Internal Innovation Climate And Strategic Relationships Essay

Question:

Discuss about the Internal Innovation Climate and Strategic Relationships.

Answer:

Introduction

In recent time Information technology as well as Information systems are playing a significant role in business. It helps the business in developing products and services, which help a company to gain competitive advantages over other company. The competitive advantage obtained by the organisation helps in gaining a competitive advantage in the field of global market. Information system of various strategies are been formulated for obtaining the competitive position and high advantages for organisation.

Information technology or Information Science is quite effective for establishing and sharing knowledge within the system of management (Shapiro and Varian 2013). This might affect the organisational philosophy. The other reasons for using Information technology within the business are for reducing the costs and at the same time achieving high quality level of tasks. Technologies also help in improving the process of decision making within the company.

In this paper we are going to present a report on considering a company Apple and how it gained the competitive advantage over other company. We are also considering an example of a company who was unsuccessful in gaining competitive advantage by implementing. We will also discuss about the internal and external factors that determines the competitive advantage and how to sustain the competitive advantage which is achieved through the use of IT.

Company Gaining Competitive Advantages by Implementing IT

The company taken for example is Apple. The phenomenal growth of Apple by using Information technology in a strategically way has shown that how company can gain competitive advantage by using IT. The three strategies that are followed by Apple for gaining competitive advantages are as follows:

Differentiated Model of Business: The products have increasingly became commoditized as well as undifferentiated. Information technology has already created the opportunities for cost re-engineering as well as a competitive position has been created (Purkayastha and Sharma 2016). This position could not be competing by legacy carriers.

Differentiation through Uniqueness: The reputed organisation achieved the competitive advantages by testing as well as proving the viability of the product. Profitability is also been computed by using Information Technology. The chip manufacturers are been owned by Apple and controlling the manufacturing as well as operating of chips with the help of Information Technology has helped the company in gaining competitive advantages (Culen and Kriger 2014).

Differentiation through Strategic Intent: This differentiation makes the organisation to face some difficult challenges. If the company succeed in overcoming those challenges then they will surely achieve the miracle. Apple has done it in past and is also doing in present by applying different strategies with the help of Information Technologies (Porter and Hepplemann 2014).

Factors Responsible Behind Success

Four strategies exist for managing the competitive advantages and these strategies correlates with the use of Information technology:

Low Cost Leadership: Utilization of Information technology for achieving lowest cost of operation as well as lowest prices. For instance a system of supply chain management may include efficient response system for customer for direct linking of behaviour of consumer to production as well as distribution department that will help in reducing the cost of inventory and distribution (D. Banker, Mashruwala and Tripathy 2014).

Differentiation of Product: The utilisation of Information system helps for innovating products as well as services and changes the old traditional products and service for customer convenience (Sirgy, Johar and Wood 2015). The innovated product and services attracts the customers largely and thus the organisation can gain competitive advantages.

Focusing Market niche: Utilisation of information system helps in focusing on a particular market. This focus enhances the target of the narrow market much better than that of competitors. Information Technology helps in supporting this strategy with the help of producing data and analysing them for enhancing the department of sales and market.

Strengthening relationship between suppliers and customer: Information technology can be used for strengthening the linkages in between customers and suppliers. It can be used for directly providing access to schedule of production from suppliers. It also allows the suppliers for deciding the shipping of products (Oke, Prajago and Jayaram 2013). This provides the suppliers with maximum lead times for production of goods.

Example of Failure in Gaining Competitive Advantage by Organisation

British Petroleum a renowned company in the sector of petroleum has failed in gaining competitive advantages by implementing Information system. The company implemented Enterprise Resource Planning popularly known as ERP, a management information system for gaining competitive advantages over their competitors. The company faced a big failure in implementing ERP. ERP is software that can help the organisation to gain maximum competitive advantages if implemented successfully. The company failed in successfully implement ERP as implementing ERP requires considering many factors. One of the significant factor is the company should understand the reasons for implementing ERP. As ERP is not cost effective therefore failure in implementing it successfully may lead to a substantial loss of fund for the organisation. The company implemented the new software without judging the use of it and therefore it has to pay a huge penalty. Moreover after the failure faced by the company after implementing management information system the company outsources the IT department and this finally led to the loss of control of IT department form the hands of management of British Petroleum (Wu, Straub and Liang 2015).

The tech industries have like Apple, Google and Microsoft has earned maximum competitive advantages by implementing Information System. But there are numerous numbers of companies who failed tragically in gaining competitive advantages by applying the technology. Over here we are going to discuss the reason liable for the failure of companies to implement successfully Information technologies. The lessons that can be learned from the failure of this company are:

Company should use IT relevantly: In the booming technological world there exist cardinal rule for the organisations. They should be continuously seeking for remaining relevant to fulfil the needs of customers. Many companies failed to bloom in their respective industries for not adhering this rule. If company like British petroleum could have use this rule then they might not faced such a huge loss (Schwalbe 2015).

