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Competitive Forces Analysis

Dwight Welsh

University of Phoenix

Competitive Forces Analysis

The following document is an analysis of the relationship
between Information Technology (IT) and a company’s competitive advantage or
strategy. The document will cover the following topics;

·
Identify the 5 areas where IT can represent a
risk/ disadvantage to the company’s competitive advantage

·
Identify the 5 areas where IT can be an
advantage to support or help a company’s competitive advantage

·
Choose one of the disadvantages and provide an
analysis of how it might occur and what could be done to prevent it

·
Choose one of the advantages and provide an
explanation of how the business could leverage it to help improve the company’s
competitive advantage.

Areas of IT Impact on Company

Information technology can provide a benefit or a risk to an
organization, depending on what the area of business operations information
technology impacts. Some areas of business operations are significantly
benefited by information technology and the abilities and support that it
provides for the business. Some other areas however can be negatively affected
by information technology and the impact it can have on these areas.

Areas of IT Risk on Competitive Advantage

Although Information Technology (IT) is commonly seen as a
benefit to business operations, there are times when certain IT areas could be
a risk/ disadvantage to business competitive advantage.

The first area where IT can be a risk to a company’s
competitive advantage is IT Innovation(“THE
FIVE COMPETITIVE FORCES THAT SHAPE STRATEGY,” 2008). IT innovation can
be a risk because it can allow competition to emulate or simulate a company’s
product/ service.

A second area of IT that can be a risk to a business’s
competitive advantage is IT Infrastructure(“THE
FIVE COMPETITIVE FORCES THAT SHAPE STRATEGY,” 2008). If the IT Infrastructure
is not sufficient to meet the needs of the company it could cause issues with
the ability of the company to be competitive.

The third area of IT that could be a risk/ disadvantage to a
company’s competitive advantage is e-Commerce(“THE
FIVE COMPETITIVE FORCES THAT SHAPE STRATEGY,” 2008). E-Commerce can
allow a company’s competitors to reach their customers and take market share.

A fourth area of IT that could pose a risk to a company’s
competitive advantage is potential privacy or security issues(“THE FIVE COMPETITIVE FORCES THAT
SHAPE STRATEGY,” 2008). The internet, networking, and information
technology all can contribute to potential security and privacy risks that
could affect a company’s competitive advantage.

The Fifth area of IT that could be a disadvantage to a
company’s competitive advantage is IT’s empowering of the consumer(“THE FIVE COMPETITIVE FORCES THAT
SHAPE STRATEGY,” 2008). The growth of IT and the accompanying ease of
access to information allows consumers to be more informed shoppers and this
could affect a company’s competitiveness.

Areas of IT Support on Competitive Advantage

One of the most significant asset of Information Technology
(IT) is that it can help a business to be more competitive and more profitable.

The first area where IT can be an advantage to a company’s
competitive advantage is Operational Efficiency(“THE
FIVE COMPETITIVE FORCES THAT SHAPE STRATEGY,” 2008). IT significantly
enhances the efficiency of an organization and this can in turn help with the
competitive advantage of the company.

The second area where IT can be an advantage to a company’s
competitive advantage is marketing of the business(“THE
FIVE COMPETITIVE FORCES THAT SHAPE STRATEGY,” 2008). IT is a valuable
tool in improving marketing for the business and can greatly help competitive
advantage for the business.

The third area where IT can be an advantage to the company’s
competitive advantage is data collection and analysis(“THE
FIVE COMPETITIVE FORCES THAT SHAPE STRATEGY,” 2008). IT improvements
have greatly improved the ability of organizations to collect and analyze data,
which they can use to help improve their competitive advantage.

The fourth area where IT can be provide support and help the
competitive advantage of a company is supply chain management operations(“THE FIVE COMPETITIVE FORCES THAT
SHAPE STRATEGY,” 2008). Through supply chain management IT can help the
organization become more competitive and obtain a stronger market share.

