Strategic Management and Role of Information Systems in Achieving Strategic Advantages - Essay Example

?STRATEGIC MANAGEMENT AND ROLE OF INFORMATION SYSTEMS IN ACHIEVING STRATEGIES ADVANTAGES Strategic management and role of information systems in achieving strategies advantages Author Author Affiliation Date Table of Contents Table of Contents 2 Introduction 3 Strategic management: A detailed overview 4 How Organizations use Strategic Management 5 Strategic Management Theories 7 Information Systems and Strategic Management 8 Information System: Basic Overview 8 Role of Information System in achieving Strategic Advantages 11 Advantages of using information systems 13 Challenges in implementing Information Systems 15 Bridging the Gap 15 Customized Tools 15 Conclusion 16 References 17 Introduction Strategic management is the art of planning business processes at the maximum possible level. However, it depends upon the experience and skills of the managers, how successfully they implement strategic management. Normally, strategic management focuses on creating an effective underlying framework to business processes that will subsequently be fleshed out through the joint efforts of every workers a company employs (AllBusiness, 2011). In this scenario, information technology provides a lot of tools that can help organizations implement strategic management effectively. Information system is a very useful tool which is currently used by the organizations to implement business strategies. This paper will discuss the concept of strategic management in detail. This paper will discuss how information systems can be useful for the organizations in achieving strategic advantage. This paper will also outline some challenges which are faced by the organizations while using information systems. Strategic management: A detailed overview Strategic management refers to a business methodology that is useful for the utilization in order to make the most competent use of available assets and resources in the process of operating some organization. However, the basic idea behind any strategic management process is to assess the existing status of the operation and all of its individual components, we must identify whether those components are being utilized in such a way to attain maximal outcome, and to expand and implement the required changes when and as necessary. In addition, if organizations successfully utilize this approach, it can help them improve the overall performance of the business; we have to move the business nearer towards reaching its declared goals. However, we should keep the expenditure of raw materials, supplies and other related resources in stability with the returns that are generated by the business efforts (Tatum, 2010). The idea of strategic management is not only used by the large companies. Even a small business that encompasses no more than one or two persons can use this decision-making technique to get advantage from the basics of this methodology. Whereas, the exact nature related to these processes and tasks necessary for the operations will be quite different between a mom-and-pop seller and a corporation which is considered as multi-national. However, the common idea behind this managing process will still be uses and considered as valid. When we apply these principals to the real-life conditions of the business, it is often likely to maximize the use of existing resources, reduce waste in the place of work, and eventually have a positive outcome on the bottom line of some organization (Tatum, 2010; Pollard & Hotho, 2006). In simple words, the term strategic management refers to a process by which a group of people or organization can examine the fact where they are at present, and also in addition they can think about where they want to be in the near future perspective and how they can create the visual ability and reality as when to reach where they want to reach in the coming future (Sulaiman, 2010). How Organizations use Strategic Management For achieving a competitive benefit position and also enhancing the organizational performance as compared to their competitors are the main objectives that business organizations in particular should try their level best to attain. In this scenario, the concept of strategic management in some organization remains as a major but also important research area as far as strategy is concerned, where we talking about profits and better utilization of resources with better management. However, as far as local and global businesses are concerned, use of strategic management is important for some organization to adopt. It is necessary in order to compete and maintain successfully, either at local level or we can use it globally, businesses must not only shine in their area but also continue in the time-consuming run. Moreover, achieving such a position that emphasizes other organizations in the market is not an easy task without a proper planned strategy as well as road map. Moreover, the financial growth, utilization people, conduct of organizational behavior related to workers and managers etc are being associated with a chain having long list of major contributing factors. Furthermore, these factors include , acquisitions, operational efficiencies, levels of diversification, mergers, types of diversification, organizational structures, top and down managerial team work and style, management of human resource, handling the political as well as social influences in a way that affects the market, agreement to various interpretations of socially and ethically responsible behaviors, global or cross-cultural behaviors of adaptation and expansion, and a lot of other managerial and/or industry level phenomena (Raduan, Jegak, Haslinda, & Alimin, 2009; Blumentritt, 2006). Strategic management techniques have now developed to the level that it is now become a primary value that is only concerned with helping the organizational operations successfully in completely dynamic as well as in complex environment. Additionally, to be competitive in some dynamic and challenging environment, corporations have to become less technical but more flexible. However, in stable environments such as those that have been existed early or in the past, a competitive policy is simply engaged in defining major competitive arrangement and then defending it in a way that is adoptable by most of the organizations. As we know that it takes a smaller amount of time for some manufactured