Table of Contents

1.0 Introduction

2.0 Literature Review

2.1 Cost Reduction Through IT

2.2 Differentiation Through IT

2.3 Innovation Through IT

2.4 Customer Lock-In Through IT

3.0 Research Approach

3.1 Companies Profile

3.1.1 Microsoft Corporation

3.1.2 Your Company Profile

4.0 Methodologies

4.1 It Enabled Business Transformation Graph

4.2 Porter’s Five Force

5. Critically Analysis

5.1 Microsoft Corporation

5.1.1 Porter’s Five Force

5.1.2 IT Enabled Business Transformation

5.1.3 Analysis Summary

5.2 Your Company

5.2.1 Porter’s Five Force

5.2.2 It Enabled Business Transformation

5.2.3 Analysis Summary

6.0 Conclusion

7.0 Reference

1.0 Introduction

The world has grown more than enough in the context of information technology in such way that organization work more efficiency to enhance and maximize their daily productivity. Storage devices, data protection, cloud application and faster communication are the main advantages that information technology can provide to our enterprise’s. IT/IS has big impact in computer application on which nearly every work environment is dependent, therefore, since those applications are computerized and widely used, it is advantageous to incorporate IT into our enterprise.

Information technology is categorized into major three group known as operation, financial and strategic system. If the operation and financial system are well integrated may result strategic system for other enterprises, however, it depends on the core business objective of the enterprise. For instance, cloud application and cloud storage are advance technology where most of the organizations are not aware of it, organization don’t consider much about technology even though the applications are flexible to use and cheap to implement, it suitable and fit the business objective of the enterprise depending on the business requirements. the issues come up from organization that there is no aligning between information strategy(IS) and business strategy(BS) which resulted to failure on productivity or IS. However, today some organization seems to pay much attention to align BS and IS to improve organization strategies(OS), thus, helps to organization to improve or reengineering organization process as well as gaining knowledge and experience to sustain the competitive advantage (Lewis and Hilton, 2015).

Through this research, a detailed study will be conduct on of the strategic use of IT applications in achieving and sustaining competitive advantage in business environment. besides, the research will be discussing on how enterprises utilize information technology(IT) to sustain a daily competitive advantage. In other hand, few factors or issues that affecting competitive advantage will be highlighted and discussed in detail as well as how organization react and cope with those issues so they can come with IT solution to enhance those factors. Without going out of scope, the main objective of this research is to justify how information technology(IT) strategy will organization to archived a sustainability competitive advantages over other industries. Therefore, after research discussion, conclusion will be provided together will suggestion on how to enhance the effectiveness of information technology strategies in business environment. Besides, the researcher select two technological company known as Microsoft and McDonalds Company offer different services and product to mass number of customers. Hence, five’s porter forces and IT-enable business transformation will be used to analyse the mode of their business and they use information technology strategies to strengthen their daily business operation’s and how they manage to sustain competitive with help of information technology(IT).

2.0 Literature Review

The objective of this research was to investigate and discuss how enterprises utilize information technology(IT) to sustain a daily competitive advantage. In other hand, Research have been conduct and determine that there are few factors that can make organizations to sustain and stay in top in business market. According to McGrath, (2013) in said that, always business is looking for a competitive advantage which require identifying a specific target customers with clearly define their demands. Indeed true, organization can archive and stay competitive only when they deliver a high quality and cost effective product or service and performed better that any company products. In other hand, the key factor here is cost of the product or services, the cheaper the product or service is the more customer you get it, therefore to gain competitive, organization has to make sure that their service or product are reliable and perform better than other product, furthermore, they have increase investment, differentiate their service from other industries, be innovative by come with new idea for short period as well as finding a mean to lock-in their customers. Hence the researcher will investigate and discuss on how information technology(IT) help industries to sustain and stay competitive and how they applied IT strategies to archive competitive advantage.

