Answer

Managing Information Systems

Table of Contents

Introduction. 1

Case Studies. 2

Successful Use of IT/IS in Gaining Competitive Advantages. 2

Unsuccessful Use of IT/IS in Gaining Competitive Advantages. 3

Success Factors of Coca-Cola. 3

Lessons Learnt from IBM’s Case. 5

Factors Influencing Organization’s Success/Failure in Gaining Competitive Advantage. 7

Internal factors. 7

External Factors. 8

Which Factor is Important: Internal or External Factors?. 9

Sustaining Competitive Advantages Gained  Via IS/IT. 9

Conclusion. 10

Reference List 11

Introduction

            Information Technology (IT) and Information System (IS) have revolutionized the business world through the immense range of technology that has transformed most business organizations. IT and IS have contributed greatly to the success of most business organizations through the realization of competitive advantage over close competitors. Most companies have gained a competitive advantage (through the use of IT and IS) by going an extra mile in terms of restructuring their systems and processes to be better and appreciated by all parties that are associated with them including suppliers, customers, shareholders, and stakeholders (Stair & Reynolds, 2011; Kozuharov & Ristovska, 2014). Examples of companies that have been able to stay on top of the game against their competitors are Apple, Google, General Electric (GE), Coca-Cola, Johnsons, Wal-Mart, Samsung, Hospital Corporation of America, IBM, Microsoft, Nestle, Toyota, Wells Fargo, and so forth. On the other hand, some companies have stagnated and even fallen because of failure to pace up with the ever-changing business world. Examples of these companies include Yahoo, Motorola, Sun Microsystems, Sony, Sears, Dell, Eastman Kodak, just to mention but a few (Kozuharov & Ristovska, 2014).

            Business owners, therefore, have to be critical in understanding the role of IT and IS in their organizations, and how to fully maximize it to their advantage. Research from various scholars including Stair and Reynolds (2011) highlight five goals of IT and IS. First and foremost is the integration of stakeholders through communication and interconnectivity; IT and IS contributes to product development and the speed in which product information reached the market; Process improvement by enhancing planning and operation metrics as well as decision making, and; Increasing cost efficiency by reducing costs of implantation and transactions, as well as expediting the process of problem solving (Stair & Reynolds, 2011).

In a nutshell, it is so evident that IS and IT plays an outstanding role in enhancing the success of an organization by acquiring a competitive advantage over competitors. Various factors determine the success or failure of a company to achieve competitive advantage, as will be discussed in this paper.

Case Studies

Successful Use of IT/IS in Gaining Competitive Advantages

            Coca-Cola company that was started in 1886 by Dr. John Pemberton, in Atlanta, Georgia, who also developed its unique formula that is appreciated worldwide. Over 120 years since its inception, Coca-Cola has been able to beat its competitors by gaining a competitive advantage through the use of IT and IS. A Case study on Coca-Cola in 2011 indicates that Coca-Cola is the leading soft drink producer and distributor in the world, with a strong supply chain system that ensures the products are available in Africa, Europe, Latin America, Asia, and America. Coca-Cola has also franchised companies in various countries to produce and package the products on its behalf.

            The following applications of IT and IS have enabled Coca-Cola earn a competitive advantage in the market and has proven its sustainability as well. First is the unique secret recipe which undoubtedly tastes better than other cola drinks, this information has been protected using a strong IS; Development of new products and re-inventing old ones using high technology; Coca-Cola has a comprehensive distribution system that makes their products accessible by billions of people worldwide; Excellent communication platforms including social sites that enables it to reach out to many people; Exceptional systems that guarantee fast, efficient, and reliable channel of communication both internally and externally (Coca-Cola Case Study, 2011).

Unsuccessful Use of IT/IS in Gaining Competitive Advantages

            According to a Case study conducted on IBM in 2011, IBM had at one point in their life cycle failed drastically despite the use of IT and IS in the realization of a competitive advantage. For over 30 years, it was viewed as the world’s most successful computer company by enjoying quite a monopoly in the field of computers. In a span of a few years, however, the prowess and success it enjoyed turned into a disaster. In 1992, it lost over $5 billion, leading to retrenchment of over 100,000 employees. IBM had managed to successfully use IT and IS to produce superior mainframe computers that served a wide range of research and scientific purposes. It was, however, unable to cope up with fast-paced technological advancements that saw the invention of powerful and low-cost microprocessors that caused a shift in the market locus to low-cost personalized computers, leaving IBM’s mainframe computers with no market to sell to (IBM Case Study, 2011).

            It took time for IBM to fully bounce back into business since it had to change a wide range of processes and plans including the total shift from manufacturing the large and immovable mainframe computers to relatively smaller, micro-processing engineered personal computers that were fast and could perform a wide range of tasks at a time (multi-tasking) (IBM Case Study, 2011).