The fifth area where IT can be an advantage to the company’s
competitive advantage is ensuring compliance with government laws and
regulations(“THE FIVE COMPETITIVE FORCES THAT
SHAPE STRATEGY,” 2008). By ensuing the organization complies with laws and
regulations, IT can help to keep the company competitive and grow their
competitive advantage.

Detailed Analysis of Specific Risk Area

The specific risk area of IT that I choose to
go into more detailed analysis of is IT Innovation. Although IT innovation can
be considered a benefit to most businesses, it can also be a risk to a
company’s competitive advantage. The main reason for this is that with
innovation comes the possibility for competitors to be able to copy or
duplicate the company’s product/ device. This in turn allows the competition to
take market share from the company and thereby negatively affect their
competitive advantage.

To better understand this it’s important to understand what
IT innovation is. Innovation can simply be defined as the development and/ or
introduction of something new, such as a new idea, device, or method of doing
things (“Competitive Advantage and Motivating Innovation,” 2015). Innovation can be both a benefit and a risk to
a business’s competitive advantage. The more innovative a company is the more
likely they will develop new and better items for the market. However if the
organization that is more innovative happens to be a competitor of the company,
this can then cause a risk to the competitive advantage enjoyed by the company
because this competitor can develop substitutions or lower cost copies of the
same products and thereby cut into the company’s competitive advantage and
potentially profits as well.

Detailed Analysis of Specific Advantage Area

The specific advantage/ support are of IT that I feel is
worthy of more detailed analysis is data collection and analysis. The
importance of an organization’s ability to collect data on the market,
customers, suppliers, or trends cannot be understated. Through the collection
of data and the analysis of this data a company will be better able to better
determine what consumers are purchasing and what their preferences are, thereby
allowing the company to target these particular wants and preferences and
possibly improve customer retention (Palermo, 2012). Another advantage data
collection and analysis is that it allows companies to target specific areas of
the market towards specific customers, which can in turn lead to customers who
are more likely to purchase your product or even change from a competitor
product to your product (Palermo, 2012).IT data collection and analysis must be
an essential part of any company’s marketing strategy if they company hopes to
have any competitive advantage over their competition.

The preceding document covered an analysis of various
Information Technology (IT) areas that were either an advantage or a
disadvantage to an origination’s competitive advantage. First the document covered
five specific areas of IT Technology that might have a disadvantage on a
company’s competitive advantage. Next the document discussed five specific
areas of IT Technology that might provide an advantage to a company’s
competitive advantage. Then the document discussed one specific area of IT
Technology that could be a risk to a company’s competitive advantage in detail.
Finally the document discussed one specific area of IT Technology that could be
an advantage to a company’s competitive advantage in detail.

References

Competitive Advantage and Motivating Innovation .
(2015). Questia, (), . Retrieved from .questia.com/library/journal/1P3-3189492421/competitive-advantage-and-motivating-innovation”>https://www.questia.com/library/journal/1P3-3189492421/competitive-advantage-and-motivating-innovation

Palermo, F. (2012). 7 Ways to Use Big Data to Gain
Competitive Advantage and Improve Customer Loyalty. Retrieved from .virtusa.com/blog/2012/08/7-ways-to-use-big-data-to-gain-competitive-advantage-and-improve-customer-loyalty/”>http://www.virtusa.com/blog/2012/08/7-ways-to-use-big-data-to-gain-competitive-advantage-and-improve-customer-loyalty/

THE FIVE
COMPETITIVE FORCES THAT SHAPE STRATEGY. (2008). Harvard Business Review, Retrieved from
http://web.b.ebscohost.com.ezproxy.apollolibrary.com/bsi/detail/detail?sid=1304155a-628c-4195-ae65-26eb2d632c2a%40sessionmgr112&vid=0&hid=124&bdata=JnNpdGU9YnNpLWxpdmU%3d#AN=28000138&db=bth

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