good or technology to replace with another, organizations are finding that there are no such piece as competitive advantage (Hunger & Wheelen, 2010). Keeping this in view corporations either local level or multinational must develop strategic flexibility for their own: the ability that will help them to shift from one dominant strategy to another easily. Hence, strategic flexibility demands a policy in which long term commitment to the growth, expansion and nurturing of vital resources. Additionally, it also demands that the organization should become a learning organization (organizations which have expertise at transferring, acquiring, and creating, knowledge and at modifying its performance to reflect new knowledge and also insights). Moreover, organizations which are in learning stage try their level best to avoid stability through constant self-examinations and experiments. Hence, business community at all levels either lower or top management; they must need to be concerned in strategic management. However, an important thing whether we scan the environment only for critical information, and also we suggest changes to those programs and strategies to take advantage of environmental shifts, and improve work methods, procedures and evaluation techniques (Hunger & Wheelen, 2010; Snyman & Kruger, 2004). Strategic Management Theories As we know that strategic management is a set of procedures and versatile approaches for outlining the objectives of a corporation, development of policies and plans for achieving these objectives, and allocating the resources in such a way that its implementation in the policies and plans could become easy and productive. Moreover, in other words the basics of strategic management can be viewed as an arrangement of plan formulation, implementation and also its evaluation. In this scenario, many researchers have offered a number of strategic management theories. However, most of the strategic management theories normally focus on the perspective of the system. Thus, it can be said that strategic management theories are useful for profit maximizing as well as for competition. Normally the theories that we relate with strategic management eminent and also applicable are the profit-maximizing theory, competition-based theory, the survival-based theory, the resource-based theory, the agency theory, the human resource based theory, and the contingency theory. These theories will be discussed in coming sections in order to show their connection with the strategic management and how these theories are helpful for the corporations to grow in various conditions like competition, ongoing market trends, human resource, and investment utilization. For drawing and implementing a full fledge strategy on some managerial level or in some organization, given points have their own importance (Raduan, Jegak, Haslinda, & Alimin, 2009; Olsen & Haslett, 2002). Profit-maximizing and competition-based theory is based on the idea that the major objective of business organizations is to make best use of long term profit and develop sustainable viable advantage over competent rivals in the outside marketplace. In this scenario, the industrial-organization (I/O) viewpoint is a little bit different which lies on the basis of this theory as it views the organizational external market position as the most significant aspect for attaining as well as for sustaining competitive benefits. Moreover, it can be said that the conventional industrial-organization I/O point of view offered strategic management as a systematic form for assessing struggle within some business. However, if we analyze the survival-based theory that centers on the idea that organization need to constantly become accustomed to its competitive environment in order to survive in ever-increasing competitive market. However, this approach differs with the human resource-based theory, which emphasizes on the value of the human factor in the strategy development of some organizations. Moreover, the concept of survival-based theory centers on that organizational requirements which continuously settle in to its competitive environment for survival. Thus, this idea is different to the human resource-based theory, which is based on the significance of the human element in the strategy development of some organizations (Raduan, Jegak, Haslinda, & Alimin, 2009; Olsen & Haslett, 2002). Information Systems and Strategic Management Information System: Basic Overview An information system refers to a structured collection of hardware, software, policies, equipment, events and people to store, process, manage and also provide a way about to receive information. Moreover, information systems are useful for achieving goals as a source their own human resource, by utilizing technological simulations, collection, processing, storage, use and broadcast that information (Queensland Government Chief Information Office, 2008; Laudon & Laudon, 1999). However, information systems (ISs) are mainly centered with the necessary information that the mainframe systems can offer to support some organization, either this organization be a non-profit or some sort of governmental body. Information systems can be believed as a feature for defining the goals and how we can achieve these goals with in certain factors. It is also focused with the procedures that we can apply it on some project and its implementation can become easy by enhancing the information technology techniques. However, corporate information system (IS) professionals have to recognize both factors related to technical factors and organizational challenges and are required to be capable of helping their corporations either localized or some multinational in determining how information along with technological-supported business processes can meet the requirements and also provide a basis for better organizational throughput. Furthermore, information systems serve as a link between both technological as well as managerial communities within a corporation (ACM, Inc., 2006; Stair & Reynolds, 2003). In everyday changing market trends, sophisticated business companies develop their habit to rely more and more on their information systems in order to deal with the complexities and volatility of the circumstance that a corporation can face in an ongoing market environment, in which they manage and as a result of their inner organization structures. In addition, they have to know about the level of