Strong linkages to customers and suppliers increase switching costs (the cost of switching from one product to a competing product) and loyalty to your firm. This allows suppliers more lead time in producing goods. Chrysler Corporation uses information systems to facilitate direct access from suppliers to production schedules, and even permits suppliers to decide how and when to ship suppliers to Chrysler factories.
For example, Internet telephone service can substitute for traditional telephone service. Substitute products and services: These are substitutes that your customers might use if your prices become too high.Some industries have lower barriers to entry, ie: cost less for a new company to enter the field.
New market entrants: New companies have certain advantages, such as not being locked into old equipment and high motivation, as well as disadvantages, such as less expertise and little brand recognition.Traditional competitors: Existing firms that share a firm's market space.Michael Porter's competitive forces model describes five competitive forces that shape the fate of the firm. Using Information Systems to Achieve Competitive Advantageįirms with a competitive advantage over others typically have access to special resources that others do not or are able to use resources more efficiently, resulting in higher revenue growth, profitability, or productivity growth (efficiency), all of which ultimately in the long run translate into higher stock market valuations than their competitors.