Technology And Peoples Activities Information Technology Essay

An Information System is any combination of information technology and peoples activities using that technology to support operations, management, and decision-making in a very broad sense, the term information system is frequently used to refer to the interaction between people, algorithmic processes, data and technology. In this sense, the term is used to refer not only to the information and communication technology (ICT) an organization uses, but also to the way in which people interact with this technology in support of business processes.

Information Systems helped organization to perform Operational and Management Support in past. But now-a-days organizations use information systems to gain competitive advantage.

It’s Strategic Information System (SIS) – instance of information system used to support or shape an organization’s competitive strategy, its plan for gaining and maintaining advantage. (Nick Rackoff, Charles Wiseman and Walter A. Ullrich (1985)).

The targets of information systems are Strategic Planning (processes related to the organization’s objective, resource allocation policies), Management Control (processes related to assuring that strategic objectives are attained) and Operational Control (processes related to assuring that tasks are executed efficiently) as described by Robert Anthony in Planning and Control System.

Avison and Fitzgerald (1995) have discussed the 3 ways to achieve competitive advantage by implementing information system in an organization.

(1) Redefine the boundaries of particular industries by developing new products or services.

(2)Change the relationships between suppliers and customers,

(3)Establish barriers in marketplace to make difficult for new entrants.

If there are number of rivals in competition who provides same product or service, then it’s not easy for any organization to gain competitive advantage. If an organization wants to gain competitive advantage then it has to be a cost effective or differentiate its product or service from other competitors.

According to Michael Porter and Victor Miller (2001) Organization has to change the competition scope by exploiting following forces.

(1) Differentiation:

Distinguish product or services from other rivals. Or reduce the difference of product or service between you and your competitors. Collect information about customer needs and use that information to differentiate product or service.

(2) Lowering Cost:

Reduce organization’s costs, supplier cost or Product or Service Cost, or by raising the costs of your rivals.

(3) Changing Competitive Scope (Focus):

Concentrate on particular market or change product or service according to targeted market by deploying information.

(Nick Rackoff, Charles Wiseman and Walter A. Ulrich (1985))

The improvement made to a product or service before the product is offered to customers is called Added Value.

Added Value can also be defined as the difference between a particular product’s final selling price and the direct and indirect input used in making that particular product as described by Kay, J. (1993)

According to Michael Porter, Value Chain Model consist of activities that a organization performs to create product or service which customer willing to buy, It can be a Primary Activities like Inbound Logistics, Operations, Outbound Logistics, Marketing & Sales and Service and Support Activities like Firm Infrastructure, Human Resource Management, Technology Development and Procurement . To gain competitive advantage, organization has to perform these activities in such a way that it differentiate or provide product or service at lower cost.

Primary Activities

Support Activities

The Value Chain (Porter, M. 1980)

In this case study, the appropriate use of Information System in Argos will be discussed. How Argos gain competitive advantage in market will be discussed. Porter’s five force model and value chain will used to analysis current position of Argos in market.

Porter’s Five Force Model:

(1) Rivalry among Existing Competitors:

This is the most powerful force. It depicts the competition between rivals in market who provide same product or service.

(2) Threat of New Entrants:

This show that whether it is easy for new organization to enter in this market or not.

(3)Threat of Substitute Product:

This will tell how easy for customer to switch from one product to another.

(4) Bargaining Power of Supplier:

This force illustrate provider of raw material or input for an organization.

(5) Bargaining Power of Buyers:

This depicts the ability of customer to negotiate on price of product or service.

(Michael E. Porter, Harvard Business Review, January 2008)

Literature View:

Mission Statement of Argos:

“We provide our customers with the best value for money through the most convenient shopping experience”

History of Argos:

The idea behind Argos was that company produced a catalogue to show all the products you could buy and they have smaller shops as they only required payment feature. This allows the customers to choose the products from catalogue and take the product numbers to buy product.

On July 21st 1973, Argos launched its first store at High Wycombe. Other 16 store was launched on the same day. At the end of 1980’s there are about 250 stores were already opened. By 2000, there are 500 store are opened around UK and Ireland. At present they got more than 700 stores around UK and Ireland.