Newly Software invented does not mean it is useful. The choosing of right technology should be done in order to gain competitive advantages. If British petroleum had made a correct strategically plan for information technology before introducing ERP then the implementation of ERP would not have faced such a big failure. The implementation of Information technology thus has to be done rightly as well as accurately in gaining competitive advantages over the other competitors (Camison and Villar-Lopez 2014).

Internal Factors Affecting the Company

The internal factors that affect the gaining competitive advantages for an organisation are as follows:

Organisational factor: The size of the organisation matters for gaining competitive advantages by using IT. The organisation has to be economically stable for getting the competitive advantages. Some management information system like ERP and setting a video call conference requires huge amount of fund for implementation and ERP has a long payback period. Though some information technologies are quite cheap in price and they require a right organisational structure to be implemented and getting competitive advantages (Oke, Prajogo and Jayaram 2013). The organisational factor leads to the complete failure of implementation of ERP system in British petroleum. The structure of the organisation was not that established for successfully implementing ERP.

Individual factor: After the technology is implemented it depends on individuals to handle them with expertise. The achievement of competitive advantage by using information technology is also significantly determined by employees. Apple has a great strategy for the individual employee as the hierarchy of the organisation was well defined. Each superior cordially supports his junior. More over the technology adapted by Apple is highly competitive and for maintaining that technology every individual employee has to take the extra workload (Oke, Prajogo and Jayaram 2013).

Management Factor: The way of implementing management information system like ERP is very much significant. The managerial stakeholders and the management is responsible for choosing the right vendor after assessing their needs accurately. Therefore management plays an important role in gaining competitive advantages. The management of Apple is well constructed for innovating some new technologies that gives them the desired competitive advantages over their rival. On the other hand management of British petroleum is excellent but when it comes to managing the information system it is not that good as the implementation of ERP was unsuccessful with unsuccessful outsourcing of IT deprtment.

External Factors Affecting the Company

Demographic Factor: This factor determines the size, growth rate, density and distribution of the company. These factors demand various innovative goods as well as services. These innovations can be achieved by using information technology (Palamuleni 2013).

Economic Factor: The economic situation of the nation where the business is conducting the operation is also significant. It incorporates GDP, foreign trade growth, capital availability, capital market’s strength and per capita income. These factors help in improvement of economic growth. All the activities of business are been greatly influenced by the economic policies. These policies are the industrial policy, fiscal policy, and monetary policy and export import policy. The economic factor of Apple as well as British petroleum is very much stable. The economic factor of Apple is much more stable and therefore the company can gain stable position and innovation can be focused on. But as ERP implementation was a total failure for British petroleum therefore it affected the economic structure of the company.

Social Factor: Social factors like customs, traditions, literacy and expectancy of life influence the organisational operation. The improvement in literacy rate will make the customer more conscious about the products quality. With the change in composition family there is also an alteration of thinking of customers (Lloyed-Jones and Rakodi 2014). The formation of nuclear families leads to have a single child concept that increases the demands of children. Apple as it is a costly brand therefore the social factor greatly influences the brand. If the company open its outlet in a society where there is a leaving of poor people than the brand will attain failure.

Political factor: This incorporates political system of a country as well as the policies of government for the community of businesses. The government stability largely influences the activities as well as operation of businesses. The stable government gives the investor dependency on investing on any businesses. The investment factor greatly influences the organisational operation (Bodie 2013). The political factors did not affect Apple or British Petroleum in that way as two of the companies are stable and established on their field and did not depend on the political factor.

Legal Factor: This refers to laws, regulation that influences the operation of business. All the organisations have to maintain the law framework. The significant legislations are Companies Act 1956, Factories Act 1948, Industrial dispute Act 1972.

Internal or External Factors- Significance

Both internal and external factors are significance for deciding the competitive advantages of company. Internal factors maintain accurate organisational factors and External factors helps in the operation of business. But sometimes situation comes when there could nothing be done for controlling the external factors but internal factors could be managed by managerial hierarchy. Therefore external factors are important for the business operation.

The competitive advantages gained by using Information Technology could be sustained in the following ways:

Using IT for being Innovative: Information technology may be utilize by the organisation in an unique manner for improvement of products as well as services. If the availability of information system increases it can facilitate the organisation for building strategies regarding to the application of IT for gaining strength in their business plan and sustaining the competitive advantages achieved (Davenport 2013).

Utilisation of IT for strategically lowering cost: Strategically lowering of cost is one of the ways of sustaining competitive advantages within the organisation. Using of Information technology effectively reduces the cost of processes for business. Automation System of Architectural Practices and Multi Phase Integration of Automation systems are been utilized for sustaining competitive advantages. These frameworks are utilized for quickly accessing correct as well as updated information, information stockpiling, sharing of data, simplicity of correspondence, diminishing expenses and less utilization of paper. Subsequently, changes in specialized side brought about quality change, new incomes and including an incentive and in addition less asset utilization for the organization. IT applications can be used to direct inbound coordination with the advantages of absolutely end of capacity expenses (Simons 2013). For example, MITOS framework has incorporated with material provider database for reason of sharing up to date data t5hat is less demanding and more successive with material providers. This functions as a "Without a moment to spare System" empowering the development organizations have their required materials provided just before they totally come up short on stock (Madadipouya 2015). This powerful and effective framework definitely decreases stock related costs, sustaining competitive advantages.

