"Critically Evaluate The Proposition That It Based Essay

1599 WordsJan 3, 20127 Pages
Introduction There is no doubt that the ongoing development of Information Systems (IS) has impacted greatly on commerce, the question however is has it led to real improvements in the profitability of firms, or has the idea of using IS to gain competitive advantage "passed from concept to cliché?" . Business leaders seem to support the idea of using IS to gain competitive advantage, with 87% of US C.E.O’s believing that "IS is critical to their strategic success" and that it may be used to "gain a competitive edge" . The conviction of their beliefs has to be questioned however considering surveys have shown that 39% of US companies have no formal IS strategy . Before we examine the proposition, we must first define what we interpret the meaning of competitive advantage to be. Kettinger et al. (1994) defines it as when "a firm achieves a return on investment that is greater than industry norms and is sustained for a long enough period to alter the nature of industry competition". With this definition in mind, the discussion of the proposition will be in three parts. We will first look at how IS can alter a company, its operations or its entire industry to provide competitive advantage, we will then examine other aspects of a company in relation to competitive advantage gained through IS, specifically HR and strategic functions. For the third part we will address the issue of the sustainability of a competitive advantage. How can an IS give Competitive Advantage? Porter and Millar (1985) identify three ways in which IS may provide competitive advantage: supporting cost and differentiation strategies; altering industry structure; and spawning new businesses. Later research proposes the titles internal strategy, competitive strategy and business portfolio . Internal Strategy Looking at the area of internal strategy, we can use Porters (1985)

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