M. (2011). Management Information Systems. USA: 10th Edition, McGraw-Hill, New York.
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard Business Review, 52-54.
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According to Porter (2008), there are five competitive forces that shape every business and market. These five forces are The rivalry of competitors within the 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, and Bargaining power of suppliers.
To survive and succeed a business must develop and implement strategies to effectively counter the above five competitive forces such forces help to carry out an analysis of the organization’s current position ranging from the level of the competitor it faces, its profitability and attractiveness. According to O’Brien & Marakas (2011) organizations can follow one of the five basic competitive strategies these are cost leadership, differentiation, innovation, growth, and alliance.
Cost Leadership: Organization can use the information system to reduce the cost of the business process and to lower the cost of customers or suppliers. Using online business to consumer and B2B models, E-procurement systems to reduce operating costs. In Nepal have many online stores like daraz.com, sastodeal, and Hamrobazzar etc. These online store doesn’t need a showroom and seller representative to sell the product and they also have a flexible payment system. You can pay from your e-Sewa Account. So it reduces the cost of operation and product as well.
Differentiation: Organizations can use the information system to develop differentiated features or to reduce competitor’s numbers. Using online live chatting systems and social media networks to better understand and serve customers to create information at real time. In Kings has Social site King’s communication which gives the overall information about our daily academic activity like class routine, seminar, and other information. Similarly, our Prof. Rajib sir shared his experience when the earthquake had happened and all communication network was down and his team developed Nepal police twitter account for emergency response. These two examples show, By using technology how we make our service or product different than others.
Innovation: Organization can use information systems to identify and create new products and services. Innovation driven and enabled by new technology (IT) and system (IS) has affected business process and firms operations resulting in a substantial change in productivity and efficiency (Bughin & M. & Johnson, 2012). For example, the recent development of E-Commerce is a sign of how companies have prospect brought by widespread adoption and use of the Internet (Chui, 2011). How Amazon and Alibaba are doing really good business. Another example, In Australia the Commonwealth Bank strives to be the market leader in online banking with its Net Bank offering real-time banking and introducing innovative app like Kaching (including Facebook payment) (Manyika, 2016).
Growth: Organizations can use the information system to expand domestic and international operations to diversify and integrate into other products and services i.e. establishing global internet and global operating platform.
Strategies Alliance: Organizations can use information systems to create and enhance relations with partners via applications, such as developing virtual organization and inter-organizational information system. Slack is the popular example of intra - organization communication and GitHub is popular for code sharing tools in the software business.
New technologies and their use change the competitive dynamics of industries which changes the buyer’s power, the supplier’s power, new entrants, substitute products and existing rivals.
References
Bughin, J. C., & M. & Johnson, B. (2012). The next step in open innovation. McKinsey Quarterly , 1-8.
Chui, M. &. (2011). 'Inside P & G’s digital revolution. McKinsey Quarterly , 1-11.
Manyika, J. (2016). Google’s views on the future of business: An Interview with CEO Eric Schmidt. McKinsey Quarterly , 12-16.
O’Brien, J. A., & Marakas, G. M. (2011). Management Information Systems. USA: 10th Edition, McGraw-Hill, New York.
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard Business Review, 52-54.