A Competitive Advantage In Global Business

Published Date: 02 Nov 2017

1.0 INTRODUCTION

There are tremendous changes happen between in the past and in the 21st century. Those days, the economy winners were those who invented new products. During those centuries, companies focus was ultimately on product development. As time goes by, the market becomes larger and complex. More resources, abilities and skills are needed to be able to compete globally. In the 21st century, different scenario happens when the word ‘competitive advantage’ is being coined simultaneously. In this era, the focus has shifted to and perfecting new process. Business organizations are realizing that to be able to compete in today global business environment, it is not merely by the product/service but most importantly is by delivering the quality level of information system to customers.

Talebnejad (2008, p3-5) explains that the concept of competitive advantage is when one particular company is different from other competitors. It is when organization creates more value and it seems outstanding in the eyes of the customer better than other competitors. The failure in gaining competitive advantage may stop the organization to sustain and survive in a long run in a global marketplace successfully. Information technology helps organizations to create competitive advantage and improve competitive position of organization in the market. In order to reach that level, the right people must be able to understand and influence technology then only they can create a sustainable and long term of value and advantage by manipulating information technology.

He further states that there are 2 approaches on how the influence of information technology can create sustainable competitive advantage. Firstly is Market-Based Approach which believes that the survival of an organization depends on how organization can create long term value customer’s needs. This external part concentration believes that through calculated implementation of the right information technology tools, an organization can afford to provide customer with their needs at the right time and right place and also create sustainable competitive advantage eventually. Secondly is Resources-Based Approach which believes that the first thing that organization get to do are recognize its resources, abilities and skills and then identify the customer needs which could be enhanced efficiently using these resources and skills. One of these resources and skills is information technology which could be source of sustainable competitive advantage. This is inner part of organization’s concentration. Information technology must be used in organizational activities and processes in a way that leads to the creation of competitive value for customers.

2.0 OBJECTIVES

To defines Information Technology as a competitive advantage in global business. As been explained before the era has gone through tremendous transformation and information technology is being used by organization to create value to the customers. Without regards to the type of industries, all organizations these days are competing with each other to bring their timely product to the customer. To that extend, competitive advantage has been created. Therefore this task is objectively seeking for companies from different industries that has been successfully gained competitive advantage the global marketplace by adopting information technology.

To develops Information Technology as a competitive advantage in global business. The forces to create competitive advantage mostly come from external. They might come from competitors, suppliers and even customers. Organization shall be alert and have full of information about all these parties in order to be sustainable and successful in a long period of time. This task is going to explore the tools that enable organization to create competitive advantage in the global business environment.

To implements Information Technology as a competitive advantage in global business. In order to create competitive advantage, organization must develop innovative products, services and business processes. Information technology also enables company to be separate from competitors. To achieve all that, this task will explain how Information Technology been implemented as a competitive advantage in the global business environment these days.

3.1 DEFINING IT AS A COMPETITIVE ADVANTAGE IN GLOBAL BUSINESS.

TOURISM INDUSTRY

Club Med operates in 35 countries and runs hotels, cruises, and tours. In order to provide extra value to the increasing international and diversify customers, the company build a state of the art reservations booking system to provide a centralized reservation system available at any time.Each industry uses IT differently. Each organizations have different strategies how they use information technology. (See figure 3.1.1) The dynamic process of IT utilization determines how the competitive advantage will reach customers. (See figure 3.1.2) Information technology has the potential to build the competitive advantage of organization by improving customer service, providing timely product to the market, improving communication, improving quality and ultimately increasing number of global reach. (Caroline 2007) (See figure 3.1.3)

AIRLINES INDUSTRY

The mission of information management team at BA is ‘to achieve business advantage for BA through being the world leader in the application of airline information technology’ called British Airways Business System (BABS).

FIGURE 3.1.1 Club Med

TRANSPORTATION INDUSTRY

FedEx was among the first express transportation companies to realize the benefits of technology. COSMOS (Customer Operations Service Master On-line System) enable customers to track their packages at all possible location.FIGURE 3.1.2 British Airways

FIGURE 3.1.3 FedEx

3.2 DEVELOPING IT AS A COMPETITIVE ADVANTAGES IN GLOBAL BUSINESS

The drawback of competitive advantage is that they are attributed as temporary. It is because competitors these days seem to duplicate the technology, business operation and worst snatch away key employees to make sure their products stand at the same level with current other competitors. However when the company is the pioneer the market, it gains special benefit like Apple and Air Asia enjoyed. According to Porter, the common tool to develop competitive advantage is Five Forces Model.

