General description of information systems and their meaning for business

First of all, I should note that Information System (IS) differs from Information Technology (IT) and it includes the elements that help to supply the information and various needed communication functions for the organization.
Information systems play fundamental roles in business, such as support of business processes and operations; support of decision making by employees and managers; support of strategies for competitive advantage. (Earl 1998)
Information Systems influence the performance of an organization through relationships change (in the five forces model that shapes its competitive environment). Graph below shows the types of information systems in organizations.
As a competitive advantage in accordance Porter’s five forces model, information systems can form entry barriers, it may influence the switching costs for customers and also may help to decrease customers bargaining power. Besides, it may have n impact in new substitute products creation, “generic lead time” may be generated (a time taken by a competitor to duplicate an IS system or IS product).

Types of information systems (Currie and Galliers 1999)

There are two ways to process transactions: batch processing and online processing. Amazon.com has developed and currently uses all Operations Support Systems and the company’s way of processing transactions is online processing (it processes transactions immediately and we can make a conclusion that a really big percentage of Amazon’s success depends on this system functioning).
As a leading web commerce company, Amazon.com takes advantage of using all Management Support Systems.
An organization with good information systems usage, Amazon.com also uses Knowledge Management Systems in order to form and share the important information with all employees of the company.
Information systems may be classified by a scope as well, there are: functional business systems with a focus on basic applications, strategic information systems that ensures strategic competitive advantages, and finally cross-functional information systems (combination of the previous types, supports various functions).
Amazon.com as an innovative organization has chosen the most modern type – cross functional information system (in reality nowadays most systems are Cross-functional). (Betz 2001)
Information system is a business area, provider of efficiency and productivity, information source and decision making support, element of competitive products and services, element of globalized network and also a career opportunity as well.
Information system consist of people resources, IT hardware resources (such as physical devices and machines), software resources (such as programs and procedures), data resources, databases of organized data, network resources (communications and internet).
Information systems as a competitive advantage (in accordance with M. Porter’s The Five Competitive Forces theory)
Porter’s The Five Competitive Forces theory is applicable to the web commerce. The main factors of success in this business field are the cost leadership and the differentiation.
Amazon has got this strategic combination and it provides a leading position. Amazon’s business very diversified. Nowadays among the Amazon ‘s product lines are: books, music CDs, videotapes and DVDs, software, consumer electronics, kitchen items, tools, lawn and garden items, toys & games, baby products, apparel, sporting goods, gourmet food, jewelry, watches, health and personal-care items, beauty products, musical instruments, clothing, industrial & scientific supplies, and groceries. (Taulli 2011)
One of the major competitive advantages of Amazon is its information system and web infrastructure. Amazon has a unique web platform which provides high inventory turnover and fast shipments. Respectively, these factors boost Amazon’s cash flows and company’s competitors just can’t replicate it.
Taking into account the forecasted growth of e-commerce in the next few years, I would like to make a conclusion that Amazon’s diverse strategy of online trade seems to be very successful (it will be possible thanks to the right information system management).
What factors shall be taken into account while measuring success of an IS? First of all, it is efficiency (cost, time and resources), effectiveness (strategies, processes, organizational structure, and customer value). (Betz 2001)
In my opinion, Amazon’s information system can be considered very efficient and successful.
Back to the forces of Porter’s The Five Competitive Forces theory, I should mention Amazon’s existing rivals and threat of entry on the web commerce market.
Talking about Amazon’s competitors, I would note that the company a very strong and aggressive leadership in its category. Despite it, other companies, like Barnes and Noble or Borders, can use its experience and extend their markets in the same way that Amazon.com did. (Taulli 2011)
Let’s begin the analysis of Amazon’s competitors with the largest US book retailer Barnes & Noble. It mainly operates through Barnes & Noble bookstores chain with Headquarters in NY; although it’s also has a web presence (http://www.barnesandnoble.com/), which offers books, eBooks, magazines, toys & games, music, DVD and Blu-ray, video games, and related products. Barnes & Noble was named a leader in eBooks industry in 2009. The company has a competitive advantage of vast chain of warehouses across the US, therefore there is a stock of over 1 million titles that are available for immediate delivery to the customer. The company says that it’s actually more titles than any other online bookseller has in stocks.
Barnes & Noble is a quite strong competitor for Amazon. For example, it’s music store has been named the best online music store according to Forbes.com. The company also has added new product lines, such as items for the office, electronics; toys & games,http://gifts.barnesandnoble.com/magazines/index.asp?cds2Pid=8184 magazine store, etc.
As for the other potential competitor of Amazon, Borders company, an international book and music retailer based in Michigan, it doesn’t influence the competitive situation much, I’m afraid.
In 2010 the company operated 511 superstores in US and web commerce was offered through borders.com. But, unfortunately, it was announced that Borders had filed for Chapter 11 bankruptcy protection in February 2011 and the company faces the liquidation and closing of 226 stores nowadays.
So we can conclude that there is no substantial risk for Amazon from Borders side, because the company’s attention will be concentrated on its financial problems and the strategy will not be aggressive (at least within the next few years). The major competitor for Amazon is Barnes & Noble for sure. Barnes & Noble’s main competitive advantage is the strong presence both brick and mortar and on the internet.
I can conclude that the threat of entry is average, due to the well developed information system of Amazon and the competitive activity in this trade category is rather high but only with one major competitor that has a good web presence as well, but not such great as Amazon has.
Among the other factors that have an impact on Amazon’s success and that have a relation to information systems, in this case surprisingly low prices can be named. Thanks to its online activity, sales tax is not collected by Amazon – this is one of the major competitive advantages; it helps the company to maintain its lower prices (it’s an important factor, because Amazon’s margins are at the very low level now).