Using IS for Competitive/Strategic Advantage

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The strategic role of information systems involves using information technology to develop products, services, and capabilities that give a company major advantages over the competitive forces it faces in the global marketplace. Creating strategic systems requires that you understand the entire firm and its relationships with external agents in the environment, such as suppliers, consumers, workers, and rivals.

A firm can succeed if it develops strategies to confront five competitive forces that shape the structure of its industry:

1. Competitors' rivalry
2. Threat of new competitors
3. Threat of alternate solutions
4. Customers' bargaining power
5. Suppliers' bargaining power

1. Cost. Lowering the cost of a product or service.
2. Differentiation. Developing ways to differentiate a product or service from a competitor's.
3. Innovation. Devising new ways to do things.
4. Growth. Expanding the capacity to produce a good or service.
5. Alliances. Developing new business alliances.

	Some authors refer to Strategic Advantage as Competitive Advantage.
	Strategic Advantage can be applied to developing an e–business solution for an organization.

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Another important concept that can help you identify opportunities for strategic information systems is the value chain, developed by Michael Porter, which can highlight where competitive strategies can best be applied in a business:

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