Quadrant under Which MDCM Falls in Accenture IT Governance Model - Case Study Example

Quadrant under Which MDCM Falls in Accenture IT Governance Model Table of Contents Introduction 1 Quadrant Under which MDCM Falls in Accenture IT Governance Model 2 Strategic Goals of MDCM 2 Competitive Forces Analysis of MDCM 3 Bargaining Power of Suppliers 3 Bargaining Power of Buyers 4 Competitive Rivalry 4 Threats of Substitutes 5 Threats of Entry 6 Critical IT Objectives of MDCM 6 Conclusion 7 Works Cited 8 Introduction MDCM Inc., considered as one of the largest and oldest contract producers of medical devices, was founded in the year 1972. The company was US based and operated with nineteen subsidiaries located in thirty five different foreign cities. The company was also registered with Food and Drug Administration (FDA) of the US. The company had been facing failure consecutively, and it has been identified in the fifth consecutive quarterly loss. This was the result of inadequate and improper information technology implementation in the operations of the company (Jeffery, M & Norton, J. F, “IT Strategy Synchronization”). The paper will study the failure of the information technology practiced in the company. The paper is also intends to provide with the strategic goals of the firm and the analysis of the competitive environment of MDCM Inc. Quadrant Under which MDCM Falls in Accenture IT Governance Model The Accenture IT Governance Model enables to examine the way an organization’s information technology based function creates value addition to the organization by the consideration the two factors i.e. ‘basis for competitive advantage’ and ‘rate of change in an organization’. In relation to the case it can be observed that MDCM falls under information integrators. It has been identified that there was lower-rate-of-change in the organization. The organization primarily competed on the base of product/service differentiation. The management of the ‘information integrators’ generally expect to use information in order to improve their decision making process. The information is expected to be used in order to create new products as well as services. The management of MDCM also sought for use of information in order to make their decision making process faster, which would in turn enable them to enhance operational efficiency and reduce cost of operations (Jeffery, M. & Norton, J. F, “IT Strategy Synchronization”). Strategic Goals of MDCM One of the main strategic goals of MDCM was to reduce the production cost which was observed to be extra expense of the company. The company was found to be lacking in making proper arrangement in its operational process which disabled the company to contact with the subsidiaries effectively. The main goal of the company stands to be determined in facilitating smooth flow of information. The company needs to enhance its profitability by reducing its extra expenses. The company is observed to follow obsolete email system. The new accommodated legacy system ‘Horizon 2000’ was noticed to increase the administration costs adding to the expenses of the company (Jeffery, M. & Norton, J. F, “IT Strategy Synchronization”). MDCM was recognized as one of the leading companies which used to enjoy maximum market share but in the due course the market share has reduced, thus one of the main strategic or business goals has been to enhance its market share. The other goal of the company is to gain the leadership in the medical product producing industry (Jeffery, M & Norton, J. F, “IT Strategy Synchronization”). Therefore, the company is concentrating on reducing its internal cots by introducing better information technology which will further enhance the efficiency of the company adding to its productivity, effectively (Jeffery, M. & Norton, J. F, “IT Strategy Synchronization”). Competitive Forces Analysis of MDCM Porter’s five forces’ analysis is recognized as a tool utilized to determine the power of the business situation. It helps by providing information about the competitive position of the organization. Porter’s five forces’ analysis is taken into consideration with a motive to analyze the competitive environment of MDCM Inc (Porter, M. E., “Competitive strategy”). To be precise, Porter’s five forces’ analysis is further divided into five factors: Bargaining Power of Suppliers The suppliers of MDCM Inc have always been one of the major influences to determine the profit and the future of the company. However, the company can overrule this power if the availability of the raw materials along with maximum number of the supplier is present in the market. In the industry in which MDCM operates has been observed to possess medium bargaining power of suppliers. There is enough availability of suppliers which can help the company to reduce the extra incurred expenses and the IT system can play a crucial role in this process. The company will be in the position to classify the potential suppliers who would provide it with comparatively lower costs. The reduced cost of the raw materials will help the company to achieve competitive advantage in the market. In order to attain this aspect, MDCM needs to incorporate such IT system that would decrease the switching costs incurred due to consumers’ shift to other companies (Porter, M. E., “Competitive strategy”). Bargaining Power of Buyers In the medical devices