One of Argos’ main strengths is the cost control of catalogue shopping over other type of retailing, which allows the company to offer a wide range of products at competitive price.

Facts about Argos:

Argos is Europe’s leading catalogue store chain and third in the world.

70% of UK households have shopped with Argos in the last year. They serve over 130 million customers a year.

Their sales were £ 4.3 billion last year. And 26% of those sales were through Internet. There are about 4 million customer orders online or on the phone.

Argos website (argos.co.uk was the most visited high street retail website in the UK in 2008).

In UK around 2/3 of population have Argos catalogue at home any time

It employs about 33,000 people.

(http://www.argos.co.uk/wcsstore/argos/en_US/images/StudentPack.pdf )

(http://www.ciao.co.uk/Argos__Review_5603128 )

“Argos likes to keep up with all the latest technological trends and is always striving to ensure each customer can shop in the most convenient way for them.”

Since Argos was started it has been known for its inventive use of technology. Computer systems have had a huge impact on the way Argos do business. New technology has allow Argos to observe stock levels in much greater detail, helping to spot trends and avoid ‘out of stock’ situations. New technology has also affected communication with other areas of the business; with the use of e-mail and intranet increase the way communicate.

www.argos.co.uk:

The expansion of the internet has allows Argos to offer new and more suitable services to customers web site, making Argos a leading retailer in the e-commerce sector. The Argos web site was first launched in 1995 and has continued to help customers. The products and promotions featured on the website shows those in Argos stores. This website allows Argos to know about purchase trend of customers, helps to predict the sale of each item, helps to know buying habit of particular customer and also helps to reduce queue at Store.

There are many services offered on the site to make shopping online as easy as possible.

Look through the catalogue.

Search for a particular item.

Make a purchase and it will be delivered to your home.

Reserve items to be collected at the customer’s local store.

Items can reserved for 48 hours at all local Argos stores via the internet at argos.co.uk. The items are paid for when collected from the store, giving customers an alternative choice to paying over the internet as well.

Check & Reserve:

Before arriving at Argos Store, Argos customers can check the item they want to purchase is available in stock or not, they can reserve item they want buy, and check opening hours of store, simply by calling on Check & Reserve Phone line on their local Argos store number. Their item will be reserve for a specific time only.

It has seen many difficulties over the years but has always handled these situations with new and creative ideas and increase the range of products sold.

Text & Take Home:

Text &Take Home service was launched in December 2002, which was a fast and easy way to check the latest prices and stock availability as well as reserve items by sending a message from any mobile phone. Customers have to send the text with catalogue number and postcode or town name to a customer service number. If item doesn’t available then Customer service will text customer when that item will be available.

Stock Checker:

As part of improving customer service, Stock Checker workstations are now available at all browser counters in store. They are quick and easy to use. All the customers have to do is simply type the catalogue number of the item they want to buy and the stock checker will shows them whether the item is in stock and the quantity of that item is available.

Quick Pay Kiosks:

To improve efficiency and decrease queuing times, Argos has introduced Quick Pay kiosks at many stores. Customers can now buy the items they want by a touch screen, pay by credit card, collect a print out of their receipt and go directly to the indicated collection point.

Order Tracking:

There is order tracking system, which can use to track customer’s order. Customer has to enter the order number, billing postcode and surname in an Argos website. It will show your status of order.

(http://www.argos.co.uk/wcsstore/argos/en_US/images/StudentPack.pdf )

(http://www.ciao.co.uk/Argos__Review_5603128 )

(http://www.argos.co.uk )

(http://www.homeretailgroup.com/ar/2009/_downloads/HRG_Annual_Report_2009.pdf )

Critical Analysis:

Porter’s Five Force Model:

In this case study, Now Porter’s Five Force model will use to analyze the position of Argos Store in market. And the situation of Non-Food Retailer market at present. It will check all five forces to determine how Argos Store can or had gain competitive advantage over its rivals.

Rivalry among Existing Competitors:

There are many companies in this market. But Argos has almost monopoly in this business environment. There are other companies who sale similar product. But some of them have only local stores and some of them only sales on a website like amazon.com and play.com. Only Argos provides the both type of facility to customers. Customers have 3 ways to buy a particular product.

In Store: customer can buy a product in store by browsing catalogue.

