Technology has transformed the world into a global village, and firms are under pressure to find ways of gaining a competitive advantage over their market rivals in order to achieve success. One of the best ways of gaining this competitive advantage is to develop mechanisms of generating business intelligence that would provide the needed knowledge about the market.
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Management information system has widely been seen as the solution to firms for generating this knowledge. Using technology to collect, process, and store data about people, organisations, and processes has been found to be the best way of generating intelligence that can help an organisation gain a competitive edge over its market rivals.
In this study, the researcher will analyze two companies in order to determine how they benefit from the management information system, and to propose changes that can be made to achieve efficiency in their production.
ABC is a leading wholesale and retail company with global market coverage. It offers a variety of products to its customers. The company is focused on providing diverse household products of very high quality at friendly prices.
In order to charge this unbeatable price for its products in the market, this firm has been offering discounts on various products. In order to understand the business focus of this company, it may be necessary to use Porter’s Three Generic Strategies.
Firms are always under pressure to distinguish their products from that of their competitors in the market in order to achieve a competitive advantage (Gupta 56). ABC Company has been using Porters Generic Strategy options in order to achieve competitiveness in the market. The diagram below shows the strategic options that have been available for this firm.
Source: (Henry 67).
As mentioned above, ABC Company has been using cost leadership strategy in the market by offering discounted products to its customers. This has helped it in setting fair prices for its products in the market.
This giant wholesale and retail outlet has also been using the differentiation strategy in order to achieve a competitive edge over its market rivals. Most of the products sold at this firm are very similar to those that are sold in similar shops because they are manufactured by the same companies.
In order to distinguish their products from those in other stores, this outlet has embraced unique packaging that gives them the superior image. This helps in creating the impression that products from the firm are of superior quality as compared to those of its competitors.
In order to achieve maximum benefit in the market, ABC Company has also been giving massive focus on the market segments that are least exploited by other market competitors. The firm has been keen to develop unique products that can help it acquire a market niche that is not exploited by other market competitors.
Main Divisions in ABC Company
In order to operate successfully in the retail industry, ABC Company has divisions which are responsible for various tasks. The main divisions in this firm include the marketing division, the finance division, information and communication technology division, logistics and warehousing division. It is important to note that there are a number of subdivisions in each division.
For instance, the marketing division has other subdivisions such as the public relations unit, customer care department, and the corporate social responsibility unit.
Although each of the above divisions operates in an independent manner, they are closely related to one another through an integrated communication system. Using the differentiation strategy in the finance industry has also been the main strategy for this financial institution in attracting more customers to its stores.
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The marketing department has developed a customer management strategy that is specifically meant to improve the customer experience while in the facility. In this strategy, the bank has a number of staffs who are specifically meant to address any issues of the customers without necessarily going to the customer care unit.
This is expected to reduce the waiting time before a customer can be served. For those making deposits, the bank has the automated systems that enable customers to make the deposits at a faster rate, as opposed to when they are attended to by cashiers. This also reduces the waiting time for the customers.
XYZ is one of the leading local banks in Dubai that has been experiencing massive growth over the past years because of its superior marketing strategy. The firm offers various financial services to its clients.
The financial industry in the United Arab Emirates has become competitive as local firms find themselves under pressure from the international financial institutions making entry into the region. This firm specifically offers services to its customers in the United Arab Emirates and other neighbouring countries.
Porter’s Three Generic Strategies can be helpful in understanding how this firm manages the stiff competition in this market. Cost leadership is a very dangerous strategy in any industry, and the marketing unit of this firm has been very careful when incorporating it as one of the main ways of gaining a competitive edge.
However, the low interest rates charged by this bank on its customers are clear indications that it has been using this strategy in the market. Most of the accounts do not attract any transaction fees. Although the bank had a major focus on Islamic Banking, it is currently spreading its focus to the conventional banking system because of the strategic position of Dubai as a global business centre.
Main Divisions in XYZ Company
Just like any other business institution, the XYZ Company has a number of divisions that help it operate successfully in the market. The financial institution has five main divisions operating semi-autonomously under direct supervision of their respective departmental heads.
The divisions include economics department, MIS division, financial department, currency and corporate services, and the financial market department. The departmental heads at these divisions report to the general manager of the institution, who is answerable to the board of directors of the company.
How MIS is helping similar organisations to generate business intelligence and achieve competitive advantage
It is clear from the analysis of the two companies above that the management information system is a key component in any organisation in the current market. As the competition gets stiffer, firms have come to realize that the only way of remaining relevant in the market is to have access to the current market information and to act upon it within the required time. ABC and XYZ operate in two different industries.
ABC has been operating in a business environment where information is vital in achieving success in the market. In some of the leading market competitors of XYZ, it is clear that management information system has helped them to a great extent, in achieving success in this industry.
For example, Carrefour has been using its MIS division to collect and analyse data on the changing trends of consumer’s tastes and preferences. This has helped this firm to achieve competitive advantage in the market because it is always aware of the needs of its customers. This has made it become one of the leading retail stores in this region.
