Strategic Use of IS/IT To Achieve Competitive Advantage Part-2

For this assignment you will have to prepare a paper that critically discusses how organisations apply the strategic use of IS/IT to achieve competitive advantage. Some aspects and issues you may discuss in your paper could include (but are not limited to):

• Discuss at least one (1) successful and one (1) unsuccessful examples of the use of IS/IT for gaining or enhancing competitive advantages.
• Highlight some success factors for the successful example.
• What are some lessons learned (i.e., what went wrong?) for your unsuccessful example
• Suggest some internal (e.g., organizational, individual, and management factors) and external factors (e.g., market, industry, social, economic, technological and political/policy factors) influencing the success or failure of organisations' attempts at gaining and enhancing competitive advantages? Are internal factors more important than external factors? Or the other way around?
• How can competitive advantages gained via IS/IT be sustained?

Introduction

Traditionally IT has been seen as an enabling function in an organisation. Over the last few years, the role of IT in an organisation has drastically changed. Investment in information systems is not just seen as an expense but rather as a source of competitive advantage. Typically, companies with a competitive benefit can access the special resources as compared to the companies that do not have a competitive advantage or do not have permission to implement special resources efficiently (Aguinis, 2013). This results in greater growth in revenue, growth in productivity or profitability. In the long run, all these competitive advantages are transformed into a higher market valuation of the stock.

The internet has damaged a few industries and has also seriously threatened other more industries. It has also generated new markets and also established the base for many new businesses. The traditional competitive forces are still implemented due to the internet. IT relies on universal regulations, which make it easy for competitors to compete against the price and also make it easy for the competitors those entering the market. The customer’s bargaining power increases due to the availability of all information on the internet as customers can easily compare the prices available on the Web (Abratt, 2012 ). Due to the internet, few industries like the financial industry and travel industry have been more affected as compared to other industries. But, the internet also offers new opportunities for developing brands and also helps to form very large and loyal customer base like eBay, Google, etc.

Successful use of IS/IT to gain a competitive advantage

There are many cases where organisations have utilised information systems successfully. One of the bright examples is the case of Apple, where the company efficiently used IT/IS to build iTunes and in the process created one of the important competitive advantages for itself. iTunes was able to disrupt the market by creating a new market segment for the company. The company took advantages of challenges from disruptive and new technology as compared to traditional competitors.

Key Success Factors

The company introduced the iPod and started an iTunes Music Store. iTunes created a marketplace for downloadable and portable music. The company had partnerships with recording labels and artists. Apple used iTunes to provide unique content in return to generate revenues and increase the popularity of groups.  This case demonstrates the role of the digital technology role in maintaining and gaining a competitive advantage.