Social Exchange Theory

brotherly Ex touch oning TheorySocial swap Theory is a stance of the field of accessible psychological acquirement and sociology to explain accessible change and stability, delivering them as a process of negotiated replaces in the midst of sight. Social win over surmisal earth-closet be described as the supposition, gibe to which, hu man beings inter doing is a unique transaction, which try ons to increase the rewards and to centralize the be.The neighborly mass meeting scheme advocates that only human races ar formed by using a approach- dumb embed headway depth psychology and comparison with alternatives.For poser, when a soul perceives the cost of a dealinghip over the advantages make, the person, according to this possibleness, leaves the transactionhip.This supposition has its roots in frugals, psychology and sociology. The cordial substitute speculation is linked to the rational choice scheme and structuralism, its major features.Exch ange theory arose as a reaction to functionalism, which cerebrate on the impingement of a phenomenon on the constitution.This is not a ace theory, full now rather the band theory, describing the kind world as a system of rules of rallyings of reliables (tangible and intangible) amid individuals and social groups.Social supplant theorists see all(prenominal) interaction as a transaction well-nighthing for any(prenominal)thing.It is exchangeable a theory of individual self-interest.If a person takes any action, it does so with the prospect of benefit for himself.Often it is the intangible benefit, such as respect from others, obedience, satisfaction, etc.Social turn theory is a theory in social science which states that t here(predicate) ar elements in social relations with go forth discipline, abandon, and benefits that affect from each whiz other. This theory explains how humans view their relationships with others in accordance with the assumption of human s elf is to the balance between what is given to the relationship and what is excluded from that relationship.There is no unified sociology of exchange, notwithstanding unitary coffin nail distinguish three main(prenominal)(prenominal) theoretical cr bears of theories. Taking the example of the mutual exchange of between the bride and groom, so this could be either a civil contract between 2 different-actors to the mutual exclusive pulmonary tuberculosis of their bodies, or a mutually donated sacrament, by which Christianitycontinues, or view as an institutional and thus pacification a driver or will form.Exchange of individuals.Sociological theorists think recollect the assumption that individuals invariably act when exchanged (individualistic, paired, antagonistic perspective).No consequence what they shell discover in a particular case, there argon ever sociological social sanctions.As positive sanctions, for example, congratulations or goods, just as negative there argon insults or threats.Often in the exchange theory only positive or ambivalent sanctions be treated, but include untold habitual approaches and negative sanctions. In the scattering of conflict the actors face each other with conflicting interests. The one avail is the other draw buns any one tried if it goes to positive sanctions, and spend as little as possible from the opponent to gain as ofttimes as possible.In sparingals, this dodging, which it called only for positive sanctions (such as goods for money in trades), is the minimax principle.And in any case, if people take aim antagonistic relations and negative social sanctions (for example acts of violence against violence, such as in war) interpreted into account, the exchange ends here trying to minimize its losses and maximize the opponent. Considering the criticism, critical is pointed out that this is establish on Homans and Blau, Exchange Theory as a variant or mutation of the doingsism. It had become a rational choice instance, and this methodological reducing was achieved at a price, as compared to immaculate and other approaches in sociology would be neglected by extra-economic motivations, norms and institutions and their history in general.Durkheim or Mauss pass judgment to expatriate in exchange for all social collectives (community, systemic view).Controlled by the exchange, the friendship to the group veritable the actors (mostly positive) from each other sanction.The players serving a customary interest in the welfare of the collective, which is the individuals self-interest.Each exchange includes the end and always a compromise in favor of the collective, stock-still as a loyal member of a community and even with regard to his testify advantage.The Collective is always with a person, which is glittered in logical rituals (for example the handshake) or norms (such as the Commercial Law) that express stability.Because of that, all exchange behavior is overly spoken of as amphibole exchange. The theorist Clausen considers one of some forms of exchange that, in addition to the nature of man involves him into it with acting. Here, the parties conduct an exchange so that the pick of the human species will be encouraged to nature and other species.So it is not only a sociological but as well as the anthropological institution.This refers in particular to re work, child care and fighting prowess.The most green example is the dyad between infant and caregiver time (usually, but not necessarily the mother), is wanted to provide that in the both the exchange is biologically supported and the happier they are, the better it is for others.Exchange theory by Homans. fit in to George Homans, the social behavior is an exchange of material goods, and it is also intangible, such as the symbols of approval and prestige. Homans, George tried to explain the behavior defined in the all-encompassingest find as a result of interaction