Competitive Advantage

1. How can information itself provide a competitive advantage to an organization? Give two or three examples. For each example, describe its associated risks.

In order to survive in the changing environment, organization should create a competitive advantage and for a company the key source to accomplish competitive advantage is information.

• Recognizing the environmental and organizational changes quickly, before the competitors, will give an organization a competitive advantage. The organization can react and make necessary changes to their activities before other competitors and increase their profitability of the company.

• The other way to gain competitive advantage is cost leadership. Information gathered from the market can help the Organization to determine the most suitable price of the product. By having a lower cost for a product than your competitor in the market, can create competitive advantage for the company.

• Most importantly information gathered from customer surveys, interviews and reviews posted online are the number one contributors to gaining competitive advantage in the market. The companies who act and keep up with their customer needs create a loyal customer base and gain more customers.

Examples

a) Local Dry Cleaners

• Bargaining power of suppliers – If there are fewer amounts of suppliers of material like: washing powder, the bargaining power of suppliers will be high. Information system is important to maintain a good relationship with suppliers.

• Bargaining power of customers – If there are lot of dry cleaners in their area, than the bargaining power of customers will be on an increase. Hence, information system is important to maintain a sustainable relationship with customers and if not customers will easily move to their competitors.

• Competitors rivalry – If customers have an opportunity to satisfy their needs through a competitor, because they are providing faster services, it becomes important to make...