How Can Information Itself Provide a Competitive Advantage to an Organization ?
The three views can be used. The first view uses the five competitive forces model by Michael Porter to look at the major influences on a firm’s competitive environment. Information resources should be directed strategically to alter the competitive forces to benefit the firm’s position in the industry. The second view uses Porter’s value chain model to assess the internal operations of the organization and partners in its supply chain. Information resources should be directed at altering the value-creating or value-supporting activities of the firm. We extend this view further to consider the value chain of an entire industry to identify opportunities for the organization to gain competitive advantage. The third view specifically focuses on the types of IS resources needed to gain and sustain competitive advantage.
The value chain model addresses the activities that create, deliver, and support a company’s product or service. Using information resources to alter value chain can be done with these five forces of porter. The value chain framework suggests that competition stems from two sources: lowering the cost to perform activities and adding value to a product or service so that buyers will pay more. Example of value chain model:
Optimizing a company’s internal processes, such as their supply chain, operations, and customer relationship processes, can be another source of competitive advantage. Tools such as:
- Supply chain management (SCM), an approach to how companies source materials for operations,
- Enterprise resource planning (ERP) systems, a tool that automates functions of the operations activities of the value chain, and
- Customer relationship management (CRM) systems, a tool to optimize the processing of customer information are routinely used to automate the internal operations of a firm’s value chain.
Resource-Based View (RBV): determining whether a firm’s strategy has created value by using IT. This view maintains that competitive advantage comes from the information and other resources of the firm.
Resources to Attain Competitive Advantage: Valuable resources must be able to give a leverage to establish a superior resource position therefore helping in gaining competitive edges. For example, the usage of IT social communities can help company to grow a new resource.
Resources to Sustain Competitive Advantage: Innovation must keep happening in order for a company to sustain their competitive advantage.
Keri E. Pearlson& Carol S. Saunders. (2013). Strategic Management of Information Systems. 05. John Wiley & Sons Singapore. . ISBN: 978-1-118-32254-3. Chapter 2