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There are many ways for a business to achieve a competitive advantage. Some managers choose to focus on pursuing innovation and improving their companies, while others prefer to focus on internal issues and mitigate them. Other examples are businesses introducing a new product that overtakes the revenue and sales volume of the previous, which is cannibalization. This paper will compare and contrast different strategies for achieving competitive advantage, discuss information systems and social IT.
There are two primary ways to approach business management. The destroy your business approach (DYB) implies a focus on the weaknesses that competitors would use to eliminate their rival (Chen, n.d.). DYB is a strategic action that allows the executives to identify the most significant weaknesses and destroy them. For example, having an office in a state that is not profitable for a company may be a considerable weakness unless this unit has a good plan for development and reaching profitability. If this organization aims to overcome its competition, it should apply DYB to destroy the weak elements of it, in this case, the unit that does not provide profits. In the long-term, DYB allows maintaining operations by illuminating the obstacles and improving profitability.
In contrast to DYB, some business managers focus on innovation as their selected business strategy. Grow your business (GYB) approach implies improving the business’s services, for example, by finding novel ways of reaching different consumer segments (Pearlson, Saunders, & Galetta, 2019). GYB is essential for long-term operations because businesses need new developments to remain competitive and continue receiving profits. Arguably, both DYB and GYB are necessary for contemporary businesses that operate in highly competitive environments. One allows the company to get rid of unprofitable and ineffective business units, while the other allows addressing rivalry by introducing products and services that differentiate this business. The main difference between DYB and BYD is the focus—in one case, it is the weakness, while in the other, it is new developments.
Businesses should execute DYB with caution because it can result in the cannibalization of their brand. Pearlson, Saunders, and Galetta (2019) describe this strategy as a reduction in sales volume and profits from it because the same company introduced a new product. As a result, the consumers reverted to using this new product instead of the previous offer. However, Armstrong (2019) argues that many CEOs are afraid to introduce new products because they are afraid that those would destroy the sales of the existing items. However, it is natural for businesses to develop and introduce new developments to the market, and if a company fails to do this, the competitors may overtake their success.
In the modern world, there are many examples of IT technologies that led to the cannibalization of previous products and allowed businesses to remain competitive. One example is Amazon’s secret project Lab126 that Jeff Bezos established in 2004 (Pearlson, Saunders, & Galetta, 2019). The goal of Labl126 was to create a product that would destroy Amazon’s book-selling business, and the result of this project is Kindle. Currently, Kindle is a significant contributor to Amazon’s success and profitability. Hence, DYB allows a company to look at its business from the perspective of a competitor and try to disrupt it intentionally. In this way, these businesses can adapt business solutions that otherwise would be developed by their rivals, which helps them overcome competition. When reviewing Amazon’s Kindle from the perspective of cannibalization, this strategy proves to be effective. Kindle provided the consumers with a technological solution for book reading, and apart from selling Kindles, Amazon also developed the e-book service. Considering that the current market for e-books is booming, the cannibalization of print books by e-books that Amazon started helped them retain and even improve their market positions.
Another example of cannibalization, as opposed to a DYB strategy, is Netflix. This company owns a streaming service that changed the industry, but they began operating as a DVD renting service (Pearlson, Saunders, & Galetta, 2019). If Netflix’s management used DYB instead of BYD, they would illuminate their weaknesses, for example, close their stores in cities with low profits, improve customer service, seize deals with DVD companies that do not produce popular films. Instead, they worked on a project that replaced DVD renting altogether because consumers no longer had to visit physical locations to rent a movie. After a while, the streaming service completely outperformed the service that Netflix offered before in terms of profits and market share.
Information systems (IS) is another strategy IT businesses use. Any changes in the strategy that the business executives execute should lead to a change in its IS. The main issue with avoiding the review of IS is that the existing systems may be unsuitable for the new business strategy, threatening the execution of it. Hence, similarly to the business strategy, which the executives should adapt to the changes, they have to adjust the IS as well to ensure that the two align.
Moreover, the executives should adjust their business strategies depending on the changes in IS. The development of technology led to people using laptops and smartphones daily, which changed the environment in many industries. Companies that failed to consider these changes in their strategies and did not adapt to failed (Chen, n.d.). Thus, IS and business strategy are linked, and managers should change both.
The use of social IT can help a business reach its stakeholders more effectively. Collaboration, engagement, and innovation are the key elements that allow one to align its social work with strategy and IS. The employees can use collaboration tools to communicate with one another, share ideas, and work with one another more effectively. This collaboration can be achieved even if the employees are located in different parts of the world. Next, engagement for social business requires one to work with the stakeholders. This involves communication with the community members, for example, through blogs and other online platforms. Through engagement, a brand can help the community create a sense of ownership. Finally, innovation allows creating new ways of developing new products for the benefit of society, and for example, employees can use innovation to create more efficient products. These three tools can be used by the employees of the business to engage with one another and community members.
Overall, this paper examines the issues of business strategy, particularly GYB, DYB, and IS. DYB can be expressed as destroying one’s business before the competitors destroy it. BYD is the focus on developing the business, introducing new products, and bettering the existing services. The current business environment, especially in the IT sector, is highly competitive, requiring companies to review their weaknesses and invest in innovations. Additionally, the introduction of new products may lead to cannibalization of the old ones.
References
Armstrong, E. (2019). The 3 Cs of cannibalization: A product strategy primer. Web.
Chen, J. (n.d.). Chapter intro. & 1: The information systems strategy triangle [Powerpoint slides]. Web.
Pearlson, K. E., Saunders, K. S., & Galetta, D. F. (2019). Managing and using information systems: A strategic approach (7th ed.). Wiley.
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