Computer-based information systems are critical to an organisation’s survival in the modern competitive environment. Discuss this statement with reference to Porter’s competitive forces model (1980), the basic strategies that can be used to gain competitive advantage, and how computer-based information systems can support these strategies.
Computer-based information systems (CBIS’s) are critical to an organisations survival in the modern competitive environment. CBIS’s are information systems that make use of information technology in order to create management information (Bocij, et. al., 2008). They help organisations with general activities of gathering, processing, storing, using and distributing information within an organisation. CBIS’s are also critical for conducting e-business activities, making use of IT, especially the internet, to conduct business. The strategic relevance of CBIS’s will first be explored, as well as CBIS’s ability to influence the competitive forces proposed by Porter, and shape the competitive environment. The ability of CBIS’s to support organisations basic strategies to gain a competitive advantage will also be discussed, as well as a critical review of CBI’s relevance to an organisations overall survival.
With the growing pace of technological change, the increasing use of CBIS’s in almost every industry sector demonstrates their growing importance for organisations survival in the current competitive environment. As Feng states, organisations of today need to adjust the way they conduct business to survive, by exploiting the capabilities of both the internet and general ICT facilities (Feng, 2007). CBIS’s can help improve the speed, accuracy and reliability of tasks (Bocij, 2008), as well as provide a form of strategic information systems. A strategic CBIS’s is an information system which is able to change organisational goals, processes, products, services and environmental relationships, in order to help an organisation gain a competitive advantage; superior performance compared to competitors or the industry average (Rothaermel, 2012). ‘ICT in general and the internet in particular are facilitating profound changes in the structures and operations of businesses’, highlighting CBIS’s critical role in organisations survival and procedures (Feng, 2007: 29). Although CBIS’s are considered critical to an organisations survival in the modern competitive world, they alone cannot create a competitive advantage, but are seen by many as merely being able to help support one.
CBIS’s critical relevance to an organisations survival can be highlighted by their ability to influence the Five Forces model. The model is a framework proposed by Michael Porter (1980) that focuses on five forces that determine the profit potential of an industry and shape a firm’s competitive strategy (Rothaermel, 2012). The forces (as shown in the diagram adjacent (Rothermel, 2012), and include the threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, the threat of substitute products and the overall rivalry among existing competitors. The weaker the forces are, the greater the opportunity for superior performance (Porter, 1979). The model can be used to assess whether CBIS’s can influence the relative power of the forces in the organisations favour (Robson, 1997). If CBIS’s can successfully affect the relative power of the forces, then that change, and hence the relevant CBIS, is considered strategic.
CBIS’s can aid to decrease the strength of the five forces; increasing industry profitability and demonstrating their critical role in helping an organisation survive in the modern competitive environment. CBIS’s can decrease the threat of new entrants, by building barriers that discourage competitors from entering the industry (Pearlson, 2004). Investment by existing firms in CBIS’s can act as a restraint to potential entrants, in terms of the expenditure they would have...
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