According to (Baltzan 2013) Porters 5 Forces Model divided into Threat of Substitute New Product, Buyer Power, and Threat of New Entrants and Supplier power. The Rivalry among Existing Competitors remains in the central because competitors stimulate all the power of all forces within the industry environment. Talking about threat of new entrants, thousands of competitions exist from day to day for example is auto repair shop. Computer is not just functioned to automate it also could transform organization via web. Internet can be used to accumulate data, analyse the industry trend and observe local competition. All the skills and services been displayed organization can increase the reach in marketplace.

When there are many competitors in the market, the buyer power to pay for an item increases. One way to make the buyer becomes loyal and stick to company is by giving few privileges to the customer as automating the ordering and payment process and have buyers the password to access to companies extranet. The threat of substitute new product becomes high when there are so many similar products exist in the market and becomes low when only fewer alternatives to be chosen.

As more substitute product becomes available, demand becomes elastic. There are several choices to buy smartphone from Blackberry, Android, and Apple. But after looking at those 3, customer might go for Android which is compatible and could be modified and used for any device. So the competitive advantage for this case goes to Android. Finally is the bargaining power of supplier. The collaboration between suppliers and customers can be synergized by providing unique and valuable information that require changes to customer’s organization and make the switching cost to other competitor more costly. Organization must understand better on how and when information technology creates dependency between customer and supplier.

3.3 IMPLEMENTING IT AS A COMPETITIVE ADVANTAGE IN GLOBAL BUSINESS

(Haag& Cummings 2010) explains that there are three key points that considered as IT implementations of business processes to support Information Technology as business strategies which are Supply Chain Management, Customer Relationship Management and E-collaboration.

Elements of Supply Chain Management include operations, distribution and integration. The focuses of chain management are on demand planning, forecasting and inventory management. From warehouse to customer, all that process includes into supply chain management. Wal-Mart’s supply chain management has leads the company to gain competitive advantage globally by offering low product costs, reduced inventory carrying cost, offers variety and wide selection of products and giving the most competitive price that a retailer can ever offered. As for now, Wal-Mart focus on innovate processes and system to improve the quality of supply chain in order to sustain the competitive advantage that they have created.

Customer Relationship Management bonding the customers with organization’s services. CRM is a business strategy designed to reduce costs and increase profitability by create a bonding between company and customer. CRM gather information from all data sources within the organization ad gives one view to each customer to face employees in the area of sales, customer support. All to all CRM is about acquiring and retaining customers to provide some insight about customer’s needs, wants and behaviour in order to delivering the best services to them.

Last but not least is E-Collaboration which can be defined as collaboration using technologies among different individuals via telephone, computer, and teleconferencing. E-Collaboration increases organization’s productivity and competitive advantage. E-Collaboration supports work activities with collaboration’s environment, manage knowledge system and social networking system. CIO Magazine and Computer World use E-Collaboration to support e commerce and supply chain over the web. These are new method to build business that help organization to build value by integrates customer and suppliers. This is so strategic and provides opportunity for organization to gain competitive advantage.

4.0 CONCLUSION

The era had transformed drastically from product concentration to information technology focus. The definition of competitive advantage been coined during 21st century. Competitive advantage means that the organization is able to create greater value for customer compared to competitor. In order to create competitive advantage, people in organization must be able to understand well how information technology works before manipulating it. There are two approaches on how information technology could create sustainable competitive advantage which are market based approach and resources based approach.

Almost all organizations using the same weapon which is information system but applying different business strategies and delivering different business models in order to gain competitive advantage. Tourism company like Club Med for example build 24 hours reservations booking system to provide a centralized reservation system available at any time. Besides that, British Airways launched British Airways Business System (BABS) and last but not least is FedEx that developed COSMOS (Customer Operations Service Master On-line System) enable customers to track their packages at all possible location.

According to Porter, the common tools to develop competitive advantage is by using Five Forces Models which include The rivalry among existing competitors, threat of new entrants, buyer power, substitute product and bargaining power of supplier. Despite all that, there are some companies who become pioneer in certain industry but since the competition is very hard nowadays, the competitor tends to duplicate the product innovations that been created by them. However, the pioneer in the market remains holding the competitive advantage.

There are three successful factors that could be implemented in global business in order to gain competitive advantage. Firstly is Supply Chain Management. Wal-Mart’s supply chain management has leads the company to gain competitive advantage globally. Secondly is Customer Relationship Management where it is designed to reduce cost and increase profit. CRM provides insight about the customers and enables organization to deliver the best from them. Finally is E-Collaboration which is a new method that helps organization to gain strategic opportunities and create competitive advantage in a long run.