Utilisation of IT for promoting growth strategically: IT/IS applications is required to aligned for the strategy of business for being strategic and addressing business requirements in future. Positive connections between an IT/IS and acknowledged money related measures of execution must be distinguished, legitimately arranged and made utilization of for a straightforward application to be deliberately utilized. Web 2.0 is can be deliberately used to advance development. This can be accomplished by utilizing long range informal communication destinations which are data frameworks that are right now being adjusted to organizations to advance business development (Wu, Straub and Liang 2015). Twitter, for example is a "demystifying online networking" states that the essential elements of web-based social networking are to screen, react, enhance, and lead shopper conduct and connections them to the entry buyers go up against when settling on acquiring choices.

Utilisation of IT for improvement of lead time: Time taken from start till the end of execution of process in various organisations is termed as lead time taken. Lead time decrease could be useful for lowering safety of stocks, additionally anticipating accuracy as well as less level stock out by getting littler requests sizes that enhances stock instrument and more financially effective accordingly applications of IT/IS and are being utilized to lessen lead-time for gaining and sustain competitive advantages.

The conceptual model of sustaining competitive advantages defines that application of IT depends on management features, organisational features, technology condition and sustaining competitive advantages. Here we are going to discuss on the factors that sustainable competitive advantages depends. It depends on the capability of marketing and capability of entrepreneur. The marketing capabilities include:

Managing Customer Connection: In order to sustain competitive advantages the connection of customer is important. Customer can be connected with the help of Information technology. The use of social site and contacting the customer using the technologies are important for sustaining IT.

Different product: Information technology may be utilize by the organisation in an unique manner for improvement of products as well as services. If the availability of information system increases it can facilitate the organisation for building strategies regarding to the application of IT for gaining strength in their business plan and sustaining the competitive advantages achieved (Davenport 2013).

Conclusion

In recent times no organisation can gain competitive advantages without utilising Information Technology. Due to ceaseless advancements as well as changes in sector of IT, it can be found that the majority of the vital moves received by different organizations no longer end up noticeably key with time. This happens when contenders have embraced comparable systems and nothing, consequently separates the method of operations of business for different organizations. Some vital administration and constant changes to the key frameworks must be embraced for achievement in long term. IT applications should be adjusted to business techniques and elements, for example, execution, highlights, unwavering quality, strength, serviceability, conformance to business condition, saw quality must be considered.

Reference List

Camis?n, C. and Villar-L?pez, A., 2014. Organizational innovation as an enabler of technological innovation capabilities and firm performance. Journal of Business Research, 67(1), pp.2891-2902.

Cul?n, A.L. and Kriger, M., 2014, June. Creating competitive advantage in IT-intensive organizations: a design thinking perspective. In International Conference on HCI in Business (pp. 492-503). Springer International Publishing.

Banker, R., Mashruwala, R. and Tripathy, A., 2014. Does a differentiation strategy lead to more sustainable financial performance than a cost leadership strategy?.Management Decision,52(5), pp.872-896.

Davenport, T.H., 2013. Process innovation: reengineering work through information technology. Harvard Business Press.

Lloyd-Jones, T. and Rakodi, C., 2014. Urban livelihoods: A people-centred approach to reducing poverty. Routledge.

Madadipouya, K., 2015. A review on the strategic use of it applications in achieving and sustaining competitive advantage. International Journal of Managing Public Sector Information and Communication Technologies, 6(2).

Oke, A., Prajogo, D.I. and Jayaram, J., 2013. Strengthening the innovation chain: The role of internal innovation climate and strategic relationships with supply chain partners. Journal of Supply Chain Management, 49(4), pp.43-58.

Palamuleni, M.E., 2013. Socio-economic and demographic factors affecting contraceptive use in Malawi: original research article. African journal of reproductive health, 17(3), pp.91-104.

Porter, M.E. and Heppelmann, J.E., 2014. How smart, connected products are transforming competition. Harvard Business Review, 92(11), pp.64-88.

Purkayastha, A. and Sharma, S., 2016. Gaining competitive advantage through the right business model: analysis based on case studies. Journal of Strategy and Management, 9(2), pp.138-155.

Schwalbe, K., 2015. Information technology project management. Cengage Learning.

Shapiro, C. and Varian, H.R., 2013. Information rules: a strategic guide to the network economy. Harvard Business Press.

Simons, R., 2013. Levers of control: How managers use innovative control systems to drive strategic renewal. Harvard Business Press.

Sirgy, M.J., Johar, J.S. and Wood, M., 2015. Determinants of product value-expressiveness: Another look at conspicuousness, differentiation, and common usage. In Proceedings of the 1986 Academy of Marketing Science (AMS) Annual Conference (pp. 35-39). Springer International Publishing.

Wu, S.P.J., Straub, D.W. and Liang, T.P., 2015. How information technology governance mechanisms and strategic alignment influence organizational performance: Insights from a matched survey of business and it managers. Mis Quarterly, 39(2), pp.497-518.

How to cite this essay: