Fsa Case Study the Importance of Information

Fsa Case Study

The importance of Information Technology (IT) / Information System (IS) in business is undeniable. The effective gathering of information can help business leaders make decisions in order to reach a competitive advantage. Michael Porter and Victor Millar's paper on "How Information Gives You [business] Competitive Advantage" is a clear framework for businesses in order to achieve competitive advantage and profitability. Porter's model revolves around five forces that are supplier power, buyer power, barriers to entry, threat of substitutes, and rivalry. This paper is a case study of porter's model based on Food Services of America's (FSA) business strategy.

In order to achieve a competitive advantage, FSA's strategy rest on three main area that are cost reduction, product differentiation, and the target of a niche market. The high cost of food price as indicated on FSA's home page is a leading indicator that food distributors need to provide high quality service at a low cost to customers. The reduction of food costs and delivery charges to customers make for a close and long lasting relationship between FSA and its buyers. Another element of FSA's strategy is product differentiation. As a part of Services Group of America (SGA), FSA has a close relationship with companies such as Systems Service of America, which specializes in "…system distribution for quick service and casual dining among other," and Amerifresh in fresh fruits and vegetables. The diversification strategy is also apparent in the relationship with Ameristar Meat and GAMPAC as an expert in logistic. Finally, FSA's decision to target the West and Midwest market of the United States helps in achieving a competitive advantage.

According to Porter and Millar," Competitive Scope is a powerful tool for creating competitive advantage"(Porter & Millar pg4 1985). An analysis of FSA's strategy for reaching a competitive advantage reveals that two of the four dimensions of competitive scope represent an integral part of FSA's strategy with the first one being the geographical scope. That scope is exemplified by FSA's presence in the Western and Midwestern regions. The use of vertical and industry scope in FSA's strategy is reflected by FSA's inclusion in the SGA's family thus the former's ability to provide a wide array of food products as well as the logistical capabilities to deliver the products.

Under the Become a Customer tab on FSA's website, the TOOLBOX to the left of that tab is an indicator of FSA's use of IT/IS in order to remain competitive. Indeed, it is valuable for FSA to use the high volume of information generated by the different industries in which it is involved in order to provide quality and reliable services to customers. For example, the need for customers to know the location of their goods and the exact time and date of delivery is captured by the WHER'S MY TRUCK link. Furthermore, the use of IS/IT allows FSA to offer reliable service such as customers' ability to enter orders "anytime and anywhere" (fsafood.com). Also, the wealth of products is stored in the catalog of products makes it easier for FSA's customers to browse and check products availability, to search product by item number and materials among others, to obtain nutritional data and information on Kosher certificates; the AT YOUR SERVICE link clearly addresses the need for quality and reliable services by offering payroll, credit card processing, and employee health care information among others to customers.

Meanwhile, all these services do not take away the information challenges facing businesses who invest in IT/IS. One those challenges is to develop and/or adapt new technologies to the sector so that these technologies can collect valuable information. Another challenge is to ensure that customers are regularly informed on products processing, storages, and shipping time and arrival. One more information challenge is to put in place a system that provides inputs in a lively and/or timely manner and that is affordable.

In order for FSA to leverage IT/IS in order to compete against industry giants, the following three questions must be answered as mentioned by Porter and Miller on page 12 of their paper.