Informations Systems Strategies for Dealing with Competitive Forces

1.Low-Cost Leadership
Use information systems to achieve the lowest operational costs and the lowest
prices. The classic example is Wal-Mart. By keeping prices low and shelves well
stocked using a legendary inventory replenishment system, Wal-Mart became
the leading retail business in the United States. Wal-Mart’s continuous
replenishment system sends orders for new merchandise directly to suppliers
as soon as consumers pay for their purchases at the cash register. Point-of-sale
terminals record the bar code of each item passing the checkout counter and
send a purchase transaction directly to a central computer at Wal-Mart
headquarters. The computer collects the orders from all Wal-Mart stores and
transmits them to suppliers. Suppliers can also access Wal-Mart’s sales and
inventory data using Web technology.

2.Product Differentiation
Use information systems to enable new products and services, or greatly
change the customer convenience in using your existing products and services.
For instance, Google continuously introduces new and unique search services
on its Web site, such as Google Maps. By purchasing PayPal, an electronic
payment system, in 2003, eBay made it much easier for customers to pay
sellers and expanded use of its auction marketplace. Apple created iPod, a
unique portable digital music player, plus a unique online Web music service
where songs can be purchased for 99 cents. Continuing to innovate, Apple
recently introduced a portable iPod video player.

3.Focus on Market Niche
Use information systems to enable a specific market focus, and serve this
narrow target market better than competitors. Information systems support
this strategy by producing and analyzing data for finely tuned sales and
marketing techniques. Information systems enable companies to analyze
customer buying patterns, tastes, and preferences closely so that they
efficiently pitch advertising and marketing campaigns to smaller and smaller
target markets.


The Changing Business Environment for
Information Technology


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