2.1 Cost Reduction Through IT

Cost reduction through IT is business strategies where most of the organization used to reduce cost of products or services provide and increase profit. According to de Wit and Zuidberg, (2012) said that, in 2014, the air Asia CEO reveal the company business plan that the airline will more attention on reducing the cost in order to improve the profitability. Therefore, so many changes were done to archive organization goal include the implementation of automation of check-in procedure, in other hand, number of staffs who are manually performed check-in have been reduces. Furthermore, the company goal is to lower the overall cost by 7.5 % in 2014 and they really archive that, they manage to reduce the cost by 2.5% within the first two month (de Wit and Zuidberg, 2012). Therefore, while air-Asia improving efficiency of their operation, they manage to obtain competitive advantage over other airlines by reducing the cost of operations as well as cost for customers that lead to stay in top in business market.

2.2 Differentiation Through IT

Differentiation is another business strategy where industries manufacturing distinctive product or service to set their business apart from competition. Industries that used differentiation strategy can be either highly skilled or they provide a creative products or services or they might have a strong sale force that brings a reputation for their innovation and quality products or service. For instance, the McKesson Corporation has decided to use differentiation strategy by responded the competitive pressure by offering Economost user an integrated software package, the system was installed in warehouse and it provide information of product to stock, how to plan shelf and floor space in the store in order to archive maximum sales (Clemons and Row, 1988). This led to large increases of profitability for the drug store using Economost system. The result was a major structural change in the industry as only the most efficient and effective competitive pharmaceutical remained and keep stay a head of the competition. This prove that IT can be the source of competitive advantage, however, those advantages to be sustainable, industries have to consider more on learning techniques rather adopting IT in order to continuously come up with new ideas, innovations and use those ideas to enhance their system or service for future business competition (Clemons and Row, 1988).

2.3 Innovation Through IT

Innovation is a business strategy where a company invests in the Research & Development (R&D) department to provide a platform for coming up with new products in the market that would attract the customers interest. Becoming a digital leader in the industry helps to set one organization apart from the others in relation with competitive advantage. Due to the fast evolution of technology, it is essential to compete in the market by having skills and talents to cope up with an increasingly complex and ever-changing market. According to Martin (2016), Uber Technologies Inc. was able to revolutionize the transport industry, by giving access to cab-riding public the possibility of booking a cab through the use of a mobile app on their smartphones. Uber implemented this disruptive innovation technique by introducing simplicity and convenience when booking a cab. Through the use of technology, Uber brought a concept of “shared economy” in the cab industry by allowing customers to share the taxi fare.

2.4 Customer Lock-In Through IT

This is a business strategy whereby a company uses Information technology techniques to retain their already existing customers in order to achieve competitive advantage. According to (Amarsy, 2015)Customer lock-in is a business strategy that has enabled industry leaders such as Amazon, Apple, Microsoft, Rolls Royce to retain their customers and outcompete their competitors by utilizing Information technology techniques. For Instance, Mobile technology companies like Apple and Android devices use the concept of ‘Data trap’ to lock-in their customers. Both companies host content and applications on their marketplaces like the AppStore and Google Play Store that can’t be transferred elsewhere (Amarsy, 2015). Hence, to switch from one mobile technology to another, one would have to give up their purchased apps, movies and music tracks. Due to this reason, many customers prefer to use only one between Apple and Android phones as it is inconvenient to switch from one to the other.

3.0 Research Approach

3.1 Companies Profile

During the discussion above the researcher shows that different business strategy with proper aligning IT strategies can bring major change to industries and led them to stay ahead of competition advantage over others. Hence, innovation and creativity play major role in archiving business goal. As for this research, Microsoft Cooperation and McDonalds Company have been chosen to represent an example of companies that use IT strategies to sustain and stay ahead of competitive advantage in business environment.

3.1.1 Microsoft Corporation

Microsoft Corporation is the largest software company founded by Paul Allen and Bill Gate in 1975 (O’Regan, 2012), the company controlled an overwhelming share of the personal computer operating system, cloud storage, office software suite, video game console Xbox, servers etc. Microsoft Company has intense pressure in the software competition over Google and Apple since they introduce operating system in both mobile device and PC. But still Microsoft conquer the market of operating system and software which resulting in more than 90% market share of operating system. Their vison is to create innovative technology that can be accessible to everyone. Therefore, to archive that vision, they decide to reduce the cost of software and service and make sure everyone can afford to use it. By doing so, they manage to lock-in their customer and influence the world to use more their products and service than others (O’Regan, 2012).