Success Factors of Coca-Cola

            A business organization that gains a competitive advantage over its competitors stands a very high chance to succeed and to survive in the future. Understanding the environment and its players (the needs of customers) is one of the key steps to realizing a competitive advantage. According to Michael Porter’s competitive forces model, five forces are responsible for determining the fate of a business organization; and if it can overcome them, then its success is guaranteed. The forces are traditional competitors, new market entrants, substitute services and products, suppliers, and customers.

            Coca-Cola Company has been able to stay on top of the game for over 100 years because of its strategic consideration of the Key Success Factors (KSF) and employing them in their systems. Research including the work of Burrow & Kleindl (2013) highlights about 11 factors that have guaranteed the success of Coca-Cola Company. First is its strong global presence that has run for over 100 years. Strategists of this company ensured that the company has set an excellent foundation not only in America but the whole world. Studies indicate that about 94% of the people o earth have heard or consumed Coca-Cola products. This has been achieved by having strong marketing and expansion strategies. Secondly, it has a well recognized and cherished brand name that is recognized in well over 90% of the world today. Coca-Cola is the well-known brand name in the world today, and the company has been able to earn the loyalty of its customers using the brand name. Besides, Coca-Cola has developed other varieties of brands including Fanta, Sprite, Minute Maid, Evian, and Power Ade (Coca-Cola Case Study, 2011; Burrow & Kleindl, 2013).

            Size is another KSF for Coca-Cola Company. Since its inception, the company has been able to grow and has established franchises in most of the countries of the world. Besides, the company can commit to huge purchases that significantly lowers their costs. Also, the large size of the company has increased its production capacity so as to accommodate the ever-growing market for its products. Another factor is a superior distribution channel that enables the company to smoothly move its products to its suppliers. It has a robust supply chain management system that ensures its products reach a wide area and serving many people (Marinagi & Sakas, 2014). Differentiation and advertisement are also a paramount factor that Coca-Cola has well tapped. This is a strategy that Coke has been using, rather than pricing. It is purported that in 2000, Coke and its joint investors spent over $1.3 billion on advertisement campaigns ranging from the American culture to holiday and sports. Also, Coca-Cola has done extremely well in the differentiation of its products and incorporating healthier alternatives basing on the consumer needs.

            Kozuharov & Ristovska (2014) assert the importance of information systems in product innovation, an area that Coca-Cola has also succeeded in. It has been able to come up with a wide range of products, both new and re-invention of old products. Understanding the needs of the consumers has been the basis of successful innovation, and this has made Coca-Cola to always stay on top of the game. Furthermore, Coca-Cola has been able to produce quality products with regard to the safety of the products to the consumers, right quantities, and appearance in terms of un-defective products. Burrow (2013) purports that Coca-Cola has one of the best quality assurance systems in the world. Coca-Cola has also done well on the price of their products which is in most cases consumer-friendly; and lastly, the company has collaborated with other licensed bottling companies to produce and package the products on behalf of Coca-Cola (Coca-Cola Case Study, 2011; Burrow & Kleindl, 2013).

Lessons Learnt from IBM’s Case

            Conway (2011) summarized the factors that led to the downfall of IBM into three: Inertia, Prior Strategic Commitments, and the Icarus Paradox.

IBM experienced a long stage of inertia that greatly costed it. At around the 1970s, it adopted a complex bureaucratic strategic management and decision-making system that made it imperative for coordination between independent operating units before a decision is made. On the other hand, the revolution in the computer industry ( the innovation of microprocessors and phasing out of mainframe computers) was happening at a fast rate that caught IBM off-guard. Within the next few years, IBM’s products did not have market because preference was on the relatively smaller and fast personal computers; and this was the downfall of the company since it could not catch up with the pace of the revolution (Conway, 2011).

            Prior strategic commitments that entangled IBM not only lagged its ability to imitate rivals but also contributed to its competitive disadvantage. Its manufacturing facilities were specialized in the production of mainframe computers only, and when there was a sudden drift in the market expectations, it had to stagnate. Its research and sales force was also so specialized and concentrated so much on mainframe computers at the expense of the ever-dynamic state of technology. Its activities were rooted in a business that was shrinking, causing the difficulties that were inevitable (Conway, 2011).

            Thirdly, the Icarus Paradox was a Greek mythology of Icarus (a public figure) who was given wings by his father to escape from an island. He ended up flying so high that he was so close to the sun, which melted the wax that had attached his feathers to his body; and this led to his demise. The paradox is that his ability to fly (which was his greatest asset) caused his demise. This paradox is used to explain how companies, including IBM, were so driven by their earlier success such that they believe that that was the only way to succeed. IBM focused so much on its significant inner success at the expense of the fast-paced technology that outpaced them (Conway, 2011; IBM Case Study, 2011).

