Use of Information Systems and Information Technology to gain Competitive advantage
How business use Information technology and Information systems within organizations for operations, to solve problems and to gain a competitive advantage
Revolution in information technology has changed the way businesses run and do their business activities, how they produce their products, and the type of products they produce. For firms to gain a competitive advantage, it has to perform these activities at a cheaper cost or perform its business activities in such a manner that its performance stands out. The customers will be willing to get such services or products at a premium price. Business can use information technology and information systems in its operation to solve and gain a competitive advantage in the followings ways:
Gaining a new perspective using information technology
Businesses recognize the need to enhance the customer experience as the customer forms an integral part of their business activities; without them, the business cannot exist (Zhang & Lado,2001). Consequently, for the business to understand the customer’s issues very well, it has to view the business problem through the eyes of the customer. It is essential to take the customer’s perspective and think of how information systems would be designed in a manner that enhances customer experience, hence making their customers happy with the service or product.
Enhancing differentiation
Information technology has come to the rescue to help a business differentiate their products from what is on the ground from its competitors through customization of products (Zhang & Lado,2001). The ability brought in by information technology of customization of products makes the business edge against its competitors hence gaining a competitive advantage.
Creating new business
Information technology has given a chance to business to venture into a new business that would otherwise have been difficult before due to a lack of feasibility or even create new business opportunities from the old ones.
Lowering Cost
Business is now able to harness information technology to enhance the production process making it efficient by reducing the production cost(Zhang & Lado,2001).
Types of information systems, the functions and how they provide a competitive advantage
Transactions Processing Systems
Transaction processing systems function is to support the business in processing the transactions, which include placing orders, employee record keeping, hiring employees, and billing(Kukreja, 2020). If the business can use information systems to process transactions to ensure daily business performance, then it will provide an edge to the competitor, which has not embraced the use of information systems. Therefore, it will gain a competitive advantage.
Management Information systems
Its function is to support the planning, decision-making, and controlling the function of the managers in the business. The management information system is capable of extracting transactional data, compiling them from the underlying Transaction Processing system, and producing information on products in the form of responses, reports, and displays (Kukreja, 2020). The information on products allows the managers to make a quick and informed decision ahead of its competitors hence gaining competitive advantage
Decision support systems
It serves the management level by processing information to support the process of decision making. Decision support systems provide information that enables managers to make intelligent decisions. For example, in a bank, the decision support system enables analysis in the changing trends in loans and deposits to ascertain the yearly targets by managers (Kukreja, 2020). This type of decision support system’s abilities allows execution of managerial tasks or problems, providing an edge against the competitors, hence providing a competitive advantage.
Knowledge Work Systems
The system’s function is to promote knowledge creation to ensure that knowledge and technical skills are appropriately integrated into the business. Knowledge workers can create and propagate new knowledge and information by providing analytical, graphics, document management tools, and communications. This provides a business with a strength due to knowledge and technical skills, which the competitors lack, providing a competitive advantage.
Information systems, their functions and how information are integrated from these systems to allow for gaining competitive advantage
For my business startup, I have decided to use the following types of information systems:
Management Information systems.
The system serves me as it converts and condenses the data from Transaction processing into information for monitoring performance and managing the business. The system reports and analyzed the transactions that were recorded by Transaction processing systems. The capability to convert and condense data into meaningful information allows for gaining a competitive advantage.
Knowledge work system
It uses computer-aided manufacture or design and is a model function to convert design specification into graphical(Johnston & Vitale,1988). It ensures technical skills and knowledge are integrated into the business. It provides new knowledge and technical skills to my new knowledge workers in terms of communication and analytical tools, allowing for gaining a competitive advantage.
Transactions processing systems
The function of the system is to serve at the operational business level (Kukreja, 2020). The system is integrated into the business to collect and store transactional information while controlling some aspects of the transaction. Processing transactions to allow daily business processes provides me with good business support allowing me to gain a competitive advantage. This is because I will be able to perform business processes using this system at a cheaper cost. Low production cost is a good opportunity to edge the competitors in the market. A competitive advantage allows me to compete in the market.
References
Johnston, H. R., & Vitale, M. R. (1988). Creating a competitive advantage with inter-organizational
information systems. MIS quarterly, 153-165.
Kukreja, S. (2020). Six Major Types of Information Systems. Retrieved 23 June 2020, from
https://www.managementstudyhq.com/six-major-types-of-information-systems.html
Zhang, M. J., & Lado, A. A. (2001). Information systems and competitive advantage: a
competency-based view. Technovation, 21(3), 147-156.