Besides that, Microsoft trying to differentiate their service with rivals, for instance, introducing a cloud service known as Microsoft Azure platform which integrated with almost Microsoft office tools, its cost effective, highly secured and reliable with no downtime. It allows industries to outsource their cloud computing and pay for what they have used. In other hand, it cutting down the need of servers, industries can only purchase cloud storage to store and secured their data for future analysis such as big data etc. Hence, this prove that Microsoft use IT strategies to sustain competitive advantage, besides that, the company focus more on learning techniques and doing deep research rather adopting IT in order to continuously come up with new ideas, innovations and use those ideas to enhance their software and service for future business competition (O’Regan, 2012).

3.1.2 McDonalds

McDonald’s is an American fast food restaurant chain with its global headquarters in Oak Brook, Illinois. It has over 36,000 restaurants found in 120 countries all over the world, serving 68 million customers each day. It was founded as a barbeque restaurant in 1940 by Richard and Maurice McDonald. In the year 1955, a businessman Ray Kroc joined the company as a franchise agent and bought the company from the McDonald brothers. McDonald’s Corporation, incorporated in the year 1964, operates and franchises McDonald’s restaurants. (reuters,2017).

A McDonalds restaurant is operated by a franchisee, an affiliate, or the McDonalds corporation itself. McDonalds primary products include burgers, french-fries, soft drinks, milkshakes, wrap and desserts. The company has also introduced different menus like salads, fish, smoothies and fruits in response to changing customer tastes in order to lock-in customers. McDonald’s is operating under a new organizational structure starting from July 2015, categorized into four markets based on similar characteristics, challenges, and opportunities for growth. The company segments include U.S. market, International Lead Markets, High Growth Markets and Foundational Market. The U.S. market being the largest in terms of number of restaurants, revenues and operating income; International Leads Market operating in  Australia, Canada, France, Germany, and the United Kingdom which includes the most established markets with strong economies; the High Growth Market holding potential of higher restaurant expansion and franchising operates in China, Italy, Korea, Poland, Russia, Spain, Switzerland, and the Netherlands; while Foundational Market being the market which spans over the most diverse geographical area with potential to operate under a largely franchised model. (reuters,2017)

4.0 Methodologies

To get clear picture on how Microsoft and McDonalds Companies manage to sustain and stay ahead of competitive advantage though using IT strategies, therefore, reasonable logical methodologies will be used and show how companies move toward the alignment of IS to business strategy. Hence below are scope that will be discussed through analyzation process.

• To understand how, how internal IT solutions facilitate competition in the market.
• To understand more on the impact of the IT system that’s makes Microsoft and McDonalds to stay ahead of others competitor’s.
• To understand the abilities of Information strategy (IS) overwhelmed the challenge’s.
• To understand how innovation pattern, affect strategic direction.
• To Examining tactical alignment of Microsoft and McDonalds Company.

Additionally, any changes made in the business strategy (BS) drive the alignment of organization(OS) as well as Information strategy(IS), therefore, since OS and IS rely on upon BS, strategic alignment is required adoption in other tactical to sustain balance where by all methodology have this balance which is reflected to a common model called information system strategy triangle (IS triangle).

Figure 1: IS Triangle

Source: (Chegg.com, 2017)

Moreover, as mention above that all selected methodology have is reflected to information system strategy triangle (IS triangle). Through this report, the researcher will examine externa and internal factors in order to know how industries archive strategic alignment of BS, IS and OS. Therefore, porter’s five force will be used to measure external factor include weaknesses and strengths of companies (D’Atri and Saccà, 2009). Furthermore, IT-enabled business transformation graph will measure internal factors in order to understand how IS alignment help companies to adopt with business strategy. Therefore, five different levels of IT implementation will be analysed and discusses the outcome, how internal changes help the organization archive strategic alignment of BS, IS and OS.

Despite of that, there are many suitable models that can be used to analyse company internal and external factors, however, the above selected methodologies are more feasible due to the above reason explained and their strong relation to IS. For instance, business model like SWOT and PEST are not legit to evaluate external and internal factors, also the models are lacking this correlation and no enough solution provided by the previous scholar regarding to those model. Hence, to finalize, this report will only focus on IT-enabled business transformation graph and porter’s five forces though different technique like hyper competition will be alluded to in the more thoughtful investigation (D’Atri and Saccà, 2009).

