Strategic Uses of Information Technology

Strategic Uses of Information Technology


Refers to the advancement of hardware, software capabilities, telecommunications, database management, and other information processing technologies used in computer-based information.

A firm can survive and succeed in long run if it successfully develop strategies to confront the five competitive forces that shape the structure of competition in its industry;
-          Threat of new entrants
-          Rivalry of competitors within the same industry
-          Threat of substitutes
-          The bargaining power of customers
-          Bargaining power of suppliers

·         Competitive strategies
-          Cost leadership; becoming a low-cost producer of products and services
-          Differentiation strategy; develop ways to differentiate firm’s products and services
-          Innovation strategy; finding new ways of doing business: unique products and services
-          Growth strategy; expanding a company’s capacity to produce goods and services, expanding into global markets etc.
-          Alliance strategy; establishing new business linkages and alliances with customers, suppliers, competitors, consultants and other companies. E.g. mergers, acquisitions, joint ventures, etc.

Strategic uses of information technology:
-          Lower costs
o   Use IT to reduce businesses processes
o   Use IT to lower the costs of customers or suppliers
-          Differentiate
o   Develop new IT features to differentiate products and services
-          Innovate
o   Create new products and services that include IT components
o   Develop unique new markets or markets niches with the help of IT
-          Promote Growth
o   Use IT to manage regional and global business expansion
-          Develop alliance
o   Use IT to create organisation of business partners

Strategic IS
Online price adjustment
Lowest price guarantee
AVNET Marshall
Customer/supplier ecommerce
Increase in market share
Charles Schwab & co
Online discount stock trading
Market leadership
Global intranet
Increase in global market
Automatic inventory replenishment by supplier
Reduced inventory costs/increased sales

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