Running Head: Information Technology in the MDCM Inc. Company:
Investing in Information technology is one in which a firm will gain competitive advantage, this case study discusses MDCM inc. company that have faced a decline in its market share and profits as a result of failing to adopt appropriate information technology. Ways in which the strategies can be matched with information technology objectives are discussed include value added chain and those related to porters five force strategy.
The medical device contract manufacturing company (MDCM) was founded in 1972, the company specializes in contract manufacturing of medical devices has subsidiaries in over 35 countries, by working together with consumers the company was able to achieve 42% market share in the US in the year 1974, and by the year 1985 the market share grew to 54%. This growth was attributed to acquisition of smaller companies and also expansion of its operations into other regions in the US. (Harvard Business, 2006)
In the year 1989 to 1990 the company lost 4 of its major consumers and this led to a decline in its profits, profits began to decline as its consumers consolidated and the company lost its pricing power, profits and market share continued to decline until the year 2000 when changes were made to reduce internal costs and also structuring the company to improve efficiency. (Harvard Business, 2006)
Information technology offer firms an opportunity to lower their costs of operation further, opportunities arise in three different ways and they include internal costs, competitive ness and business portfolio, internal costs refers to improvement of the efficiency and effectiveness of an organization therefore reducing costs, competitiveness refers to advantage associated with information technology that result into added competitiveness, and business portfolio refers to an information technology that affect decision made by potential investors.
One of the main objectives is to reduce the production costs associated with the production process of the products, the article highlights internal costs as one of the major problem that result into reduced costs, and some of these problems include:
Networking: – the company lacks a network system that would enable access its subsidiaries
Different legacy systems: – the company has custom legacy system that increase administration costs which include many different custom sales, financial and duty and inspection systems
Operating system: – outdated operating systems for its employees
Email system: – the company lacks a standardized email system
(Harvard Business, 2006)
The other objective is to increase market share, the company was one of the largest medical product manufacturing company and had realized a 53% market share but due to a decline in its competitive advantages the market share declined. For this reason one of the main objectives is to increase market share. (Harvard Business, 2006)
The other objective is to become a market leader in the medical product manufacturing industry, the company should relies through investment in information technology which will add value to its product, increase market share …