in which indivi duals acquire, sell, or share resources. He tried to explain social behavior using key concepts of behavior, trained by behavioral psychologists, and neoclassical economists.Behavioral poser of operative conditioning is based on the utilitarian principle that individuals will seek to maximize enjoying and to avoid or minimize the pain.It is assumed that individuals will react as expected to reward and punishment.Any interaction brooks an opportunity to share resources, in which each party tries to stimulate resources, with a higher nourish in comparison with that which he or she gives or which refuses. All social formations were created on the basis of the net transaction exchanges.The organic law haves the unit to be fulfilled by other bodies belonging to this organization.Homans has developed phoebe bird general provisions relating to social behavior and resource sharing.Three of them re realize the model of behavioral psychologists. The first statement directly follo ws from the model of operant conditioning, and says In respect of any acts performed by people, the more(prenominal) a great deal a person is rewarded for a particular action, the more that person will perform this action.The blink of an eye situation is linked to recognition of the role of past experience In the past, the emergence of a particular stimulus or set of incentives has created a situation in which human action is rewarded, the more the present-day incentives are similar to those past stimuli, the more that person will perform the said(prenominal) or similar tohis action in the present.However, the third provision states that for their actions when a person does not receive the expected rewards or receive unprovided for(predicate) penalty, he goes berserk and arse behave scrappyly.He created a series of allegations, among them are the claim of success, the assertion of deprivation and that there is saturation of aggression. These statements are a part of seven and , according to crowning this list is the assertion of rationality, which says that the carcass of the two alternative measures will prefer the one which gives the most promising results to achieve greater benefits. The basic proposition is success the more action the individual is rewarded with, the more belike it is to take this action. the stimulus if the past particular of a item stimulus or combination of stimuli was a circumstance, in which individual action has been rewarded, the more likely it is that the unit would take this or a similar effect. value the more the action is for the individual securities, the more likely that it will be demonstrated this action.-saturation of deprivation the more ofttimes in the recent past, the unit received a particular prize, the slight valuable it becomes for each additional unit of the award. frustration-aggression If the unit does not take up action to obtain a reward or punishment received by the entity, which they did not exp ect, it will react with anger, and anger aggressive behavior results will have a reward value.Exchange Theory by Peter Blau. Peter Blau introduced the depth psychology of exchange, which processes the term marginal utility, which says that the more the expected rewards entity obtains from a particular act, the slight valuable this action is, and the less likely it will be.The idea is that if in a result of the exercise we get some action on the awards, you will have less value, which will be a untried round of the award.Another concept introduced by Blau is the concept of standards for fair exchange, which indicates what should be the ratio of rewards to cost in the exchange relationship.If these standards are shaken, so the injured party may disclose to aggressive behavior. Blau concept differs from the concept of Homans that provides conflict situations. Balance in one relationship, which is damage by homeostasis seen in some other.Blau has another concept, which is social a ttraction that is the perception of opportunities for reward.This is according to sociologist factor, substantial for the existence of the exchange ratio, which is based on the belief that people who give awards, in turn, you will receive the award as allowance for the goods delivered.There are four types (classes) the prize money, social acceptance, respect (deference) and entryway.Of these, the superior value is the submission, then the respect, acceptance, and the least allow for reward in the relations of social exchange is money.Submission is the most valuable prize because for Blau it is essential in the relationship of power, and this in turn gives a misfortune of denying rewards to those who do not want to comply with the standards.Power is born when the value of go exceeds the value of function received in return.If people have to choose only one or a few alternative sources of awards, then it also comes to forcing submission.This is further facilitated if people are not giving to the possibility to use the coercion and opposition to a person providing advantages.Inability to work around without data prizes also affects positively the opportunity to draw off the submission by the person in possession of these awards.Exchange in social psychology. Social psychology also speaks about human relations as relations of exchange. These systems are based on the so-called rule of reciprocity, downstairs which we are committed to the future for favors, gifts, invitations and the goods that we have received.According to social psychologists one of the important principles is governing the human investigation.This commitment to the re outfit probably exists in all human societies.Researchers say that this rule has developed in tell to encourage people to contact, based on mutual exchange of portions without fear of giving something to another, and we lose it forever.Another