INFORMATION AND COMPETITIVE ADVANTAGES

A competitive advantage is significant and long-term benefit to a company over its competition, and can result in higher-quality products, better customer service, and lower costs. Establishing and maintaining a competitive advantage is complex, but a company’s survival and depend on its success in doing so. An organization often uses its information system to help achieve a competitive advantage.

There are five competitive strategies in HRIS, which are cost leadership, differentiation strategy, innovation strategy, growth strategy and alliance strategy. In cost leadership, the objective by doing this strategy is to become the lowest-cost producer in the industry. The traditional method to achieve this objective is to produce on a large scale which enables the business to exploit economies of scale.

Second is differentiation strategy. This strategy is to differentiate firm’s product from its competitors. Product differentiation is a competitive business strategy whereby firms attempt to gain a competitive advantage by increasing the perceived value of their products and services relative to the perceived value of other firm's products and services.

Example of differentiation strategy:

On the Dell Inc. Web site, customers can select the options they want and order their computer custom built to these specifications. Dell’s assemble-to-order system is a major source of competitive advantage.

Third is innovation strategy. To me, innovation means offering things in different ways and creating new combinations. Innovation is about finding new ways of combining things generally. This innovation is to find new ways of doing business, means that unique products or services, unique markets and radical changes to business processes to alter the fundamental structure of an industry.

Forth is growth strategy. The growth strategy is the best plan and decision of the company in order to enlarge their company capacity to produce and expand it into a global market. To do well in any business organization must develop a long-term strategy. Making consistent decisions in all aspects of a firm's operations is difficult without a well-defined and clearly integrated strategy. By far the most widely pursued corporate directional strategies are those designed to achieve growth in sales, assets, profits or some combination.

Last is alliance strategy. This strategy is to establish linkages and alliances with customers, suppliers, competitors, consultants and other companies. It also includes mergers, acquisitions, joint ventures and virtual companies.

References:

1) Ralph Stair and George Reynolds, (2009). Fundamentals of Information Systems 5^th edition.