Using Information Systems to Achieve Competitive Advantage

In almost every industry you examine, you will find that some firms do better than most others. There's almost always a stand-out firm. In the automotive industry, Toyota is considered a superior performer. In pure online retail, Amazon.com is the leader. In off-line retail Wal-Mart, the largest retailer on earth, is the leader. In online music, Apple's iTunes is considered the leader with more than 75 percent of the downloaded music market, and in the related industry of digital music players, the iPod is the leader. In Web search, Google is considered the leader.
Firms that "do better" than others are said to have a competitive advantage over others: They either have access to special resources that others do not, or they are able to use commonly available resources more efficiently—usually because of superior knowledge and information assets. In any event, they do better in terms of revenue growth, profitability, or productivity growth (efficiency), all of which ultimately in the long run translate into higher stock market valuations than their competitors.
But why do some firms do better than others and how do they achieve competitive advantage? How can you analyze a business and identify its strategic advantages? How can you develop a strategic advantage for your own business? And how do information systems contribute to strategic advantages? One answer to that question is Michael Porter's competitive forces model.

PORTER’S COMPETITIVE FORCES MODEL
Arguably, the most widely used model for understanding competitive advantage is Michael Porter's competitive forces model.This model provides a general view of the firm, its competitors, and the firm's environment. Earlier in this chapter, we described the importance of a firm's environment and the dependence of firms on environments. Porter's model is all