Have Information Systems Affected Competition - Report Example

?  Have information systems affected competition. Have information systems affected competition. Information technology is a science that uses computers to transfer data from one source to another and also to save data in the hard drives. Information systems is a branch of IT that brings a connection between the field of business and a well integrated system of computer science in the constantly changing world of scientific technology. In common understanding, information systems comprises of a common operation involving people, data, hardware, software and procedures that are all involved in the analysis of digital information (Armoni, 2000).  The business environment today uses information systems in almost all activities. Helped by constant development and changes, information systems currently control the key operations in the business world from production, sales, processing and even marketing. However, it is important that any business intending to employ the use of this technology understand its implications in full, especially, its influence to output and resultant profits. When the issues are fully understood, organizations require tools to necessitate the implementation of the information systems technology. This should be in a manner that will enable them increase their strategy in competition within their market (Bogetoft & Olesen, 2000).  One way in which many organizations have viewed information systems over the years is through a pyramid that would show a certain hierarchy that is observed in the organizations. At the bottom are the systems involving transaction processing, systems used to manage information systems follows closely, above this are systems that support decision making and the highest ranked are the systems that are used to save executive information. This was the most rudimentary organization, yet the level of organization it brought to a company enabled it to grow and prosper than its competitors. In the recent contexts, there have been new technologies that have changed the basic framework to encompass the changes in the contemporary business environment. Some of the new improvements are enterprise systems, global information system (GIS), and enterprise planning using resource departments, data warehouses, global information systems (GIS) and the automation of offices (Neumann, 1994).  It is obvious that information systems have influenced the competition by companies over the past few years; this is seen from the fact that most managers have been forces to integrate the use of software technology in their offices, production and daily running of activities. This revolution has made the finance departments to be forced to locate funds to purchase hardware used in managing information systems, training of these system’s personnel and encouraging capacity building through funding trainings and workshops. Some of the competitive advantages gained from the use of information systems are reduction in costs that are incurred when obtaining, transmitting and saving information within a firm and between different business groups (Armoni, 2000).  Information systems fall under the group of competitive systems. This is because it involves many services all of which have a contribution to how and when decisions will be made. In addition, information systems have the competitive advantage of enabling users to collect data from the primary resource center, and then analyze it on the spot using well defined pre-set programs. The systems of information will enable users to plan ahead of their competitors and know their intentions beforehand (Rainer & Cegielski, 2011).  In addition, fieldwork analysis will help the managers to know the changes that occur in the market, changes in customer requirements, how the structure of the industry has changed in such issues as social, physical, and the physical forces; this would be with the use of internet searches on the news sites. Furthermore, the continuous changes in technology within and outside the company’s realm can be easily identified and made into use to help the company perform better for its shareholders as compared to other firms. The biggest advantage that information systems poses to companies who invest in the technology is that there would be no surprises from the field, the competitive surroundings and potential opportunities and threats are identified in earnest and action taken in the right manner (Bogetoft & Olesen, 2000).  The revolution of information systems, therefore, affects competition in three main forms. One is that it has changed the structure and form of the market, and when this happens, the initial rules followed in the competition are all altered. Secondly, information systems are likely to sprout a new form of business. This mostly arises from the existing operations of the company. Thirdly and the most important is that information systems will always bring competitive advantage to the firms using them and hence create new ways in which the business can perform better than their rivals (Armoni, 2000).  Information technology has lead to changes in the manner in which companies operate by affecting in how the firms create products, ending up to give the product a new shape. The main effect is to increase the value of the products to their customers. The value chain created by information systems is achieved by dividing the activities of the companies into economically distinct sections. A business will be said to be profitable if it creates a value that I higher than the cost of improving the state of the product. Information systems enable companies to perform production activities at costs which are lower than before and increase the value of the product. This will in turn encourage the firm top lower the prices of their products and increase sales. In effect, competitive advantage is gained (Neumann, 1994).  Linkages are very important for any company to enable synergy in its operations. For example, the marketing department has to inform the sales department on how the consumers behave in relation to certain changes. The production line members need to efficiently equip the marketers with information details about the products of the companies, the advantages of the products and the architecture of the products. These departments could be located far from each other in most companies, especially the large ones. Therefore, information may need to be passed through long channels (Neumann, 1994).  