Business

How business firm use Information System for Competitive Advantages?

How business firm use Information System for Competitive Advantages?

Competitive Advantage is an advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retains more customers than its competition. There can be many types of competitive advantages including the firm’s cost structure, product offerings, distribution network, and customer support. To gain and maintain a competitive advantage, an organization must be able to demonstrate a greater comparative or differential value than its competitors and convey that information to its desired target market.

An information system can be defined as a set of a coordinated network of components. which act together towards producing, distributing and or processing information. The purpose of an information system is to turn raw data into useful information that can be used for decision making in an organization. Competitive advantages give a company an edge over its rivals and an ability to generate greater value for the firm and its shareholders. To increase and sustain a competitive advantage, an organization must be able to show a better proportional or disparity value than its competitors and express that information to its desired target market.

An Information System (IS) is the organized combination of people, hardware, software, communication network, data resources and policies and procedures that stores retrieve, transforms and disseminates information in an organization. IS helps in gaining competitive advantages in the following ways:

  • Implementing ERP software in the organization,
  • Introducing e-commerce to attain new customers,
  • Creating loyal costumers,
  • Capturing the lifetime value of customers.