Factors Influencing Organization’s Success/Failure in Gaining Competitive Advantage

Internal factors

            Burrow & Kleindl (2013) affirm that the Internal factors of an organization determine the success or failure of an organization in gaining competitive advantage. These factors can be organizational, individual, or management; and their careful combination may promote immense benefits. Employees, for instance, have a direct contribution to a company’s competitive advantage. Engagement of the staff is paramount — and it should start from the top management. Managers need to continuously engage their teams, they need to measure their performance, ensure proper communication between individuals and the teams, and in case things do not go as expected, they need to dig into the root cause of the problem and find solutions to them. When employees get to be engaged in their roles, then competitive advantage will come automatically (Burrow & Kleindl, 2013).

            Kleindl (2013) alleges that management factors are equally paramount in determining a company’s competitive advantage. The management needs to develop policies and goals that are realistic and achievable. The management needs to be innovative so as to come up with products and services that will outshine those of their competitors. In addition, they need to develop and motivate the staff so as to improve their competence over those of competing companies (Burrow & Kleindl, 2013).

            Lastly, organizational factors like the culture and environment of the company play a great role in determining the success or failure of an organization in gaining competitive advantage. The physical environment for example including the design and layout of the organization, the temperature, noise, and other facilities that promote employee performance affects their motivation, and the competence of the organization (Burrow & Kleindl, 2013).

External Factors

            Burrow (2013) suggests that the external factors surrounding an organization have a direct or indirect influence in determining the success or failure of an organization in gaining competitive advantage. The market, for instance, specifically the marketing mix whose elements are product, price, place, promotion, people, and process, need to be properly understood so as to realize a competitive advantage. The products and their prices (of competitors) available in the market determines the success of an organization if its compete favorably with those in the market. How competitors manage the promotion of their products and their success or failure in that activity determines if an organization may realize competitive advantage.

            Kleindl (2013) on the other hand claims that political factors influenced by the government may guarantee the success or failure of an organization in gaining competitive advantage. Government factors like taxation, laws governing some business industries, as well as the legal requirements may affect an organization’s ability to gain competitive advantage. Some laws may be so binding and oppressing and can hamper the success of n organization. For instance, high taxation of foreign investors compared to their local counterparts.

            Moreover, social factors characterized by the social class, race, gender, age, demography, etc. is equally important to an organization. A company needs to understand the social factors that determine its market. Customization of products and services to suit the market needs is very important in the realization of a competitive advantage, a strategy that Dell Company is using (Burrow & Kleindl, 2013).

Which of the Factors is Important: Internal or External Factors?

            Both internal and external factors are important. However, the internal factors are of great significance to an organization because it has control over, unlike the external factors which the business organization has very little influence on them.

Sustaining Competitive Advantages Gained  Via IS/IT

            Strategies employed by companies need to be sustained over time. Sustainability is achieved by gaining a competitive advantage over competitors, and maintaining or improving the tempo. Just like an idea, the objectives that guarantee a competitive advantage need to be sustained in order for them to be useful to the organization — the realization of profits through the satisfaction of customers (Stair & Reynolds, 2011).

            An innovation that is achieved through the use of IS/IT needs to be regularly improved. An innovation regarding products and services needs to be enhanced in order for it to surpass those of competitors. An example is Amazon.com, which is an innovation for online full-service customer system that promoted market leadership. Amazon has been improving its platform making it difficult for competitors to match to its standard (Stair & Reynolds, 2011). Another strategy is maximizing on the formation of an alliance with other companies. An example is Wal-Mart and Gamble through the automatic inventory replenishment by the supplier that reduced inventory cost and increased sales. Having a strong alliance promotes sustainable competitive advantage by undertaking activities jointly (Kozuharov & Ristovska, 2014). These two companies have been able to improve their systems, and this has been beneficial to them.

            Through IS/IT, an organization can sustain competitive advantage by effectively differentiating products and services. A good example of this strategy is that of Consolidated Freightways Company that allows for online tracking of customer shipment. Continuously improving this service that is offered by a small number of competitors guarantees a larger market share, hence sustaining the competitive advantage (Stair & Reynolds, 2011).

Conclusion

            IT and IS have increasingly played an important role in determining the success of most business organizations. In fact, about 90% of all business organizations are using IT and IS in one way or another including generation of documents, digital systems like digital filing, communication, designing, and innovation, problem-solving, just to mention but a few.

            Most successful companies whose success has been influenced by using IT and IS include Coca-Cola, Dell, GE, Google, Apple, Johnsons, etc. On the other hand, some companies have been unable to sustain their prowess in their industry due to incorrect application of IT and IS. IBM, for example, has been dominant in the industry of computers, but could not move with the dynamic market that saw it lacking a market for its mainframe computers. Coca-Cola is also among the giant companies that have enjoyed a competitive advantage for a long time through sustainability of its IT and IS. Some success factors are a strong global presence, size, superior distribution channel, differentiation and advertisement, innovation, ability to produce quality products, and friendly prices. On the contrary, the factors that led to the downfall of IBM were inertia, prior strategic commitments, and the Icarus paradox.

            Furthermore, internal and external factors of an organization have an impact on the realization of competitive advantage by an organization; and lastly, sustainability of the competitive advantage is paramount in order for a business organization to outpace its competitors and assure its survival in future.