Online: customer can buy a product on the Argos website and it will be delivered at customer’s home.

On Phone: customer can reserve item on phone and can collect it from local store.

None of its rivals are providing all these service to its customers. Still it’s a very competitive market place for Argos.

Threat of New Entrants:

In such business environment, Threat of New Entrants is low, because the organizations who want to enter in this market will face difficulties. First, cost is very high to enter in this market due to large scale of existing competitors. They have to spend large amount behind market research, to establish a store and warehouse at very large scales, and behind the human resource and IT facilities. Second, it is difficult for new entrants to establish its brand name where organization like Argos already has strong brand reputation. Third, new entrants can’t differentiate products in this market. They can only make difference in a store design or way they deliver service.

Threat of Substitute Product:

There are many companies in market providing similar product and service to customers. But Argos has more range of products and more choices for customers. That’s why it is hard to replicate the products or services provided by Argos. So, Threat of Substitute will be low.

Bargaining Power of Supplier:

Here bargaining power of supplier is medium, because the Argos has already build good supplier relationship to deliver a high quality service at reasonable price to customer. Its long term relationship to make sure it got product from supplier at lower price than others. And it has large range of products.

Bargaining Power of Customer:

Argos offers more service and products to customer than other rivals. It also provides this service or product at much lower cost. It also provides additional service like “Buy Now, Pay Later” Argos Card, Argos account for online shopping etc. That’s why its difficult for buyers to switch to another company.

Value Chain Model:

Primary Activities:

Inbound Logistics :

This activity consists of a receiving, warehousing and creating a product record which comes in to business.Argos understand the challenge to balance supply and demand. The company have own inbound logistics operating model.

Then they bring a new Central Distribution Centre (CDC) for small items – replenishing local distribution centers and providing deliveries of small items to stores in the UK and Republic of Ireland. The solution also provides considerable savings in operational costs, freeing up resources at the busy local distribution centers.

(http://www.logisticsit.com/absolutenm/templates/article-supplychain.aspx?articleid=2760&zoneid=5 )

Operation:

Facilities Argos provides like Check and Reserve, Online Shopping, Text & Take Home and Quick Pay Kiosks helps to reduce queuing at Store. It also helps to reduce staff overhead and maintain a good delivery service.

Outbound Logistics:

Argos continuously tuning outbound logistic demand so that customers are never having bad service experience, and that cost efficiency is not achieved at the cost of meeting customer expectations.

It uses VISIONâ„¢ WCS, It is able to constantly determine the most efficient way to each order picking station, based on the workload at each station, product supplies around the system and the importance with which particular products are needed.

Marketing and Sales:

As a retailer, marketing is designed to support Argos as the first place to visit for a wide range of available products. This is usually based on different seasons, and products that are important for that time.

The Argos catalogue is the centre of all marketing efforts, with 35 million copies published each year. Argos spend very large amount for advertising, it spends on television, radio, newspapers, or magazines.

Market Research often took place to know where and how improvements can be made.

Service:

All the information collected about customer helps Argos to better understandability of its customers. There is Customer Service Department in Argos. Which helps customer to request for an item or complain about product or any other issue. It provides valuable information about customer needs.

Support Activities:

Technology Development:

The new technologies like Internet, text service, Order Tracking, Quick Pay now broadly used in Argos and the information system helps Argos in collecting suppliers’ data, customers’ data, and in decision making.

Human Resource Management:

There are different areas that make the Argos human resources department; all playing an essential part in ensuring and retain tremendous working practices. Areas are:

Avebury HR (2) Distribution HR (3) Retail HR (4) HR Direct

The training has been recognized learning needs across the business and developing suitable learning solutions. Training is given for general practice as well as for new systems introduced in a store.

Procurement:

It includes the purchasing of material and equipment for organization. IS can give a company a better view, and help to select the appropriate supplies.

Firm Infrastructure:

It depicts the structure of organization, control system and the environment of organization. IS helped Argos to connect all its store and provide intercommunication between stores.

Conclusion

Information system is basic need for organization today. To compete with rivals and to survive or to gain competitive advantage IT is essential. IT has a critical role in any Organization.

Despite of, information technology has become more of a basic need, if IT use with good business model it can provide strategic advantage.