There are four generic strategies used to manage competitive forces, each of which often is enabled by using information technology and systems:
Low-cost leadership: Use information systems to achieve the lowest operational costs and the lowest prices. For example, a supply chain management system can incorporate an efficient customer response system to directly link consumer behavior to distribution and production and supply chains, helping lower inventory and distribution costs.
Product differentiation: Use information systems to enable new products and services, or greatly change the customer convenience in using your existing products and services. For instance, Land's End uses mass customization, offering individually tailored products or services using the same production resources as mass production, to custom-tailor clothing to individual customer specifications.
Focus on market niche: Use information systems to enable a specific market focus and serve this narrow target market better than competitors. Information systems support this strategy by producing and analyzing data for finely tuned sales and marketing techniques. Hilton HOTELS uses a customer information system with detailed data about active guests to provide tailored services and reward profitable customers with extra privileges and attention.
Strengthen customer and supplier intimacy: Use information systems to tighten linkages with suppliers and develop intimacy with customers. 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. This allows suppliers more lead time in producing goods. 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.
The Internet has nearly destroyed some industries and has severely threatened more. The Internet has also created entirely new markets and formed the basis for thousands of new businesses.