What Is Competitive Fores?

The subtopic of competitive forces give me a better insight of using for the topic of using Information System for competitive advantages. Before this lesson, I always define competition too narrowly, as if it occurred only among today’s direct competitors (rivalry among existing competitors). Yet competition for profits goes beyond established industry rivals to include four other competitive forces as well: bargaining power of buyers, bargaining power of suppliers, threat potential entrants, and lastly threat of substitute products. The extended rivalry that results from all five forces defines an industry’s structure and shapes the nature of competitive interaction within an industry. For an example, in the market for commercial aircraft, fierce rivalry between dominant producers Airbus and Boeing and the bargaining power of the airlines that place huge orders for aircraft are strong, while the threat of entry, the threat of substitutes, and the power of suppliers are more benign.

An organization responds to the structure of its industry by choosing a competitive

strategy. Porter followed his five forces model with the model of four competitive

strategies. According to Porter, a firm can engage in one of these four fundamental competitive strategies.

An organization can focus on being the cost leader, or it can focus on differentiating its products from those of the competition. Further, the organization can employ the cost or differentiation strategy across an industry, or it can focus its strategy on a particular industry segment.Consider, a car rental company can seek to differentiate its products from the competitors. It can do so in various ways—for example, by providing a wide range of high-quality cars, by providing the best reservations system, by having the cleanest cars or the fastest check-in. The company can strive to provide product differentiation across the industry or within particular segments of the industry, such as- domestic business travelers.

 Cost leadership means a company provides goods/ services with lower price compare to other company with same goods/ services, the company who able to produce goods in lowest cost would gain best profits. Innovation strategy means produce a unique product that the other company do not have to attract customers. Another way to compete with competitor is to improve the company itself by developing or expanding the size of company to turn it into global markets in order to  gain more customers and profit. Alliance strategy includes of mergers, acquisitions, joint ventures and others.

To be effective, the organization’s goals, objectives, culture, and activities must be consistent with the organization’s strategy. This means that all information systems in the organization must facilitate the organization’s competitive strategy.

Reference: Paul Sparrow; Chris Brewster; Hilary Harris (2004). Globalising Human Resource Management. Routledge