Business Information Systems

This article discusses the reasons why organizations need IT strategy, including cost management, risk management, hardware and software management, vendor management, and customer relationship management. It also explores how information technology helps companies gain competitive advantages by increasing buyer power, reducing supplier power, and creating entry barriers.

Running head: BUSINESS INFORMATION SYSTEMS
Business Information Systems
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Table of Contents
Question 1..................................................................................................................................2
Question 2..................................................................................................................................3
References..................................................................................................................................5

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Question 1
Reasons for organizations needing IT strategy
Information technology or IT is required by various organizations. The information
technology strategy is the specific comprehensive plan, which eventually outlines the
procedure of utilizing technology in any organization for fulfilling the organizational
objectives and goals (Eason 2014). It is the kind of strategic plan, which has all the details of
the various factors affecting the investment of the organization regarding the utilization of
technology. There are various reasons for requiring IT strategy in a company. The most
significant reasons are given below:
i) Cost Management: The first and the foremost reason for using this technology is
cost management. This type of strategy helps in managing the overall costs of the
organization by simply outlining the processes of the business and so that no extra cost is
incurred here.
ii) Risk Management: The second reason for utilizing the IT strategy is risk
management (Schwalbe 2015). There is always a high chance of various types of risks in any
organization. IT strategy helps to reduce or mitigate the risks of the business.
iii) Hardware or Software Management: The next important and significant reason
of the IT strategy is the management of hardware and software. The strategy of information
technology maintains the details of software and hardware by properly up grading them on a
regular basis (Holtshouse 2013). This daily up gradation helps in reducing the business
complexities and allows advancements towards new technology.

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iv) Vendor Management: The fourth reason of using IT strategy is the management
of vendors. It helps to obtain correct quotes with proper pricing, capabilities for negotiation
of contracts, ensuring payments and many more.
v) Customer Relationship Management: It strategies also help to maintain a good
relation with the customers by maintaining a customer relationship management (Eason
2014).
Question 2
Information Technology helping a company to gain competitive advantages
IT is extremely helpful for any company to gain several competitive advantages. The
factors, which enhance the procedure for helping an organization in obtaining competitive
advantages, are as follows:
i) Increasing Buyer Power: The first factor is buyer power. This factor is extremely
high when the buyers have several choices from where they would buy and are extremely low
when these choices become limited. In any competitive market, technology is utilized for
increasing this buyer power for any particular product (Bloom et al. 2014). The technological
tools plays the most significant role in attracting the attention of customers and thus
competitive advantage is obtained. Moreover, information technology is utilized for
advertising the products.
ii) Reducing Supplier Power: Supplier power is higher when the buyers have limited
choices from where they would buy and are extremely low when these choices are many. The
higher supplier power solely affects the business as the supplier holds the goods and services
with the target to increase the prices (Schwalbe 2015). The technological tools such as

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Internet help any company to search for more efficient suppliers within their niche.
Moreover, B2B marketplaces are also enhanced with information technology.
iii) Creating Entry Barriers: Information technology also helps any business in
creating the entry barriers. The most successful organizations have created entry barriers by
blocking their competition and thus gaining competitive advantages (Bloom et al. 2014). The
entry barrier refers to the product that the customers expect from the organizations in any
specific industry.

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References
Bloom, N., Garicano, L., Sadun, R. and Van Reenen, J., 2014. The distinct effects of
information technology and communication technology on firm organization. Management
Science, 60(12), pp.2859-2885.
Eason, K.D., 2014. Information technology and organisational change. CRC Press.
Holtshouse, D.K., 2013. Information technology for knowledge management. Springer
Science & Business Media.
Schwalbe, K., 2015. Information technology project management. Cengage Learning.