XYZ Company also faces stiff competition in the financial sector because of the market rivals that are currently using their MIS division to generate business intelligence that can help them achieve competitive advantage in the market. According to an interview conducted with a mid-manager at the National Bank of Abu Dhabi, it was clear that this financial institution has been seriously using this division to generate intelligence in the market.
This institution has been able to use this department to identify the fact that there are many non-Muslims coming to the region to invest in the oil industry. These new niches of customers prefer conventional banking system other than the Islamic system.
When it gathered this information, its product offering was diversified, making it possible to attract both the Islamic and non-Islamic customers in the region. This has made the National Bank of Abu Dhabi one of the most successful financial institutions in this country.
Comparison of the Two Organisations
ABC and XYZ companies are operating in two different industries. While ABC is in the retail industry, XYZ is operating in the banking sector. However, it is possible to compare the operations of the two firms in order to understand how they use management information system to achieve success in their respective industry. The above discussion has pointed out to the importance of managing information in both sectors.
According to Henry (34), information is a powerful component of a marketing program, especially when developing strategies that are meant to achieve maximum customer satisfaction in the market. Porter’s Value Chain analysis can help in comparing the two firms.
Creation of value for the customers is something that is highly appreciated in both firms. There are five primary activities or stages in value chain creation based on this analysis. The first stage involves inbound logistics. To both firms, these are activities that would ensure that the products needed for sale or in the service delivery to the customers are acquired and delivered safely to the premises of the firm.
This process is more involving in ABC than it is in XYZ because of the bulk of ABC products. At ABC, this entails breaking the bulk into small units and then repackaging them. At XYZ, it involves setting appropriate products (accounts and interest rates) that would be offered to the customers based on the industry dynamics. The outbound logistics stage involves making the products available to the customers.
ABC will need to transport the products to various outlets in the country, ready to be sold to the customers while XYZ will need to make cash available to its customers at various bank branches in the country. The marketing and sales stages entail persuading potential customers to make purchases of the firm’s products. Both firms have been using both the mass and social media to popularise their products in the market.
The fifth stage involves the services done by the firm to maintain the value of the product. Both firms have been using management information system to gather and analyse the current data about the customers in order to adjust their products to suite the changing needs.
Porter’s Five Forces analysis can also be useful when comparing these two firms. The figure below shows Porter’s Five Forces Model.
Porters Five Forces Model
Source (Gupta 89)
ABC and XYZ have had to deal with the problem of powerful suppliers. The central bank and other large financial institutions that may offer financial help to XYZ such as IMF and the World Bank are very powerful. Similarly, some of the main suppliers of ABC Company such as Samsung, Apple, and Sony are also powerful. To deal with this problem of powerful suppliers, both firms have been trying to diversify their supply sources.
The buyer power has been another major problem to both firms, and ABC has been more successful than XYZ in dealing with this problem. It has developed unique market niches that make it the only supplier in the market. This has helped it eliminate the power of the buyers. The competitive rivalry has been a thorny issue in the quest for the two firms to achieve success.
To manage this threat, ABC has discounted and differentiated its products in the market. On the other hand, XYZ has given more attention to differentiation of its service delivery to the clients. To address the threat of substitutes, both ABC and XYZ have diversified their product offerings in the market.
However, it is unfortunate to note that XYZ, unlike ABC, has been unable to manage the threat of new entrants. While ABC has been penetrating the global market to reduce the impact of new entrants into the local market, XYZ has not been able to take this initiative because it is still operating locally.
Improving Business Effectiveness and Efficiency in the Two Organisations
It is clear from the above analysis that the two firms have been focused on achieving success in their respective industries. However, they must understand that the process of developing a competitive advantage in the market requires an integrated approach to managing the market forces. The following are some of the proposals that the two business entities can use to improve their business effectiveness and efficiency.
- ABC and XYZ Companies should consider expanding their expenditure on the modern information communication technologies. Although the two firms have functional MIS divisions, it is necessary to incorporate the emerging technologies that would help improve effectiveness and efficiency of the division.
- ABC and XYZ should redefine their employment strategy because of the dynamics in the market. The firms should ensure that they hire dynamic employees who are able to change with the changes taking place in the market. They should also be technology enthusiasts in order to ensure that they can manage tasks that are technology oriented.
- The two firms should embrace creativity and innovation when addressing various issues. The information gathered and analysed by the MIS division should form the basis of coming up with new methods of addressing the problems of the companies.
- XYZ should find a way of expanding its market coverage beyond the local region, just like ABC. An expanded market will increase the income of the firm, making it affordable for it to implement some of the strategies considered expensive because of the infrastructural investment.
Gupta, Hitesh. Management Information System: (an Insight). New Delhi: International Book House, 2011. Print.
Henry, Anthony. Understanding Strategic Management. Oxford: Oxford University Press, 2011. Print.