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Porter’s work on competitive advantage indicates that it can either come from low cost or differentiation (“Porter’s Generic Competitive Strategies”). Depending on the competitive scope of the company, which can be either broad or narrow, the firm can follow one of the three competitive strategies: cost leadership, differentiation, and focus (“Porter’s Generic Competitive Strategies”). Today, computer-based information systems are considered to be a necessity for companies operating in the contemporary business environment.
Indeed, if the company uses computer-based information systems correctly, they can become strategic information systems used by businesses to gain a competitive advantage (Rainer et al. 49). The present essay will seek to discuss computer-based information systems in the context of Porter’s competitive strategies and offer examples of how computer-based information systems can be used by different companies to gain a strategic advantage.
Companies that focus on cost leadership as their main competitive strategy provide products that have a low price for their value (Amadeo). In order to achieve cost leadership without losing profits, companies need to find ways of reducing operational and production costs. Some companies produce this effect by lowering wages and using low-quality materials (Amadeo). However, this might hurt customer satisfaction and workforce quality, impairing the firm’s success in the long term.
Computer-based information systems, on the other hand, present a sustainable opportunity for reducing operational costs. For example, computer-based information systems can reduce the costs associated with communication or information storage (Rainer et al. 55). Computer-based information systems also allow reducing the number of workers or their workload by automating manual functions. For instance, various accounting programs available on computers can perform sophisticated analysis and other complex tasks, thus decreasing the need for medium or large companies to employ several highly-skilled professionals.
The differentiation strategy requires companies to provide a unique product or service features that differentiate it from the key competitors. Computer-based information systems can be used in the differentiation strategy. For example, computer-based information systems can make communication between clients and the company faster and easier (Davies). Robust online customer support and online shop can distinguish the company from its competitors, thus aiding in the implementation of the differentiation strategy.
Focus strategy is an example of a narrow competitive strategy that includes two main options: cost focus and differentiation focus (“Porter’s Generic Competitive Strategies”). In general, companies that use this strategy aim to target the needs of their consumers better than their competitors. Computer-based information systems offer a wide range of opportunities that can help companies in fulfilling the needs of their customers.
For example, logistics companies targeting large corporate customers could use computer-based information systems to develop software that would make placing orders easier or allow them to track multiple deliveries. Insurance companies targeting corporate buyers, on the other hand, could use computer-based information systems to build online tools for tailoring insurance plans to the customer’s needs, thus saving their clients time and effort.
Overall, computer-based information systems are an example of strategic information systems and are thus useful for the vast majority of contemporary businesses. Not only do they allow improving processes and reducing costs, but they can also help in facilitating the company’s competitive strategy, whether it is based on cost leadership, differentiation, or focus. Therefore, applying computer-based information systems correctly can help businesses to survive in highly competitive markets, while at the same time achieving greater profits and higher customer satisfaction.
Amadeo, Kimberley. “What Is Competitive Advantage? Three Strategies That Work.” The Balance. 2017. Web.
Davies, Warren. “Advantages of Computer-Based Information Systems.” Chron Small Business, n.d.. Web.
Rainer, R. Kelly, et al. Introduction to Information Systems. 3rd ed., John Wiley & Sons, 2013.
“Porter’s Generic Competitive Strategies.” University of Cambridge, 2016. Web.