Competitive Advantage

1. Introduction

SME or large firms apply the strategic use of Strategic Information System (SIS) to achieve competitive advantages. SIS is a system that support or shape a business unit’s competitive advantage (Callon, 1996). An SIS is characterised by its ability to significantly change the manner in which business is conducted, so as to give the organisation strategic advantage. Besides, the information system changes the goals, processes, products, or environment relationships to help an organisation gain a competitive advantage or reduce a competitive disadvantage.

A competitive strategy is a board-based formula for how a business is going to compete, what are the goals, plans and policies to be carried out (Porter, 1985). Through its competitive strategy, an organisation seeks a competitive advantage in an industry – an advantage over its competitors in areas such as technology, quality, speed and cost. Competitive advantage is the core of a company’s success or failure (Porter and Millar, 1985). A strategic information system helps an organisation gain a competitive advantage through its contribution to the strategic goals of an organisation and its ability to significantly increase performance and productivity. When a company is the first to the market with a competitive advantage, it has the first mover advantage and results in gaining market shares from its competitors.

Earlier research suggested the competitive advantages of high market shares enjoyed by large firms. However, later on the researcher realised that small firms and low market share did not automatically cause poor performance (Woo and Cooper, 1981). Besides, Porter also suggested that niche or focus strategies can be a source of competitive advantage (Porter, 1985).

Take FedEx as a successful example; although FedEx is smaller in terms of annual revenue than its competitor UPS and DHL, they are able to compete effectively with these big guys in the global market....