Information and Competitive Advantages

Channels through which private information affects the competitive position of firms in the marketplace. Firms try to gain a competitive advantage via strategic investments in cost reduction or demand improving effort in an uncertain context. It is found that under regularity conditions, an improvement in the information precision of a firm has always a favorable impact in its competitive position and profitability. The rivals are hurt if the market is characterized by quantity competition but favored if price competition prevails. 

Managing Information for Competitive Advantage

Purpose effective and efficient conversion of resources into goods and services that meet the present and future demands of their customers is central to the success of all organisations. Successful management of information will depend on:

• The efficient collection and processing of data through information and communication systems to support managerial decision-making in the area of resource use and conversion. 
• The effective design and management of information, communication and knowledge systems. 
• The effective use and interpretation of information by managers in the decision-making and problem-solving processes.

Information Gives Competitive Advantage

Advances in information technology affect competition and the sources of competitive advantage. Information technology must be conceived of broadly to encompass the information that business create and use as well as a wide spectrum of increasingly convergent and linked technologies that process the information.in addition to computers, data recognition equipment, communications technologies, factory automation, and other hardware and services are involved. The information revolution is affecting competition in three ways:

1. it changes industry structure and in so doing ,alters the rules of competition: the structure of an industry is embodied in five competitive forces that collectively determine industry profitability, the power of buyers, the power of suppliers ,the threat of new entrants ,the threat of substitute products and the rivalry among existing competitors. 
2. it creates competitive advantage by giving companies new ways to outperform their rivals: in any company, information technology has a powerful effect on competitive advantage in either cost or differentiation. The technology affects value activities themselves or allows companies to gain competitive advantage by exploiting changes in competitive scope. 
3. it spawns whole new businesses, often from within a company’s existing operations: the information revolution is giving birth to completely new industries in three distinct ways which are makes new businesses technologically, spawn new businesses by creating derived demand for new products, creates new businesses within old ones.

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References:

http://www.cipd.co.uk/NR/rdonlyres/D2B97FF5-492F-49E8-9609-77095DD89E3F/0/manag_info_competitive_adv.pdf

Vives X.1989 Information and competitive advantage, International Journal of Industrial Organization http://blog.iese.edu/xvives/files/2011/09/76.pdf 8 (1990) 17-35. North Hollond

Millar V.E.& Porter M.E. 1985 The information revolution is transforming the nature of competition ,Harvard Business Review 

http://www.ida.liu.se/~TDEI65/documents/8500002422.pdf