information that they gather, must be productive, up-to-date, comprehensive and precise. Because the information has become a major requirement to stay alive in an increasingly competitive global world, where we have to face a lot of problems but to manage our organizational structure in such a way that within and outside it is considered as an organization which is operationally excellent. At the present, we can see a lot of developments in information technology areas like vibrant supportive networks, customer and supplier relationship, mass customization of services as well as products, and continuous procedure to control the required automated means, in order to mange the operational business processes. Moreover, it is a fact that role of humans cannot manage the whole operation in an efficient and valuable way anymore. As a result, business requirements related to information systems are raised at a dazzling tempo (University of Technology, 2010; Turban, Leidner, McLean, & Wetherbe, 2005). On the other hand, emergence of global economy with continuous and rapid developments in field of information technology provided way to application types that minimally to be considered as not realistic just a few years ago. Moreover, information systems nowadays are considered as a purposeful foundation and strategically advantage for the successful business. These developments belong to directly or indirectly with the range that starts from basic computing technology with communication technology and a broad range of informational data and also valuable in processing the management technology for comprehensive frameworks generally required in enterprise information systems as well as in electronic-business systems (University of Technology, 2010; Turban, Leidner, McLean, & Wetherbe, 2005). Consequently, the role of information technology for the businesses has become an article of trade; when we joined it with correspondingly analyzed changing factors in some organizational level or in management, it is useful for the establishment of new products, services and business models, customer and supplier intimacy, decision making and ways of conducting business that provide corporations with a competitive edge (Answers.com, 2011). Role of Information System in achieving Strategic Advantages Information systems have emerged as a useful method of integration and the provider of new-fangled competitiveness in support of today’s venture in the global marketplace trends, which are growing. In this scenario, we have lots of examples of strategic planning that have changed adequately to support the advance role of information systems and technology (Pant & Hsu, 1995). Business related information systems (IS) which maintain various critical business related processes and operations, managerial level, and competitive strategies. Thus, an investment like information system can support a foundational competency. In this scenario, a lot of corporations either they have business at national level or they invariably have tendency to move forward in global market place, a bit they can do superior than anyone else. Moreover, it could be anything from new item for development towards the customer service. Furthermore, information systems have the ability to play a major role in strategic management of corporations, which is helpful in many ways for instance, if we talk about strategies it includes technology focus, personnel and career development, alignment with the organization can support that core competency. On the other hand, if we talk about policies that are required for information systems to be used in strategic management includes organizational arrangements required for strategic planning, outsourcing (use of outside IT services), selling IT services to outside organizations while implementing information system in any corporation. In this scenario, information system (IS) is an organization’s main competency that can generate a considerable barrier to entry for other organizations. Furthermore, if information systems are used in strategic management for a fully equipped organization it can enhance distribution channel management (Yahoo, 2011). The growth that we analyzed in information system and technology in the last two decades has been exceptional. In this scenario, the role of information system in strategic management is primarily concerned with providing an organization its members with assistance in performing the routine tasks efficiently and effectively. However, one of the key concerns before any organization is to deal with the goals and objectives (Pant & Hsu, 1995). In this scenario, some organizational tactics that are supported by information system (IS) fulfilling its mentioned business aims keeping in view of different aspect that directly or in directly affiliates with market trends. Such information system functions in strategic management consist of those aspects that are involved in gathering, analysis and maintenance of data concerning internal resources or external, and aptitude about competitors, suppliers, consumers, government departments and other non government organizations (Pant & Hsu, 1995). Moreover, the enterprises which are facilitated by (information systems) are generally assumes one of the following forms: (Pant & Hsu, 1995; Laudon & Laudon, 1999) Vertical Quasi Integration: In this technique, existing interaction with consumers and suppliers can become more strongly coupled (Pant & Hsu, 1995). Outsourcing: In outsourcing, actions earlier performed inside the organization due to high transaction risk might be shifted to third party. This is very helpful to the organizations in a sense that they get assistance from the advanced production financial side, such as specialization and scale (Pant & Hsu, 1995; Laudon & Laudon, 1999). Quasi Diversification: This method allows the corporations to collaborate across markets to influence their centralized assets in innovative areas. However, it is focused on exploiting improved financial side of scale and scope in those resources (Pant & Hsu, 1995).  