Competitive advantage in businesses can be considered as an attribute, which allows the organizations to outperform their competitors. According to Scarborough (2016), competitive advantages generally include the accessibility to the natural resources like low-cost power sources or high grade ores, geographic location, highly skilled labor, accessibility to new technology and high entry barriers. It can be said that the competitive advantage of any company helps in leveraging the business over their competitors. This can also be gained by providing the clients with greater and better values. Advertising services and products with higher quality as well as lower prices interests the customers.
Competitive advantage has a very little to do with the accessibility to technology. Enterprise systems are one of the most adopted technologies in businesses and without this; it would be difficult for the firms to achieve competitive advantage. The companies do use their Enterprise Systems Strategy in order to achieve the competitive advantage. The purpose of this essay is to select three major strategies in order to discuss how an Enterprise System can allow a firm to achieve their competitive advantage. In addition to this, the report also consists of two different industrial examples for each strategic approach selected for supporting the overall discussion.
The essay mainly focuses on the developed nations, arguing that information technology when used efficiently and effectively helps to bring in better quality of the products, greater speed and flexibility. In addition to this, the first mover advantage also helps in reducing the cost impact of information technology, which is of secondary importance. For example; the organization for Economic Cooperation and Development experience with the information technology has been mixed, which is often disillusioning. The nations along with their well developed infrastructures, telecommunications infrastructures, national computer and substantial resources have however, failed to develop the universal rules of applying information technology in a successful manner (Laudon and Laudon 2016).
The obstacles are regulatory and managerial, but not technological. The unpreparedness by the companies, lack of standards, regulatory barriers and other factors tend to inhibit the diffusion of information technology. Enterprise systems can be regarded as one of the most adopted technologies in businesses. Without this technology, the firms will not be able to achieve the competitive advantage. Three different strategies are being chosen in order to discuss how the enterprise system strategy allows a company to achieve the competitive advantage. These three strategies are; cost leadership strategy, differential strategy and the focus strategy. The cost leadership strategy depends on the ability of the business to produce a service, which will be at the lower costs, than that of its competitors (Pearlson, Saunders and Galletta 2016).
For instance; Domino’s Pizza and Pizza Hut produces same kind of products and offers same type of services to its target customers. In addition to this, their target audience is more or less same. Both the businesses are each other’s competitors. However, Domino’s pizza has a wide range of products at much affordable prices for the lower and middle class groups. Lower costs helps in generating higher profits as the businesses still make a reasonable profit on each service or good sold. Therefore, it helps in providing the price value to its target customers. Same is the case of Domino’s Pizza as Porter suggested that finding a less cost base like materials, facilities and labor will help a business yield better outcomes (Grant 2016).
This also benefits the business on the long run as it gives the company a lower manufacturing expense over their competitors. In addition to this, the company can also add values to the customers by transferring the cost benefits to them. Another example of cost leadership strategy is what Burger King has undertaken in order to compete with its big time competitor KFC. The food joint has introduced a huge range of menu for their target customers, which are affordable without compromising the quality of the food. This strategy helps the businesses in gaining more and more advantage over its competitors (Suri 2016).
The second strategy is the differential strategy which gives a differential advantage to the business’s services and products that are different from its competitors. Michael Porter, in his theory, explained that those services and goods which are more attractive, stands out from their tough competitors. However, it is immensely important for the businesses to conduct a strong market research in order to design as well as develop innovative ideas. These particular improvements to the services and goods can also help in delivering high quality products to the customers. In addition to this, if any customer sees a service or product as being different from other products, the customer might want to pay more for receiving the benefits (Van Alstyne, Parker and Choudary 2016).
In simpler terms, differentiation means the companies deliver their high quality products with better benefits than their competitors. For example; an organization can achieve the differentiation strategy by providing its customers with high quality products at good prices. These companies do not compromise on their products quality and due to this; the customers love to buy their products, without even thinking about money. Apple products are one such example, which fits into this case scenario. A firm having a good differentiation strategy usually charges a premium price. This means that the company usually has a high profit margin (Booth 2015).
Another example of differentiation strategy is to deliver products faster than the competitors. The companies generally achieve the differentiation criteria with quality, innovation and customer services. Innovation generally means that they meet same needs of the customers but in a new way. The iPod can be seen as an innovative product as it allows the users to listen to whatever songs they want. Apple is a great example of this as it provides the customers with best services and products. Customer services are also good as the company goes out of their way to delight their target audiences (Welford 2016).
The third strategy is the focus strategy which ideally tries the businesses to aim at certain target markets rather than every individual. This particular strategy is often used by the smaller businesses as they do not have adequate resources and abilities to target the entire market. The businesses often use this particular method in order to focus the needs as well as demands of the customers and how the company’s services or products can improve their lives. Similarly, in this specific method, most of the firms might even let the customers give their valuable inputs regarding the products and services (Sakas, Vlachos and Nasiopoulos 2014).
This strategy is also termed as the segmentation strategy and it includes the demographic, behavioral, physical and geographic segmentation. The companies can narrow down their market into smaller segments so that it helps them in meeting the changing preferences of their target customers. Michael Porter stated that once a company have decided its target group, it is highly essential to decide which approach the company will undertake. The focus strategy might not make a business successful. In addition to this, Porter also mentioned that it is immensely important to not utilize the three generic strategies as there are higher chances that the companies might come out gaining nothing and achieving nothing. This can be termed as the ‘stuck in middle’ factor as the companies will not be able to gain competitive advantages (Cooper 2017).
