Information Technology In The Mdcm Inc. Company:

Running Head: Information Technology in the MDCMcost and also reduce the company's supplier switching
Inc. Company:cost. (Rockart, 1984)
Name:The other way to add value to the products is the
University:introduction of more services and product into the
Course:market, for example the introduction of a more
Date:efficient way to communicate with consumers will
Abstract:improve the competitive advantage of the company.
Investing in Information technology is one in which a(Rockart, 1984)
firm will gain competitive advantage, this case studyThe company y may a also add value to its value
discusses MDCM inc. company that have faced achain by introduction of computer aided
decline in its market share and profits as a result ofmanufacturing process, the use of computer
failing to adopt appropriate information technology.software to aid in decision making, computer
Ways in which the strategies can be matched withsoftware decision making and introduction of 
information technology objectives are discussedconsumer services system and ensures efficient
include value added chain and those related toresponse to consumer enquiries. (Porter, 1985)
porters five force strategy.Riesman and Porter five force strategy:
Introduction:Parson also identifies which information technology
The medical device contract manufacturing companycan be used in order to achieve competitive
(MDCM) was founded in 1972, the companyadvantage; these five forces include power of buyer,
specializes in contract manufacturing of medicalpower of supplier, new entrants, competition and
devices has subsidiaries in over 35 countries,  bysubstitution threat. (Porter, 1993)
working together with consumers the company wasSubstitution of labor:
able to achieve 42% market share in the US in theSubstitution information technology for labor is one of
year 1974, and by the year 1985 the market sharethe ways in which a firm can gain competitive
grew to 54%. This growth was attributed toadvantage, MDCM main problem is the existence of
acquisition of smaller companies and also expansion ofcustom systems that increase administration costs,
its operations into other regions in the US. (Harvardintroducing information technology will reduce
Business, 2006)administration costs whereby the firm will not be
In the year 1989 to 1990 the company lost 4 of itsrequired to hire labor to undertake tasks that can be
major consumers and this led to a decline in itsperformed more effectively and efficiently by the
profits, profits began to decline as its consumersnew IT system.
consolidated and the company lost its pricing power,(Riesman, 1982)
profits and market share continued to decline untilIncreased switching costs for the consumer:
the year 2000 when changes were made to reduceThe value added IT based information system will
internal costs and also structuring the company toincrease the consumer switching costs, this is the
improve efficiency.  (Harvard Business, 2006)cost associated with switching from one supplier to
Information technology offer firms an opportunity toanother whereby a value added information system
lower their costs of operation further, opportunitieswill results into increased cost of identifying other
arise in three different ways and they include internalsuppliers.
costs, competitive ness and business portfolio,(Riesman, 1982)
internal costs refers to improvement of theCooperation with rivals:
efficiency and effectiveness of an organizationA shared IT system with rivals will encourage
therefore reducing costs, competitiveness refers tocooperation with rivals, this means that through
advantage associated with information technologycooperation the company will gain price power over
that result into added competitiveness, and businessthe consumer and this will improve selling prices of
portfolio refers to an information technology thatproducts, and the higher prices will help the company
affect decision made by potential investors.to realize higher profits.
Business objectives(Riesman, 1982)
One of the main objectives is to reduce theReduced company switching costs:
production costs associated with the productionThe firm will also realize a reduction in switching
process of the products, the article highlights internalcosts, through its information technology system the
costs as one of the major problem that result intofirm will be in a better position to identify potential
reduced costs, and some of these problems include:suppliers who may supply products at lower costs;
Networking: - the company lacks a network systemthis reduced cost will enable the company gain
that would enable access its subsidiariescompetitive advantage over its competitors.
Different legacy systems: - the company has custom(Riesman, 1982)
legacy system that increase administration costsProduct innovation:
which include many different custom sales, financialInformation technology will lead to product innovation,
and duty and inspection systemsintroduction of information technology into the
Operating system: - outdated operating systems forcompany will help in the improvement of products
its employeesproduced by the company, products produced will be
Email system: - the company lacks a standardizedbetter than those of the competitors and also
email systempotential substitutes and therefore the firm will gain
(Harvard Business, 2006)competitive advantage.
The other objective is to increase market share, the(Riesman, 1982)
company was one of the largest medical productSharing of information:
manufacturing company and had realized a 53%Information technology system put in place will
market share but due to a decline in its competitiveimprove information sharing, this will help in improving
advantages the market share declined. For thisservices to the consumers in two ways and one is
reason one of the main objectives is to increasethat there will be a quick response to enquiries by
market share. (Harvard Business, 2006)the consumer and also information sharing across the
The other objective is to become a market leader insubsidiaries and various departments will help improve
the medical product manufacturing industry, thethe quality of the products and therefore better
company should relies through investment inmeet the needs of the consumer.
information technology which will add value to its(Riesman, 1982)
product, increase market share and also increaseIn addition Austin and McFarland (2007) used the five
profits recorded.force strategy to show how information technology
The company therefore intends on reducing itscan be used to gain competitive advantage, for
internal costs by investing in information technology,rivalry they state that information technology can be
this will be achieved through the identification ofused to establish a planning system that will reduce
function areas where information technology will becosts and also enable the firm to react more quickly
used in the reduction of costs; this strategy will alsoto consumer enquiries. Regarding the threats of entry
be aimed at improving the efficiency andby other firms into the industry they state that
effectiveness in the company.websites can be re designed and also to aid in which
Matching IT objective with cooperate strategies:will help reduce costs.
The IT objectives must match with the corporateConclusion:
strategies highlighted above; the following is anMDCM inc was once a market leader in terms of
analysis of how these strategies will relate tomarket share but over the years this has changed
information technology objectives with reference todue to increased internal costs and high competition in
value chain management and the porters five forcethe industry, The above discussion highlights the
strategy.importance of information technology in business
Value added chain:strategies, it also shows how the objectives of the
According to Rockart (1984)Information technologycompany will be matched with the information
can be used to create add value to products in ordertechnology objectives using the five force porter
to achieve competitive advantage, there are threestrategies and the value added chain strategy.
ways which this can be achieved and they includeReferences:
improving each function of the value adding chain, thisHarvard Business (2006) MDCM Inc. strategic IT
will involve better consumer care, improved efficiencyportfolio management case study, retrieved on 4th
of processes such as order processing and enquiryDecember, from
replies. (Rockart, 1984)Porter, M. 1993. Competitive strategy, New York:
The other way to add value to the product value isfree press
through improved links with the suppliers andRiesman, H. and Gerstein, M. 1982. Creating
consumers, creation of the value added chain willcompetitive advantages with information technology.
influence the switching cost of both the suppliers andBusiness strategy journal, vol (3) (1) page 53 to 60
the consumers, when information technology isRockart, J. 1984. Information technology:  strategic
adopted it may lead to increased consumer switchingapproach.