4.1 IT Enabled Business Transformation Graph

Today, any successfully business required IS strategies since it play a big role on shaping tomorrow business operation, to conquer business market, industries have to consider three elements as strategic use of IT applications in achieving and sustaining competitive advantage.

• Keen costs.
• Deliver high product quality.
• dynamic response to customer’s necessities.

Currently, information technology(IT) has a fundamental enabler in producing and sustaining a flexible business network, a methodology like IT enable business transformation graph (BTG) has divided the business into five levels, though these levels are not incremental, therefore, organizations have to analyse and measure their potential benefit of level, if benefit satisfied the business operation, they can skip the level. Furthermore, each level has specific characteristic and provides a range of guideline for archiving maximum potential benefit. Therefore, as potential benefit increase within each level, so does the business operation as well change and the necessity to deliver better value to the customer as well is increased (Venkatraman, 1994).

Figure 2: IT-enabled Business Transformation Graph

Source: (Venkatraman, 1994)

The first two level of BTG are known as evolution levels, in the first level, existing IT system are decentralized and organization departments are not integrated. Hence when the organization archived cost reduction, they can be boosted by internal integration of systems at level two where organization department, existing IT system and process are integrated customer (Venkatraman, 1994). Therefore, in the evolution levels, the range of potential benefit is low, because only minor change in business process are required. However, as the business grow up, essential change is required in the organization which lead to higher comprehensive benefits. In the revolutionary levels, organization have to come with new IT strategies in order to cope with current technology, therefore business process have to adopted and redesign if necessary, furthermore, reshaping the business network by improving relationship with business partner, customer and supplier and lastly, redefine the scope and analyse what is has to be adjustable in the business process so that organization can deliver better value to the customer (Venkatraman, 1994).

4.2 Porter’s Five Force

Porter’s five forces model, named after Michael E. Porter, is powerful tool for understanding where power lies in a business. It helps you identify and analyse the strength and weaknesses of your current competitive position in the market, and the strength and weaknesses of the position you’re considering moving into (Porter,1979). Understanding where the power lies in an organization, helps it take fair advantage of a strength situation, improve on the company’s weaknesses, and helps avoid taking wrong steps in the business.

Figure 3: Porter’s Five Force

Source:()

Supplier Power: assesses the control that suppliers hold over your company, whether the company or the supplier dictates the price of supplier’s product, the cost of switching from one supplier to another, uniqueness of supplier’s product and the number of supplier choices. If the supplier holds more control in the above-mentioned aspects, then it’s a weakness for the firm, while if the company holds more power over the supplier then the company is considered to have strength in the supplier power.

Buyer Power: assesses who holds more power between the company and the customers. Questions to ask here are how easy it is for buyers to lower prices, importance of each individual buyer to the business, cost of switching of buyers to the company’s competitors. Dealing with a few but powerful buyers means that they can dictate terms to your company indicating a weakness in the Buyer Power.

Competitive Rivalry: assesses the number and capability of your company’s competitors. Having more power in this area involves having no competitor in the market that can offer customers what you offer. On the other hand, having many competitors, offering equally attractive products and services, then it shows weakness in your organizations competitive rivalry.

Threat of Substitution: evaluates the ability of your company’s customers to find a different way of doing what you do for them. For instance, if your company supply a unique software that automates a certain process, then can customers substitute your software by doing the process manually. If substation is difficult then indicates strength in your organization power while if it’s easy then indicates weak power.

Threat of New Entry: assesses the barriers to entry for competitors to enter your market and compete effectively. if it costs more in time and money, having more protection of your company’s key technologies, having more economies of scale in place, then competitors can hardly enter your market and weaken your position. This will help your company take fair advantage in the market and preserve a favourable position.

5. Critically Analysis

5.1 Microsoft Corporation

5.1.1 Porter’s Five Force

The researcher assumes the influence of the five force to Microsoft company overall as follow below:

• Bargaining power of buyers is high.
• Bargaining power of suppliers is low.
• Threat of new entrants is low.
• Rivalry among existing competitors is high.
• Threat of substitute products or services is moderate.