Information and Competitive Advantages

Blog 1 : Information and Competitive Advantages

Organizations always seek for competitive advantages in an industry in order to take over competitors in some measures such as cost, quality, or speed as it can determine the success or failure of a company (Porter and Millar, 1985 and Porter, 1996). Hence, a strategic information system can help the organizations to gain competitive advantage through its contribution to the organizations’ strategic goals and its ability to significantly increase the organizations’ performances and productivities.

            Cost leadership, differentiation strategy, innovation strategy, and alliance strategy are the five competitive strategies commonly practice by the organization to gain competitive advantages. I will take Air Asia as my example. Cost leadership means produce products or services at the lowest price in the industry by increasing the prices of competitors and helping customers or suppliers to reduce their costs. Air Asia has been known as the low cost carrier airline in the world. It has less management level, effective, focused, and aggressive management. It also uses single type fleet to minimize its maintenance fee and easy for pilot dispatch.

            Secondly, differentiation strategy means the firm differentiates its products or services from its competitors. It usually focuses on a particular segment of its market. For example, Air Asia differentiates its business from the traditional Low Cost Carrier model by adding customer services or operation as full service airline with low fare.

            Next, innovative strategy means that the firm produces unique products or services which bring radical changes to the business processes. For example, Air Asia offering a wide and innovative range of distribution channels to make booking and travelling easier. Customers can book their air tickets through Air Asia official websites, during Matta Fair, or at any Air Asia kiosk in the shopping complexes.

            Furthermore, growth strategy helps o obtain competitive advantages too. It enables the companies to expand their capacity to produce, expand their business into global markets and diversify into new products or services. For example, Air Asia is using the Computer Reservation System (CRS) suit powered by Navitaire’s Open Skies technology to facilitate its reservation and inventory system. This has satisfied the needs of AirAsia in implementing a low-cost business model to transform the business process to efficiently streamline its operations and helped AirAsia to grow from 2 million passengers to 7.7 millionpassengers in less than two years (Tony Fernandes, CEO, AirAsia).

            Lastly, AirAsia also uses alliance strategy to gain its competitive advantages. I found a news article reported in Singapore on Business Times, titled: AirAsia-Expedia alliance to tap Asia travel mart (Monday, October 22, 2012). Under the alliance, passengers can also book AirAsia and AirAsia X flights on the Expedia website. This partnership will give Expedia exclusive third-party distribution rights for AirAsia and AirAsiaX flights and travel packages, giving the carrier a wider distribution reach.

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References:

1.     1. Mahmood Hemmatfar, Mahdi Salehi, and Marziyeh Bayat. (2010). Competitive Advantages and Strategic Information Systems. International Journal of Business and Management, Vol. 5, No. 7, pp. 162.

2.      2. Strategic Information Systems for Competitive Advantage. IT in the Organization, Part 1, Chapter 3, pp. 92.

3.      3. Pui Man, W. (2009). Project Studies – Enabling Technology in Airline Industry. Professional Diploma Program in Logistics and Supply Chain Management. AirAsia.com, pp. 4, 7, 8, and 10.

4.      4. Sandy, H.A. (10 April, 2005). Might of Air Asia: Internal Analysis perspective. Strategic Management Individual Assignment. Melbourne, Faculty of Economics and Commerce, University of Melbourne.

5. News at Btimes website: http://www.btimes.com.my/Current_News/BTIMES/articles/aaexpedia/Article/index_html