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Porter's Competitive Forces Model-Information Systems - Research Paper Example

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Porter's Competitive Forces Model-Information Systems Porter’s Competitive Forces Model Michael E. Porter’s Five Forces Model is considered as the best model that can be applied in understanding the competitive position of a business in regards to its external business environment…
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Porters Competitive Forces Model-Information Systems
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Download file to see previous pages Thus the competitive forces model helps one to understand the different strategies that the firm can take to counter the competition posed by the different external entities as reflected. Porter’s Five Forces Model of Business Competitiveness can be reflected as follows. Figure 1 (Source: Laudon, 2010, p.96) The business gains competitive advantage in its pursuits of governing the competitive threat imposed by these different parameters that can be analyzed as follows. Firstly the company would have potential competitors existing at the market place that can work on product or brand development and thereby gain on its existing market share. This product or brand development can work in encouraging the consumers to switch over to gain the benefits of the products and services delivered. Secondly the business company in question also needs to effectively compete in regards to new entrants in the industry. Owing to lower economic and trade barriers it is found that companies focusing on the opening up of small retail arms and food joints tend to face lesser trade and economic constraints than companies in other industries where investment required is huge. In larger investment sectors it is hard for the companies to retrieve potential returns on the amount invested and thus are deterred from entering. Again in the third case the business company operational for a longer period happens to create a more popular understanding of the type of the attributes of the products and services developed. Thus this fact encourages the emergence of substitute products in the marketplace with both the prevalence of more innovative products and also of lesser value and price. Fourthly the company needs to counter the bargaining power of consumers in meeting the requirements both in regards to quality and pricing conditions. The number of companies in the industry being large enables the consumers to switch over to different concerns at the cost of the initial company holding the consumer. Finally in the fifth case the company needs to hold on to its suppliers from switching over to another company in the same industry rendering more leverage. Henceforth the business companies need to work on a greater network of suppliers where the company can tend to exert influence over the supplier groups in regards to pricing, quality and timely and effective delivery management guidelines (Laudon, 2010, p.94-97; Rainer and Cegielski, 2009, p.45-48). Thus the Porter’s Five Forces model effectively presents the situational analysis of a company’s external environment based on which the firm is required to develop its potential strategies required for market growth and business development. Utility of Information Systems in Porter’s Competitive Forces Model The analysis of the above model reflects the various competitive forces that a company is required to counter to successfully exist in the competitive business market. Herein the modern business companies tend to put into use information technology applications that would help the company to effectively counter the different competitive forces. Firstly it is found that business companies in order to largely reduce the price structure of its products and services and at the same time work to generate profitability can largely integrate information systems in its applications. Retail organizations through the use of effective information systems can help reduce the amount of working capital that would be kept locked in regards to ...Download file to see next pagesRead More
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