Significance of Information Technology in Managing Threats

Running Head: Information 0
LDIRECT co
Business Information Systems
3/17/2019

Information 1
Introduction
LDirect Company initiated by Tom Hardy, which supplied Laser-disk records and audio
selections to people within the local area. He successfully utilizes the developed website to
promote his business to an international level. In the prospective five years, their business
seeks a steady development as various new clients were generated. He diversified his services
and started to supply compact disks and audiotapes with the help of the website. As he hired
10 people to assist with the expansion of business, invested capital in information technology,
developed a customer database and establishes links with supplier and distributors
(Krichevsky and Johnson, 2015). In the following, an effort has been made to discuss the
significance of Information technology, which can be used to manage the threat utilizing five
forces analysis. In addition, describe the relationship among the information system &
business strategies, and align both the strategies in an effective manner.
Information Technology can be used to manage the threats using Porter’s five forces
LDirect seeks to recognize that they face increased threats from many other organizations
who were delivering online purchasing facilities and dealing with the challenges of illegal
pirating, which is rapidly developing in the industry (Pearlson, Saunders and Galletta, 2016).
Porter’s five forces analysis
(Palacios-Marqués, Soto-Acosta and Merigó, 2015)

Information 2
 The threat of new entrant- It is stated that LDirect is facing the threat of new
competitors, which are equipped with value propositions and new digital-based
methods. Information technology can be used to manage threats by developing new
business models and establish a diversified platform for digital business. They can
utilize cloud technologies, cyber-security, intelligent automation, mobile & social
media analytics, and the Internet of Things to improve the value proposition in the
future. This IT industry is significant because of its customer base and rapid
development.
 Bargaining power of buyers- LDirect biggest driver of digital business emerges
from the needs and preferences of customers. They are facing the threat of fulfilling
the customer requirements and attain the economies of scale at the minimum time.
They need to maintain its position as a customer can easily switch so bargaining
power of buyer is high so they also need to modify their website and provide unique
service to people who are requesting video and audio recording. Information
technology can be utilized to manage threats by continuous corporate innovation
across business processes, products, models, operations, and services (Marin et al.,
2015).
 Bargaining power of suppliers- Suppliers can slow down or quicken the adoption of
digital-based business models, which influence the LDirect. Information technology
can be used to manage the threats, which are identified as LDirect are not maintaining
electronic links with suppliers and maintaining a customer database. They are
receiving supplies from various music distributors but then also it cannot achieve the
economies of scale. It can be managed by utilizing the Application Programming
Interface to integrate their capability to form a new collaboration. It is stated that they
need to use their bargaining power to decrease the validity of integrated models where
the supplier can use the models to embrace the customer experience.
 The threat of substitutes- In respect of the digital business, the threat of substitutes
might replace LDirect offerings, which are differentiated from other product. It is
stated that they are currently supplying DVDs, LD records, CDs and audiotapes in
which there are many substitutes available in the music industry. Therefore, the
customer can switch to another substitute and generate an effect on the profitability
and market share of the industry. Information technology can be used to manage the
threat as they can develop a long-term revenue stream from the digital services than
the one time sale of the product. The threat of substitutes is high in the music industry