Business Frameworks and Strategies
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Frameworks and Strategies
Michael Porter argues that the strengths of a business fall into one of two categories: cost advantage or differentiation. He goes on to explain that the application of these categories will result in three “generic strategies“: cost leadership, differentiation, and focus. According to Porter, competitive advantage is achieved by leveraging the strengths of the organization. Consider how Porter’s strategies relate to an organization in which you work now or have worked at in the past.
Referring to the below mentioned journal articles and other scholarly resources, explain how you would use Porter’s Three Generic Strategies to leverage IT resources at your organization and increase its competitive advantage.
Resources
Readings
•Haag, S., & Cummings, M. (2008). Management information systems for the information age (Laureate Education, Inc., custom ed.). Boston: McGraw-Hill/Irwin.
Chapter 1, “The Information Age in Which You Live: Changing the Face of Business”
Chapter 2, “Major Business Initiatives: Gaining Competitive Advantage with IT”
Articles
• Carr, N. G. (2003). IT doesn’t matter. Harvard Business Review, 81(5). Retrieved from the Business Source Premier database.
This article claims that IT within the business environment is becoming less important as it becomes more widespread and the costs associated with it decrease.
• Bhatt, G., & Grover, V. (2005). Types of information technology capabilities and their role in competitive advantage: An empirical study. Journal of Management Information Systems, 22(2). Retrieved from Business Source Premier database.
This article presents an empirical study of firms that have invested in IT capabilities and the impact those capabilities had on establishing competitive advantage. This article identifies concrete and practical results of IT investment. It is a refutation of Carr’s article (2003) in the Harvard Business Review.
SAMPLE ANSWER
Business Frameworks and Strategies
To achieve a competitive advantage, business and information technology managers need to apply three generic strategies that were postulated by Micheal Porter in 1980. These generic strategies include the cost leadership strategy, product differentiation, and focus strategy. For maximum resource utilization, Porter claimed that a company should choose only one of the three strategies or risk wasting the precious resources. Porter also believes that the ability to attain competitive advantage is achieved by the leveraging of the company’s strengths while minimizing its weaknesses. While these strategies refer to long-term goals and objectives, leverage is the act of doing more with much fewer resources (Robert, 2000).
The cumulative experience obtained in my work in IT has resulted in the understanding that even with more resources than its competitors, a company that spends more on research and development with far more advanced resources in information technology does not necessarily mean it is strategically more successful unless it has the correct strategy in place. The availability of resources only reflects past leadership and past successes of the business and has nothing to do with the future of it. Therefore, this does not guarantee success, but only depends on the strategic vision, better processes, services, and compatible sub-strategies (Smith & Fingar, 2003).
. To leverage IT and IS resources in an organization, it is usually important to look at the scale of resources the organization has. A company with less information technology resources may experience the need to innovate, use the most efficient and least costly processes and systems that would reduce the costs of operations and improve the effectiveness and efficiency of the Information systems in place. This helps them to outmaneuver the competition rather than just out-powering them. Resource surplus firms, for example, spend a lot of resources on developing information technology and systems. With the best infrastructure in place, it is important for this large resource endowed firms also to match software and hardware acquired with proper training of employees who will run, monitor, and man the systems. The proper training of employees in the use of these resources leads to competitive advantage in the sense that the work can be organized and done faster in a more efficient, effective, and reliable way (Haag & Cummings, 2008).
Technological advancement in information technology is happening in a fast rate in this modern competitive business environment. To remain competitive, a company needs to draw up plans to be able to adapt to the changing circumstances by ensuring technological absorption and new product introductions. According to Carr (2003), unplanned technological absorption without a long-term outlook to costs and benefits may lead to resource wastage and unwanted or unsustainable changes that might cause serious problems and cause more harm than good (Smith & Fingar, 2003).
Since information technology in the business environment has become cheaper with new advances over time, new ways of exploiting IT opportunities have been invented. These inventions have different information technology capabilities and roles in acquiring and maintaining competitive advantage. These strategies focus more on core competencies and find alternative solutions to business IT problems. An empirical study of firms that have invested
in IT capabilities reveal that firms prefer bespoke IT systems that consist of unique innovation improvements, than relying on system imitations from competitors (Zhao, 2008). These innovations lead to capabilities that are able to work with other organizational strengths to match existing established advantages to become strategically more competitive with much more practical results with IT investments.
References
Haag, S., Cummings, M., & McCubbrey, D. J. (2004) Management information systems for the information age (4th Ed) Boston: McGraw-Hill
Robert, M. (2000) the power of strategic thinking lock in markets, lock out competitors. New York, N.Y.: McGraw-Hill.
Smith, H., & Fingar, P. (2003) IT Doesn’t Matter – Business Processes Do: A Critical Analysis of Nicholas Carr’s I.T. Article in the Harvard Business Review. Tampa, FL: Megan-Kiffer Press.
Zhao, F. (2008) Information technology entrepreneurship and innovation Hershey PA: Information Science Reference.
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