Assignment 1: Discussion—Technology Supporting Business Processes Over the twentieth century, the ability to process information in terms of labor units has improved by a factor in the order of 1 to 5 trillion. This improvement represents a compounded growth rate of between 30 to 35 percent per year for a century. At the turn of the twentieth century, the mechanical calculator offered a modest productivity increase but the number of workers required to maintain the accounts of a medium-sized business still remained very high. Many tasks would take a large investment in equipment and a significant number of accountants’ weeks to process. A hundred years later, the same tasks can be completed by a standard desktop computer in minutes. The challenge for management has transitioned from a simple reduction in labor requirements to leveraging the increased processing power to develop competitive, efficient, and profitable organizations. With this example in mind, use the assigned readings for this module and respond to the following: Explain how information systems influence businesses to be more competitive, efficient, and profitable. Provide at least one example for each factor.

In today's rapidly evolving technological landscape, information systems play a pivotal role in transforming how businesses operate and compete. These systems enhance competitiveness, efficiency, and profitability, enabling organizations to adapt swiftly to market changes and customer demands. Their influence can be understood across three core dimensions: fostering competitive advantage, streamlining operations for efficiency, and increasing profitability through innovation and better decision-making.

How Information Systems Enhance Business Competitiveness

Information systems enable businesses to differentiate themselves from competitors through strategic use of data and technological innovation. For instance, companies like Amazon utilize advanced data analytics and personalized recommendation algorithms to enhance customer experience, thereby gaining a competitive edge. By analyzing customer purchasing behavior, Amazon tailors offerings and marketing strategies, attracting more customers and increasing market share (Chaffey & Ellis-Chadwick, 2019). This strategic leverage of information systems positions Amazon ahead of traditional retail competitors who lack similar data-driven personalization capabilities.

Increasing Efficiency through Information Systems

Operational efficiency is significantly improved by automating routine tasks and optimizing processes. For example, Walmart's inventory management system employs real-time data tracking and forecasting models. This system reduces stockouts and excess inventory, minimizes waste, and ensures the availability of high-demand products (Laudon & Laudon, 2020). Such efficiency gains reduce operational costs and enable faster response times to consumer needs, positively impacting customer satisfaction and reducing overhead expenses.

Augmenting Profitability with Information Systems

Information systems foster profitability by supporting innovation and better decision-making. A case in point is Starbucks’ use of their loyalty program integrated with mobile ordering, which collects data on customer preferences. This data allows Starbucks to optimize product offerings and targeted marketing, leading to increased sales and higher profit margins (O’Brien & Marakas, 2018). Additionally, real-time analytics help identify key revenue opportunities and mitigate risks, translating technological investments directly into financial gains.

References

• Chaffey, D., & Ellis-Chadwick, F. (2019). Digital Marketing (7th ed.). Pearson.
• Laudon, K. C., & Laudon, J. P. (2020). Management Information Systems: Managing the Digital Firm (15th ed.). Pearson.
• O’Brien, J. A., & Marakas, G. M. (2018). Management Information Systems (11th ed.). McGraw-Hill Education.
• Turban, E., Volonino, L., & Wood, G. (2018). Information Technology for Management: Digital Resources (11th ed.). Wiley.
• Porter, M. E., & Heppelmann, J. E. (2014). How smart, connected products are transforming competition. Harvard Business Review, 92(11), 64-88.
• Brynjolfsson, E., & McAfee, A. (2014). The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. W. W. Norton & Company.
• McAfee, A., & Brynjolfsson, E. (2017). Machine, platform, crowd: Harnessing our digital future. Harvard Business Review Press.
• Rogers, D. S. (2016). The digital transformation of business: How technology is reshaping industries. Business Horizons, 59(1), 35-44.
• Porter, M. E., & Kramer, M. R. (2011). Creating shared value. Harvard Business Review, 89(1-2), 62-77.
• Hess, T., Matt, C., Benlian, A., & Wiesböck, F. (2016). Options for Formulating a Digital Transformation Strategy. MIS Quarterly Executive, 15(2), 123-139.