Advantages of using information systems At the present, it is very difficult for anyone to explore too many organizations that are not using computers to carry out their business activities. Information systems have transformed the ways through which business activities are conducted. In addition, when we use information systems in strategic management it provides businesses with many significant as well as tangible benefits which can boost their efficiency, competence and eventually results in profitability (Goessl, 2010). The benefits which information systems provide are infinite, but it is important for those companies which recognize the responsibilities and challenges that come with using information systems. However it is also a true fact that technology revolution increases and enhances the capabilities of trade and business, but there are further factors to think about it as well. Moreover, the benefits of using information systems are very important and that’s why they are considered as the most important reason for many businesses that choose to spend in information systems (Goessl, 2010). In this scenario, achieving better data integrity and less redundancy is one of the important benefits that organizations avail by using information systems. An important aspect that computer information systems are programmed in such a way to have incredible ability to abolish duplicates, also it points out inconsistency and merge data jointly to make it more convenient (Goessl, Advantages of using information systems in business , 2010). Information systems bring a lot of benefits for all the areas of business. Below we will discuss how they can support strategic management: If the level of redundancy associated with different business operations is eliminated it can cause saving of cost. When redundancy is eliminated and/or condensed, it saves operational hours worked and frees up workers to take on other responsibilities that they want to done. However, these processes can be made more efficient through information systems which supplementary diminish redundancy (Goessl, 2010). Another substantial benefit that we analyzed by using information systems is assimilating. When computers can take over some of the tiresome, comprehensive detail and routine responsibilities; this will help us in creation of processes to move more rapidly with an elevated amount of accurateness. Even as its proper human resources still engage in recreation with a vital task in ensuring that data is entered in the approved manner, on one occasion if we entered in the required program, the information system can efficiently enhance integrity as well as efficiency (Goessl, 2010). The planning aspect is much important when we talk about achieving maximal output. Seeing that proper planning leads a company towards profit and it also results in diminishing overhead expenditure. However, when organizations implement a totally new system usually it comes with a high value tag, but if processes and business requirements are properly analyzed and precisely recognized, the payoffs can be immense (Goessl, 2010). It is a true fact that investing in information systems helps some companies to carry the ability to uphold visible status in the global or national economy and keeps a business competitive. Thus, without information system (IS), businesses will be more than likely fall hastily in the rear (Goessl, 2010). It is a true fact that a lot of benefits of integrating tools within a corporation can truly be boundless but it depends on the level of strategic planning, innovation and creativity in the decision making process (Goessl, 2010). Challenges in implementing Information Systems We know that the idea of strategic management has developed significantly in such a way that organizations stumble on new but better ways to collect information about financial performance and operations. On the other hand, almost two decades ago, strategic management was considered one of those things that are limited to rudimentary analysis which was repeatedly backed by data quality. At the present, in changing trends in business where spectrum is wide, quality management systems have formed a strategic framework. This strategic framework is purely dependable on statistical tool driven by business related software applications and process development methodologies. However, basic goal is to find a point of common ground: (Bryant, 2011) Bridging the Gap Systems like quality management systems (QMS) similar to Six Sigma along with LEAN manufacturing are the two frequently used business managing solutions which help a lot to build a common language that is useful in reporting results and for interpreting the data required by the organizations. In addition, these management systems are providing effective services, but sometimes they are incompatible with business systems to which they are working. As a result managers ought to find ways to link the gap between the data provided by business information systems and quality assessment tools (Bryant, 2011). Customized Tools In the above discussed scenario, one way to bridge the gap between management information systems and strategic management is to construct a modified tool which is precise to the organization or some business element. On the other hand, this is the well-organized way, but natural or organic models formed by spreadsheet and databases applications (like MS Excel and Access) can make it complicated, which can cause reduction in productivity levels. In this scenario, a more effectual solution is to inquire users of business information data to present insight into the general uses of data. Hence we can then customize a solution to the business operating system (OS) used and save our organization with both time that is much precious and money (Bryant, 2011). Moreover, organizations face a lot of different problems such as rules applied by government, internet-based piracy and security issues, social and economic effects of climate change, nanotechnology, shifting societal values and distraction of business. Coupled with varying harms of business is a need to expand more comprehensive but pragmatic measures of managerial performance (Grant, 2010). Conclusion Strategic management is a business methodology that is useful for making the most competent use of available assets and resources in operating process of an organization. However, the basic idea behind any strategic management process is to assess the existing status of the operation and all of its individual components, we must identify whether those components are being utilized in such a way to attain maximal outcome, and to expand and implement the required changes when and as necessary. In addition, organizations use information systems to support strategic management. 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