The Current Modern Business

Published Date: 02 Nov 2017

Introduction

Recent research and literature on strategic management strongly supports the resource-based view (Marti, 2004 p, 31). In other word this perspective stresses that, the modern business is becoming a dynamic and turbulent environment due to rapid change in technology and the shifting of the customers and industry demands, so the sustainable competitive advantages are argued to be mainly depended on company resources and capabilities. According to (Hemmatfar et al, 2010), the burgeoning information provision have made an organization surge to develop strategies in IS/IT which integrate with their business strategies and together carry on their corporate missions.

Determining the role of general managers in terms of taking decisions regarding IS strategy is the key point to understand. The decision about the IS strategy are not made totally relaying on information accumulated from the highly skilled professionals assigned in the field of IS. General Managers are required to have a good insight about the IS strategy for proper alignment with the organizational and the business strategy. GM often have to demonstrate a clear understating of the information system of the company compare with those of their competitors, they must be prudent about the consequences of improper use of IS/IT.

Nowadays, many organizations depend on information resources to maximise the effectiveness of the firm’s business strategy, which can be either assets or capabilities of firm to use the available resources effectively to reduce the firm’s cost of the production and increase productivity ultimately to gain competitive advantages over their competitors. For example an Irish International Consumer’s Food Producer, Glanbia group were able to reduce the stock errors and increase efficiency in inventory management & supply chain management by using information resources and Home Depot -one o the world’s largest home improvement retailer managed to change its growth direction bottom to up while other where struggling to exist in the market.

The report also summarises briefly about the Michel Porter’s model of five competitive forces of firm’s to evaluate the firm’s competitive environment and the Porter’s value chain model to show how firms create value for an organization.

Information System Strategy Triangle Framework

The Information System Strategy Triangle (ISST) is a framework which is very straightforward for understanding the impact of IS on the organization and appropriate alignment. The framework helps to illustrate the relationship between the IS strategy with organisational and business strategy within an organization. Generally an IS strategy and organization strategy are driven by business strategy. These three strategies are fundamentally linked with each other. The consequences of failing to understand this relation can be substantially detrimental to a business. As such a change in IS strategy can affect or be affected by a change in other business strategies. There must be constant adjustment between all three strategies. Hemmatfar et al, (2010) explains that, the IS plays an important role in financial and non-financial and business operation features such as decision making as a big role of management. That’s why, the GMs are often required to make a prudent decision while deploying the IS decision with organizational decisions by taking into consideration the accountability of the organization’s capabilities and resources available.

Another example here shows the impact of IS, Home Depot -one among the world’s largest home improvement retailer that operate over 1134 retail locations with information system. In 2000, it made the record fiscal year sales of $45.7 billion. Their information system annually processed nearly one billion cash register transactions and supported over 450,000 pieces of technology.

Home Depot’s created a unique IS strategy, known as the Special Projects Support Team (SPST). This information system team was initially created by comprising three members, in 1997 when the organization was involved in a large-scale legal case. Home Depot required to process and present information in terabyte (one trillion characters). The software system capable of handling this amount of data was developed by the help new innovative SPST, as a result the objective was achieved within six and a half weeks.

The SPST then took on a growing number of other projects until in 1999 its 40 members were involved in the research, implementation and prototype application development across the business. In June of that year, they faced a massive change as the Home Depot Web site was developed. It was at this point that SPST members gravitated towards the Internet initiative. Home Depot’s Web site was far from typical of the dotcoms springing up at that time. The online products were available in all stores, online purchases could be returned to any outlet and Web site information was readily available for any customer who entered the bricks and mortar establishment.

Home Depot’s new approach resulted very profitable. It was also selected by Computerworld magazine for three out of the past four years as number one place to work in information services. Home Depot understood the potential of aligning its IS strategy with wider organizational objectives. That’s the fundamental reason why they succeeded at a time when so many other dotcoms were logging off and going home. By aligning its information systems with the rest of its organizational goals, Home Depot was able to integrate IT successfully with the rest of the business. This meant that not only did senior management develop a heightened awareness and use of IS, but it was also possible to monitor and assess this investment in line with other projects and not simply look for a physical return on investment (ROI).

Using Information Resources Strategically

Glanbia plc. Invested €1 million in radio frequency based voice control of its logistic and warehousing. The radio frequency based voice control device automatically converts the electronic orders in to speech which further transferred to the warehouse staff that uses secured wireless technology. The traditional manual system of paper based warehouse transaction and inventory management has been replaced with the advanced technologies in two warehousing sites, as well as two manufacturing sites, where it is integrated with the company’s SAP system. Since the implementation the company has reported 80pc reduction in inventory errors. (Business and Leadership Ltd, 2008-2013) The system has boosted productivity by up to 95% and has improved stock picking accuracy by 600%, resulting in a reduction of credit claims by 45%. The speed of the product pickup has improved from 160 to 260 cases per hour. Warehouse operatives in Glanbia say that operation now has been much straight forward as they don’t have to spend time checking stuffs repeatedly. The usual duties and orders are performed by using speech recognition and handheld terminals, replicating the old paper system for different warehouse transaction. The company’s productivity and accuracy has improved due to movement of its operator from order to order with the capability of such technology. (Handling-Network.com, Monday 4th march 2013)

The example illustrate that if strategically used Information resources can maximise the effectiveness of the firm’s business strategy. Glanbia plc. in the example have demonstrated the Firm’s strategic capabilities to use new IT assets that helped them to replicate the traditional inventory management which reduced the stock errors, labour hours and increases the efficiency in supply chain management to achieve the ultimate competitive advantages.