industry, the bargaining power of buyers is identified to be quite high. The industry encompasses buyers which are generally industrial consumers and there are a number of providers of similar products, thus it enhances the buyers bargaining power. MDCM was once considered as the leader in the market, gradually it has been facing decline in the customers as a result of the inadequate information system. This has also impacted upon the bargaining power of the company in the market which they need to rectify (Porter, M. E., “Competitive strategy”). Competitive Rivalry In the industry of medical devices, the competitive rivalry is identified to be high. There are a number of organizations with similar capabilities which has increased the rivalry among them. MDCM Inc can take steps to collaborate with its rivals. The company is well renowned globally, the new rival with advanced technology can be provided with the proposal of the cooperation. This will help both the corporation to enhance their profitability. The sharing of information system will help MDCM to reduce the customers’ bargaining as well as substitution risks and the new rival company will be able to make its position better in the market by collaborating with the existing giant company (Porter, M. E., “Competitive strategy”). Threats of Substitutes Medical devices’ industry faces medium threats of substitutes. Substitution of medical devices can be seen in terms of products of other competitors. However, if an organization provides durable, affordable and technologically advanced product then the threat can be mitigated. MDCM operates in such environment that experiences medium level of threat of substitution. Many companies are available in the market which operates with the similar kinds of product. MDCM has customer system that adds into administration costs rather than adding in the efficiency and the customers are getting distracted to other companies. Thus, the company needs to develop such IT based system that would add efficiency in the work of the company and also reduce the administration costs (Porter, M. E., “Competitive strategy”). The existing system of the company is employing major manpower forces for assisting the customers which has proved to be a major failure. With introduction of better information system, the company can cut off the extra cost of hiring the labor and the money can be used to retain the customers by providing with the better facilities (Porter, M. E., “Competitive strategy”). Threats of Entry The industry of medical devices faces quite high threat of entry from a new entrant. The environment of the market it operates in is highly competitive and experiences maximum number of new entry. The company needs to focus on product innovation and incorporate such IT based production technologies that would provide it with competitive advantages. Here, the company needs to focus on producing the product better than its competitors along with the new product launch in the market (Porter, M. E., “Competitive strategy”). Critical IT Objectives of MDCM MDCM was operating a communication system which was outdated and inadequate for the company to perform better in the market. The company needs to upgrade the information system which would provide the production head with the up-to-date information that would further be utilized by the company for making related decisions. Supply chain system is needed to be upgraded so that the operation heads have immediate information about the system (Jeffery, M & Norton, J. F, “IT Strategy Synchronization”). MDCM needs to develop effective information system so that the required and on time information is provided, which will enhance the efficiency of the company. The company can incorporate value added facility to enhance the profitability. Information technology can play a major role in adding added impetus to the entire system, thus the resultant outputs can be provided according to the needs of the customers. This is highly effective in gaining the competitive advantage. The company can provide with the value added facility to its customers in three ways. For instances, the company can provide with the better customer care facility, increase efficiency in processing the order and ensuring that the replies to the enquiries are received immediately. The company can also concentrate on establishing relation between the customers and the suppliers (Jeffery, M & Norton, J. F, “IT Strategy Synchronization”). Conclusion MDCM had gained the customer satisfaction by the practice of working together with the customers i.e. sharing profit and risk. The company, in its initial period, was able to attain 42% of market share (1974) and the trend was that of growth (Jeffery, M & Norton, J. F, “IT Strategy Synchronization”). The company acquired many firms, mostly, outside the US and was concentrated on providing diverse facilities to the customers. But, due to the lack of the advanced information technology in the operations of the company, it lost its major market share. Thus, the company needs to provide upgradation and rectify its existing IT based system in order to overcome the hurdles and to get back as a competitive force in the market. Works Cited Jeffery, Mark. & Norton, Joseph F. IT Strategy Synchronization Kellogg School of Management, 2006. Porter, Michael. E. Competitive Strategy Free Press, 1993. Read More