For example; the community banks usually follow the focus strategy in order to gain a sustainable competitive advantage. They mainly target the local or small businesses or say, higher net worth people. Most importantly, their target audience generally enjoys the personal touch, which the big banks are unable to give. These types of customers love to feel special and valued by their chosen companies. Therefore, it can be said that the customers here, might also pay a little more fees for the services. The community banks are utilizing the differentiation type of focus strategy (Rugman and Verbeke 2017).
In addition to this, a country can also utilize the competitive advantage. This is generally termed as national comparative advantage or competitive advantage. For instance; China generally uses cost leadership strategy, as the country exports their low cost products or services at quite a reasonable quality level. However, it can do so as the country’s living standard is a bit on the lower side. Therefore, the country can pay its daily wagers less. Another example; the country Japan has changed their competitive advantage from cost leadership to differentiation strategy in quality brands like Lexus. It can be said that the firms’ enterprise system strategy might allow the competitive advantage to be achieved through the above mentioned strategies (Rosenfeld 2017).
Moreover, the individuals can also gain competitive advantage. If the individual is an employee and works in a company then his/her target market is the employer. Moreover, the employee’s benefit depends on how well he/she can increase the profitability level of the company. The competition of the employee is his/her co-workers as well as technology. However, he/she should communicate the competitive advantage within the appearance, interview and resume. Once the candidate gets the job, it is important for him/her to continue the communication process in the work performance (Cassidy 2016).
In addition to this, to design the successful strategies for competition, the firms should conduct a competitor analysis at a regular basis. The competitor analysis helps in providing a defensive as well as offensive strategic context, in order to identify the opportunities, threats and other factors. The offensive strategy allows the firms to exploit their opportunities more quickly and also capitalize their strengths. On the other hand, the defensive strategic context allows the firms to counter the threat more effectively, posed by the rival firms, seeking to exploit their weaknesses. Through the competitor analysis, the firms try to identify their key competitors and develop some profiles for each of them (Tan et al. 2015).
It helps the companies in identifying their competitors’ strategies, objectives, strengths as well as weaknesses. The firms which gauge their threats through effective measures, gets to understand the reactions or moves of their competitors. Furthermore, the firms which develop an advanced or systematic competitors profiling, tends to have more significant competitive advantages. In this context, it can be said that the enterprise systems helps in achieving the competitive advantages through the strategies, which might allow the companies to become low cost producer, become more innovative and provide its employees with analytical abilities. It helps them to focus on a particular niche customer markets (Fleisher and Bensoussan 2015).
For example; the enterprise systems of Apple Company integrate a lot of applications, formats and protocols. In doing so, the enterprise system allow the company to integrate their business processes like accounts, deliveries and sales. It does so by sharing the information across the business functions as well as employee hierarchies. These systems help in replacing the multiple independent systems, which might or might not interact with the process data and systems for supporting the particular business procedures and functions. Another example is that enterprise resource planning have supported the entire process of sales, which include sales orders, pre-sales activities, deliveries, inventory sourcing, customer payments and others. This has helped the companies in gaining competitive advantage on the long run (Pisano 2015).
Conclusion
To conclude, small businesses tend to implement the enterprise systems in order to gain a company-wide accessibility to the business knowledge. It helps in increasing the employees’ productivity level and minimizing the duplication of the company data. The enterprise system strategy also helps in reducing the costs of information technology as well as minimizing the manual data input method. These attributes of the enterprise system provides the company with particular benefits like teamwork support, improved marketplace response, greater employee efficiency and collaboration and increased quality of the work. In addition to this, enterprise system management also helps the companies to gain competitive advantages on the long run. This in turn, benefits them in enhancing their profitability level. Therefore, it can be said that the enterprise system strategies are beneficial for the companies and their operations.
References
Booth, S.A., 2015. Crisis management strategy: Competition and change in modern enterprises. Routledge.
Cassidy, A., 2016. A practical guide to information systems strategic planning. Auerbach Publications.
Cooper, R., 2017. Supply chain development for the lean enterprise: interorganizational cost management. Routledge.
Fleisher, C.S. and Bensoussan, B.E., 2015. Business and competitive analysis: effective application of new and classic methods. FT Press.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
Laudon, K.C. and Laudon, J.P., 2016. Management information system. Pearson Education.
Pearlson, K.E., Saunders, C.S. and Galletta, D.F., 2016. Managing and Using Information Systems, Binder Ready Version: A Strategic Approach. John Wiley & Sons.
Pisano, G.P., 2015. You need an innovation strategy. Harvard Business Review, 93(6), pp.44-54.
Rosenfeld, S.A., 2017. Competitive manufacturing: New strategies for regional development. Routledge.
Rugman, A. and Verbeke, A., 2017. Global corporate strategy and trade policy. Routledge.
Sakas, D., Vlachos, D. and Nasiopoulos, D., 2014. Modelling strategic management for the development of competitive advantage, based on technology. Journal of Systems and Information Technology, 16(3), pp.187-209.
Scarborough, N.M., 2016. Essentials of entrepreneurship and small business management. Pearson.
Suri, R., 2016. It’s about time: the competitive advantage of quick response manufacturing. Productivity Press.
Tan, B., Pan, S.L., Lu, X. and Huang, L., 2015. The role of IS capabilities in the development of multi-sided platforms: the digital ecosystem strategy of Alibaba. com. Journal of the Association for Information Systems, 16(4), p.248.
Van Alstyne, M.W., Parker, G.G. and Choudary, S.P., 2016. Pipelines, platforms, and the new rules of strategy. Harvard business review, 94(4), pp.54-62.
Welford, R., 2016. Corporate environmental management 1: systems and strategies. Routledge.
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