In addition, many times, the members of these different wings of operations may only meet during organized meetings. For effective market approach, actions are usually supposed to be taken immediately. This is so as to arrest negative situations immediately or to take advantage of an opportunity while it still lasts. Passage of information using information systems will enable the management to react to certain issues faster without even having to meet. Using electronic mails to pass memos from one department to another, or inform all departments of an impromptu meeting is efficient and cost effective. It not only saves time needed for a decision to be passed, but it also creates a better understanding between the relevant parties participating in the process (Armoni, 2000).  The company can also obtain competitive advantage by having a strategy that optimizes the tradeoffs presented by a situation. These decisions are usually determined by information that has been gathered in the primary form, and then analyzed in a manner that is easy to understand. Information systems are programmed specifically to aid ion such analysis and derive business conclusions that are wise. For example, a situation where a production company s faced by a situation where the management has to choose between a costly design for a product or a raw material that is expensive in its initial purchase but causes a reduction in costs of after sale services. Therefore, a good information system can provide sources for which analysis is done to draw up the best choice for the company that will ensure highest obtainable profits at low costs (Rainer & Cegielski, 2011).  Information systems have changed the manner in which marketing is done. Three quarters of products exposed to the markets have two parts. The first is their physical component, which is the visible and tangible part that can be accessed when one purchases it. The second and very important is the information part of the goods produced. The information part is important because it gives the buyer all the information he or she may need to be convinced to buy the good. The information usually has details on the characteristics of the product and how the user should make use of it so as to receive the required efficiency. An example is that most consumer appliances that have convenient and accessible information on how to do repair and maintenance services have recorded higher sales than those that do not include such information. This has changed how other businesses now operate in every market. The new technology has shifted a product’s importance from its physical component to the information component. General Electric has provided a database for its products so that it can easily be separated from other providers (Armoni, 2000).  Their support hotline that operates full time ahs separated it from its rivals making it have a competitive advantage as the consumers’ prefer a product which they are sure to get guidance in case anything unusual arises during its use. It is in the same breath that most of the railroad and companies involved in trucking have made use of Global positioning systems to give their customers real time details about where their ships, freights, and goods are located. This has improved the organization and coordination between the railroad and shippers. This improvement in technology and use of information systems has increased the possibility of offering products which do not have their physical components by any way. For example, customers of CompUSA are able to access corporate and financial information stored in offices of the exchange and security commission (Rainer & Cegielski, 2011).  The business has been thriving son much than recently many companies are performing analysis of use of energy of building structures without even going to the buildings. Information is just achieved from the well located temperature sensors and ventilation zones. These data are then analyzed and inferences made in relation to the derived analysis (Bogetoft & Olesen, 2000).  Information technology that is derived from information systems has lead to changes in the structures of different industries. The skeleton structure of any market industry is normally under control of five main forces, these are the strength of suppliers, the power of buyers, the treats that are posed by new entrances to the market, the threat of companies that produce substitute goods and the degree of rivalry that is already in existence between current competitors. Information systems can alter each of these five forces in different ways, therefore, determining how business will be done. In the case of buyers, the information provided to them by these systems increases their power in the industry. Buyers are able to evaluate where materials come from when they are given vendor quotations and automated bills. For those who are trying to get into the market as new recruits, information systems that would need the small companies to invest large amounts in complex software systems may prove to be high barriers to their entry. An example is in the banking for corporate institutions market. The current requirements that there has to be an on-line account that shows real time account details has made the new investors into the market think twice about viability (Neumann, 1994).  Computer aided designs and systems running manufacturing systems have a hand in the changes in the threats that substitute producers have posed in the market. The flexibility has enabled an easier, cheaper and quicker ways to put in better features into products. This will also encourage the companies losing customers to the new product change their ways, therefore, always shifting the market for these substitute products (Armoni, 2000).  Information systems have enabled most companies of the developed states to go to the global field by opening branches in foreign land. Production has been taken to countries that provide cheap labor like India and China. The information from both branches is easily accessed through the databases organized by the two companies. Furthermore, information technology has made franchising a successful possibility and rules the business expansion projects today. Therefore, we owe it to information systems for the globalization of the business world today (Bogetoft & Olesen, 2000).  References Armoni, A. (2000). Healthcare information systems: Challenges of the new millennium. Hershey, Pa [u. a.: Idea Group Publ. Bogetoft, P., & Olesen, H. B. (2000). Incentives, information systems and competition. Copenhagen: Centre for Industrial Economics. Neumann, S. (1994). Strategic information systems: Competition through information technologies. New York: Macmillan College Pub. Co. Rainer, R. K., & Cegielski, C. G. (2011). Introduction to information systems. Hoboken, N.J: J. Wiley & Sons. Read More