Essays on Using Michael Porter's Competitive Forces Model To Analyse How Strategic Use Of Information Systems Assignment

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Executive SummaryRosenbluth international (rosenbluth. com) is a world’s third largest travel agency company. It offers exclusive vacation, corporate and travel services. This international travel agency whose headquarters are in Philadelphia operates in more than 30 countries, with over 1000 locations. The travel agency had experienced threats such as increased popularity of online travel agents, commission caps and cuts, as well as the emergence of automated travel management systems. This made many travel companies to either surrender to low profitability or exit the market. This report examines how Rosenbluth responded to such threats to gain competitive advantage by use of information systems.

The analysis focus on how Porter’s competitive forces model shape the structure of an organization in the industry’s competitive environment. These competitive forces include rivalry, threat of new entrants, threat of substitutes, bargaining powers of the target customers and finally the bargaining powers of the suppliers (Porter, 2008). The report shows how the information systems, especially the use of the internet, affect these competitive forces. It is realized that the internet increases the competition in the market. A company that would succeed must employ strategies that will enable it compete favorably where the use of information systems is one of them.

Rosenbluth used travel management applications as well a web-based travel management which made it succeed under the stiff competition. Since the competitive forces continuously change over time, it is necessary for Rosenbluth to view the use of information systems as a competitive weapon in which it gains competitive advantage. Therefore, it should use innovative IT applications and the internet to link business partners and changing business process hence reducing the operating costs. Introduction: Organizations within the same market segment constantly compete with one another.

Any organization that needs to succeed must seek for ways which enables it survive this competition, and gain a competitive advantage over the others. The set formula that determines its goals, operations, plans and policies that it uses in the competition is referred to as a competitive strategy (Porter, 1996). An organization is able to gain a competitive advantage in measures such as quality, cost, or speed through the competitive strategy that it uses. A firm’s success is thus determined by its competitive advantage.

The advantages gained enable an organization to earn above average returns, and in most cases, be a market leader. One of the competitive strategies that a firm uses to gain competitive advantage is the use of information systems, which contributes to the realization of the strategic goals of an organization as well as increasing the performance and productive abilities. Information systems can be defined as the applications used in a business firm to shape or support its competitive strategy in order to gain a competitive advantage over other firms (Porter, 1985).

Thus, it is the role of the managers to seek for a competitive strategy of engaging the use information technology to expand the company’s products, services, as well as its overall capabilities so as to gain major advantages over the competitive forces that it faces in the market.

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