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Strategic Role of Information Systems in the ANZ Group of Companies Essay Example

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Strategic Role of Information Systems in the ANZ Group of Companies

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Strategic Role of Information Systems in the ANZ Group of Companies. The five forces we shall be looking at as per Porter’s model are a rivalry, barriers to entry, the threat of substitutes, supplier power and buyer power (Laudon & Laudon, 2010).
The intensity of rivalry is generally influenced by the number of firms in an industry, diversity of firms in the industry, the rate of market growth, level of switching costs, level of product differentiation, exit barriers and industry shakeout. ANZ is a major player in New Zealand financial products with a 34 per cent market share (ANZ, 2010) and to this effect, Varian (2003) argues that they could use IT to further reduce industry rivalry and increase their market share. He says that information technology is helpful in collecting information about consumers, in designing product lines, and in actually producing the different versions of the product itself.

ANZ could use their already huge market share to build switching costs that are substantial enough to cause customer lock-in. Customer lock-in is useful in creating a long-term substantial source of profit for the firm. One way the company could achieve this is through bundling up their products or services. From this, there are two distinct economic effects involved: reduced dispersion of willingness to pay, which is a form of price discrimination, and increased barriers to entry (Varian, 2003).
In as much as IT could be used to create conditions for customer lock-in by major players, ANZ would need to be wary of the role of ‘disruptive technologies’, i.e. low cost and initially low-quality innovations that have the potential to unseat established industry players. According to Varian (2003):
IT has, in many cases, reduced fixed costs over time, leading to more entrants; particularly in industries where there is high demand for variety [banking is an industry with a high demand for variety]…rapid reduction in costs and rapidly growing markets offer a fertile ground for competition and disruptive technologies (p. 9).   . Strategic Role of Information Systems in the ANZ Group of Companies.

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