Strategic role of information system in contemporary business - Essay Example

?Running head: STRATEGIC ROLE OF INFORMATION SYSTEM IN CONTEMPORARY BUSINESS Strategic role of information system in contemporary business Insert Insert Grade Course Insert Tutor’s Name 22 February 2011 Outline Abstract Introduction Information systems in business- conceptual framework Challenges for using business systems Information system at Microsoft Conclusion References Abstract This paper primarily focuses on information system and its application in business organizations. It goes ahead to consider some marketing strategies that companies can adopt to gain competitive advantage over the other competing organizations, and how they can use information systems to achieve this. A practical look is given to how Microsoft has managed to beat competitors using information systems Strategic role of information system in contemporary business Introduction The knowledge of information systems and its applications in business is of important consideration for managers in the current business world owing to the increased use of technology ((Kotsoukis & Mitra, 2003, p.3). The staff in the organization as well as the other available human resource should have the basic knowledge necessary for the incorporation of these technologies, which is now a necessity, into their operations. There are several uses of information system in business organizations. They are used in organizing the business processes and its operations. It is also used to assist the organization during complex decision-making processes using the necessary application software. Information systems can also be used by the companies as strategies to compete and beat their competitors in the market. This can be achieved using information technology to advertise or market the products of a company. However, it is also important to consider that in as much as the use of such systems are of importance in businesses, there are associated challenges that it poses to the management of the organization, which may impede their adoption. Information systems in business- conceptual framework The use of information system is increasing in business and other organizations. Regardless of the type of organization considered, there are always many sets of data to be managed or manipulated (Kotsoukis & Mitra, 2003, p.3). The use of information system in business ranges from simple applications like the calculation of wages to the more complex techniques like the use of application of software that can be used to aid operations or decision-making process of the organization. Its extensive use will enable the business organization to survive in a market with many competing firms. Michael Porter had suggested that there are five forces that influence the operations in a given business industry (Strategic Management, n.d). These forces are the supplier’s power, barrier to entry, threat of substitutes, the power of the buyer, and the degree of rivalry among the competing firms. The management should consider the possibility of other firms getting into the business as well as the reputation of existing alternative products. Every company then needs to have a competitive advantage over the rival firms. Identifying the power and opportunities that a form has for investment, as well as the needs of the customers is fundamental in ensuring organizational success. The firms should identify the competitors and strategize their operations to beat them. The use of information system can help an organization to obtain this competitive advantage. How an organization keeps the data that pertains to its operations as well as its employees will determine the success in managing the organization. A proper and efficient means of data storage and retrieval will facilitate the achievement of an organization’s objective. Mutilated sources of data call for approximation or estimation that can result into wrong course of action being taken by the management. It can also lead to losses in the event that financial data like pay roll is poorly retrieved. Organizations will thus use the information systems to manage their data properly. A customer in a banking institution would be attracted to an institution that takes the shortest time possible to provide him/her with the account statement. A large company would want to work out the salaries and wages of its employees in a month. The use of manual means for calculating such figures would take much longer time consuming a lot of work force. Besides, the clerical officers charged with such responsibilities are prone to errors especially given the large number of employees and the short time period often issued by the line managers. If information system is incorporated into the system, more time and resources will be saved and there shall be little or no errors as well. The use of spreadsheets as Microsoft will not only help in keeping a large database of employees in an organization, but they can also be used to perform these simple calculations in a relatively short period. The current business world is very competitive with various companies emerging with new modified products each day (Pappa & Stergioulas, 2008, p.2). The companies would wish to inform their customers on the kinds of products and services they currently offer and how they are superior to similar ones in the market. The use information systems will enable the companies to reach several customers at a relatively lower cost and time. There are several adverts that are currently posted online. A company would post its current products, prices of the products, and the possible locations where they can be obtained. Information system has also been used by business organizations to sell their products. Several companies not only advertise but also sell their products and services online. A site is established that has a full description of the products as well as the transaction procedures. The means transport is also defined in case of a tangible product. A company can thus reach customers all over the world. In many cases, there is need for the data that are stored in the organization’s data management systems to be accessed by different users at different locations. Means of information transfer can be made easier by use of information system. An integral network system within and outside the organization will aid in the quick operations in business. This will also allow for a direct interaction between the customers and the management. Immediate solutions to their problems can be obtained as well as the possible recommendations on how to improve the product and services. However, this would require some compatibility in he software components that are used within and outside the organization (Pappa & Stergioulas, 2008, p.3). There are complex decision-making processes that may not be easily obtained through the manual means. Most of these cases can be converted into some theoretical models that can be easily solved by application software (Kotsoukis & Mitra, 2003, p.9). Application software like Microsoft Project will help an organization in planning its operations, which can be solved as a project management problem. Others like LINDO, LINGO, and MINITAB will be handy in several problems encountered in operations management. An organization that effectively adopts the use of applications will operate on the optimal solutions of whichever problem they were to solve. This will be of competitive advantage to the organization. For instance, a minimized production cost may allow for the reduction of prices. This will eventually enable the company to beat the other companies who probably are not able to reduce their prices due to poor decision-making techniques. Challenges for using business systems The main challenges that are faced by