Nowadays, information systems have become an essential component in the day-to-day operations of organizations. Over the past few decades, information technology (IT) has accelerated at a tremendous rate, and this has significantly affected the manner of operation in companies. The progress and growth of an organization in this “digital era” is highly influenced by the willingness of management to incorporate IT systems in overall strategy: a trend that has become a norm in the past three decades. Notably, everything started in the early 1990s when management personnel started understanding the impact IT systems would have on their organizations (Scott, 2015). For example, during General Electric’s (GE) annual meeting in 1995, the company’s Chief Executive Officer (CEO) announced one of the primary priorities would be the incorporation of information systems in their strategic focus (Scott, 2015). In this regard, for many years, information systems have been a critical enabler for organizations to achieve both their short and long-term goals and objectives.
Today, information systems have come a long way in creating new services as well as providing solutions to various problems being witnessed in different industries. One of the industries in which information systems has become a key component is the automobile industry. It is without a doubt that automobiles have taken advantage of information systems to make their operations more desirable, improve the value of their products, enhance service delivery to their customers, and enhance their business styles and images among others. In this regard, most companies in the automobile industry have incorporated information systems in their day-to-day activities. More so, increased competition in the market and demand for quality products has led to investing more resources in information systems. Thus, there is a need to discuss the impacts of information systems on organizational strategy of organizations in the automobile industry.
Information Systems and Organizational Strategy of the Automobile Industry
Information systems refer to a combination of components used in the collection, storage, and processing of data as well as providing information, knowledge, and digital products. For example, it is common for organizations to use information systems in processes related to preparation of financial accounts, management of human resource processes, and reaching out to customers with both online and offline promotions among others. Information systems comprise several components that include computer software and hardware, telecommunications, databases and data warehouses, human resources, and procedures (Winner, Hakuli, Lotz, & Singer, 2016). Over the years, most significant organizations all over the world have evolved to build and revolve all their activities around information systems.
On the other hand, organizational strategy refers to all activities and actions performed in an organization with the aim at achieving both its short-term and long-term goals and objectives. In this regard, it entails how an organization needs to evolve to ensure it attains its short and long-term targets (Markus, 2017). Organization strategy also includes a detailed assessment of what is need to be done in a company. Notably, all the activities usually make up an organization’s strategic plan. The plan of developing a strategic plan involves undertaking a comparison between an organization’s present state and its desired state to approximate the difference and come up with a plan to reduce the gap between the two states (Markus, 2017). As a result, the success of an organization is determined by how its management can effectively integrate information systems with the organization’s strategy its day-to-day operations.
Analysis and Discussion
Nowadays, the automobile industry has evolved from just manufacturing vehicles. The introduction of information systems in the automobile industry has enabled companies to manufacture cars that provide users with extra functionality to enhance the desirability and attractiveness. More so, information systems also enable the companies to incorporate new business models through the provision of services to the customers. In this regard, some of the impacts of information systems in the organizational strategy of companies in the automobile industry include:
Strengthening Brand Differentiation
The rapid growth in competition has led to massive rivalry in the industry, which causes a rise in copycat tactics among manufacturers. Here, the manufactures engage copying designs and speculations of vehicles from other manufacturers, hence resulting in reduced profit margins of the original manufacturer. As a result, manufacturers have resorted in the incorporation of unique features that enable customer awareness. In this sense, information systems are vital to this aspect, as the customized software-hardware combination makes it difficult for competitors to duplicate initial models (Yin, Stecke, & Li, 2018). Nowadays, each manufacturer has a unique approach that enhances its in-vehicle information system, which is difficult to be duplicated by competitors.
Enabling new business models
In the automobile industry, on-board information systems allow vehicle manufacturing companies to invent new business models. Initially, before the existence of information technologies and systems, the companies only depended on revenue through selling cars. The presence of information systems has enabled companies, such as General Motors (GM), to establish the OnStar system that provides customers with numerous safety and security features, namely auto-crash response and stolen vehicle assistant.
Improvement in design and manufacturing
The process of designing new automobiles is usually long and involves a series of activities and operations. In this regard, most of them have resulted in incorporating information systems to ease the design processes of their products. One of the information-related activities used in the automobile industry is the Computer-aided Design (CAD) that enables the use of computers in the creation, modification, and optimization of products’ designs (Saha, 2016). Therefore, information systems play a significant role in process improvements and greater participation of personnel to enhance the design and manufacturing processes in the automobile industry to be smoother and more efficient. More so, information systems help in cutting down production time of new products, thus enabling manufacturers to come up with more new products in the same duration compared to what would have been designed in the absence of the systems.
Management and improvement of procurement processes
Procurement is one of the essential processes in the automobile industry. Notably, the process involves a lot of time and manpower wastage when it relates to manual checking and handling of suppliers. Furthermore, it is usually difficult to determine the reliability of suppliers and whether to drop them or not. However, automobile companies have incorporated information systems to measure the performance of their contractors effectively. Therefore, information systems help the companies in evaluating the performance of their suppliers, rank them, and can make informed decisions on which suppliers to depend on outsourcing products and services.
Other impacts of information systems on the organization strategy of automobile companies are witnessed in improving inventory management and providing new avenues that enhance interaction between the companies and customers.
Information Systems at BMW – A Real Case from the Industry
Bayerische Motoren Werke (BMW) is a German-organization that specializes in vehicles and engine production and was established in 1916. The company is famous for manufacturing three premium brands that include the BMW, the Mini BMW, and the Rolls-Royce (Pigorsch & Beyer, 2016). One of the primary strategic objectives of BMW is to be the leading automobiles manufacturer as well as provide unmatched and reliable services to customers. To achieve this strategic plan, BMW has to ensure it incorporates information systems that give it a competitive advantage over its competitors.
Notably, the competitors of the company include Lexus, Audi, Mercedes, and Chevrolet among others. Such are established brands with the ability to compete with BMW’s high-end vehicles. Nevertheless, the manufacturer has incorporated several unmatchable information systems approaches to ensure it does not lose its market share to rival companies. One of the approaches is that its competitors have not matched the presence of a limo that has a maximum horsepower in its engine. Notably, the information systems at BMW are comprised of four main components: strategy, architecture, control, and planning. To begin with, BMW has a management information system in which sale managers receive daily reports from sales departments all over the world (Pigorsch & Beyer, 2016). More so, BMW vehicles have auto parking assistant systems that help the drivers park their vehicles automatically. In relation to procurement processes, BMW has a scoring system that is used in determining the benefits provided by individuals and companies who supply products and services for its plant operations. Additionally, BMW’s information systems incorporate feedback channels that enhance the working relationship between the organization and suppliers as well as the customers (Pigorsch & Beyer, 2016). Therefore, information systems have greatly affected the organization strategy of BMW in its bid to remain competitive in the automobile industry.
Information systems have become an essential component in the operations of modern organizations. Nowadays, information systems have come a long way in creating new services as well as providing solutions to various problems being witnessed in diverse industries. Over the years, most major organizations all over the world have evolved to build and revolve organizational strategies around information systems. One of the industries whose organizational strategies have been affected by information systems is the automobile business. Notably, companies like BMW have been able to maintain longevity in the market due to incorporation of information systems in their organizational strategy. Essentially, management of various organizations from different industries should ensure they integrate information systems for them to achieve their short and long goals as well as gain a competitive advantage in the market.
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