the organizations in adopting the use of information systems are lack of enough resources as well as lack of technical skills necessary for the use and maintenance of the systems (Karimi et al p.26). An organization may wish to upgrade its systems of operation through computerization. However, it can fail to achieve this due to the financial constraints that prevail. The incorporation of information system into the operations of an organization would call for expertise that may not be available. The organization would then go an extra mile to hire or employ new hardware and software experts for the installation and maintenance of such systems. Further, this introduction would call for the training of the existing staff on the applications of the new system in their operations (Kesner & Russell, n.d, p.1) This is particularly important because it will be the duty of the management of the existing clerical staff to use the applications (Askenas & Westelius, 2003, p.2). Data entry and retrieval shall be performed by these people. Besides, if an application is used that required some theoretical model, it will be the role of the personnel concerned to interpret the given output and relate it to a practical situation that can be understood by the relevant line managers. Thus, information system can be used here as a consultant who performs certain tasks and gives advice. The management then takes control (Askenas & Westelius, 2003, p.3). Information system at Microsoft Microsoft Corporation used monopolistic business practices in the 1990s that put off the efforts by competitors in the market for operating systems and other software products (Levy, 1995). It has since used monopoly to adopt some ant-competitive practices to gain competitive advantage over the others. They established strategies like refusal to deal and tying. They put heavy restrictions on the use of their software, and went contrary to some legal provisions by the US. Microsoft dominated the markets particularly due to the nature of its product and the barriers that prevented other companies like Apple or Macintosh from providing competition. Its production of operating systems that runs on Intel PCs has let the company have a competitive advantage of the others that may emerge (Court’s Findings of Fact, 1998, p.6). It would take cost much time and financial resources for company to get the product into the market. Their operating systems run on about 70 percent of desktops. Other companies like Lotus are forced borrow operating systems from Microsoft enabling the later to learn and strategize against their production and marketing techniques (Levy, 1995). In dumping, a company sells its product to customers at a loss. The main aim is to throw out the competitors and dominate the market at which point it can then raise the prices to normal. This technique was used by Microsoft when it was getting into the market 1980s. Another practice is tying where unrelated products are restricted to be purchased together. The main marketing strategies that Microsoft applied to beat the competitors in the computer industry were product expansion and innovation, extensive advertisement, brand extension and competitive toughness. Microsoft has been known for the invention and innovation of new products since its inception in 1979 when it started producing Operating Systems. Advances have been seen through the 1980s and 1990s with different versions of operating systems and application software. Having dominated the market for operating systems for along period, the company has not sit back. The competitors are however threatened by how long the customers will take to shift their attention to their new products (Court’s Findings of Fact, 1998, p.22). The introduction of the new video product, Xbox 360, in 2005 featured as an advanced marketing strategy against the competitors. This was the first entry of the company into this video game industry and it opted to adopt a non-traditional system of product introduction. The company deviated from the usual routine of introducing the product to customers through the then famous Electronic Entertainment Expo (E3) (McDonnell & Jackson, 2005). It instead used MTV to reach the consumers some days before the E3 conference. The move would kill the sales of its hardware product and greatly lower the sales of software product. However, its main aim was to push the competitors like Sony and Nintendo. Another important marketing strategy is for a company to collaborate with another company that produces related products so that the two products can be jointly sold at a reduced price. Microsoft collaborated with Samsung to develop the video product that would succeed the then Xbox with better features (McDonnell & Jackson, 2005). Microsoft Corporation has one of the highly rated content portals. Microsoft-Content Management Server is among the top 100 E-Content portals according to a report by Press Release Network. Through this portal, the company can attract a huge global audience. The information on the products it offers as well as how they can be purchased thus made simple. In fact, nearly all software products from Microsoft Corporations are now available to be purchased online. The company’s registration with the Press Release Network enables it to be connected to numerous media organizations and journalists. These help in the sales promotion for the company’s product at a relatively lower cost. Apple Computers are the other companies that have highly ranked E-content portals according to this report. The use of information systems has associated risks that the organizations adopting such technologies have to manage. Now that the purchase of products, especially software, can be done online, there are high chances that fraud like hacking be committed by some users. A security system is that required to restrict the users on how to handle products. Unauthorized reproduction of the products is one of the problems to be addressed by these organizations. The license provided by Microsoft on their products like Operating systems does not allow the users to reproduce the product and use in another computer Microsoft is one of the companies that grouped up to form Trusted Computing Platform Alliance in 1999. The alliance was aimed at protecting the software products from use by unauthorized persons. Conclusion The use of information systems in business cannot be avoided especially owing to the increasing use of modern technology. Many competitors in the market attempt to adopt strategies that can help them beat the pother firms. This is currently achieved by incorporating information systems into operations. However, the management has to be aware of the associated risks. Reference List Askenas, L. and Westelius, A., 2003. 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Available from: http://books.google.co.ke/books?id=4U4rPdW18r8C&dq=the+role+of+information+systems+in+business&source=gbs_navlinks_s (Accessed February 22, 2011). Levy, S., 1995. Antitrust and common sense. Newsweek, Vol. 125, Issue 10. (Online). Available from: http://web.ebscohost.com/ehost/detail?hid=108&sid=3c360ce9-e89e-4719-ae48-045ea3724093%40sessionmgr104&vid=4&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=bth&AN=9503027630 (Accessed February 22, 2011). McDonnell, F. and Jackson, P., 2005. Commentary: Microsoft's Xbox 360 spin. Forrester Research. (Online). Available from: http://news.cnet.com/Commentary-Microsofts-Xbox-360-spin/2030-1069_3-5706144.html (Accessed February 22, 2011). Pappa, D. and Stergioulas, L. K., 2008. The emerging role of corporate information systems: An example from the area of business process-oriented learning Int. Journal of Business Science and Applied Management, Volume 3, Issue 2. (Online). 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