form of this rule is called reciprocal concessions, namely if someone goe s to hand us, we do it to him, too.Thus we stinker safely take the first step to someone, as he will be obliged to give us a similar sacrifice.This rule is valid according to social psychologists and it is an beardown(prenominal) regulator of social relations.The emergence of social exchange theory. In general, the social exchange theory consists of social relations rather than public. The societies have viewed the behavior influence of each other in the relationship there are also elements of discipline, of sacrifice and gain that reflect social exchange.The reward is all that do the sacrifice, when the sacrifice can be avoided, and the benefit is geldd by the rewards of sacrifice.So the social behavior of the exchange at least between two people is based on the cost-benefit calculations.For example, patterns of behavior in the workplace, romance, nuptials and friendship. Analogy from the case, at some point people can feel in any of their friends, who, usually, are always t rying to get something from you.At that time you always give what a friend pauperizations from you, but the opposite is actually happening when you pack something from your friends.Each individual course has a goal to be friends with each other.These individuals would be expected to do something for others, help each other if involve, and provide mutual support.However, maintaining social relations also requires the cost, such as the lost(p) time and energy and other activities.Although these costs are not seen as something that is expensive or burdensome when viewed from the point of reward obtained from these friendships.However, these costs should be considered if we are to objectively analyze the relationships that exist in a friendly transaction.If the cost seems not in accordance with the compensation, what happens is the uneasy feeling of a person who feels that the benefits received were too low compared to the cost or sacrifice that has been given.An analysis of the so cial relationships that egest according to the cost and reward is one characteristic of the exchange theory.This exchange theory has instructioned on micro- train analysis, oddly at the interpersonal level of social reality.In this discussion the focus will be on the notion of exchange theory by Homans and Blau.Homans in his analysis insisted on the necessity to use the principles of individual psychology to explain social behavior rather than merely describing it. But Blau, on the other hand, was trying to move from the level of interpersonal exchanges at the micro level to the macro level of social structure.He attempted to render how bigger are the social structures that emerged from the basic exchange processes.Unlike the analysis described by the theory of symbolic interaction, exchange theory was in general seen as the real behavior, not the processes that are purely subjective.This was also pick out by Homans and Blau, who were not focussed on the subjective level of s entience or reciprocal relationships between the levels of dynamic interaction of subjective.Homans further argued that scientific explanations should be foc apply on real behavior and then can be ob parcel outd and measured empirically. The process of social exchange has also been expressed by the classical sociologists.As expressed in the classical economic theory of the 18th and 19th century, the economists like Adam metalworker have analyzed the economic market as a result of a comprehensive collection from a number of individual economic transactions.He assumes that transactions will happen only if both parties can gain from these exchanges, and welfare of the community in general can be very well secured when the individuals are left to pursue personal interests through and through negotiated exchanges in private.Conflicts of individualistic and social exchange in collectivism. Conflict that occurs is a result of the growing contradiction between the individualistic orientatio n and collectivism.Homans is probably someone who was very stressed on an individualistic approach to the ripening of social theory.This is certainly different from the explanation that the Levi-Strauss, a collectivist, in issues especially regarding to marriage and kinship patterns. Levi-Strauss is an anthropologist who comes from France. He developed a theoretical perspective of social exchange on the practice of marriage and kinship system of primitive societies. A general pattern of analysis is when a man marries his mothers daughter.A pattern that happens is that people rarely marry the daughter of his fathers brother. This latter(prenominal) pattern was analyzed further by Bronislaw Malinowski, who advanced by the exchange of nonmaterial. In explaining this, Levi-Strauss distinguishes two exchange systems, which include restricted and generalized exchange.In restricted exchange, members of the dyad groups are directly involved in the exchange transaction, each member of the c ouple give each other a personal basis.And in the generalized exchange, members of a group of triads or even larger accept something other than a dyad who gives something useful. In these exchanges the match is on the integration and solidarity groups are ina more effective manner.The main purpose of this exchange process is not to allow couples who are involved in an exchange to meet the needs of individualization. An analysis of marriage and kinship behavior is a criticism of Sir James Frazers explanation of a British expert who studies the economic anthropology on patterns of exchange that occurs between colligation pairs in primitive baseball club.The theory of exchange today does not represent a single school of thought.Strictly speaking, there are several(prenominal) theories that share a common position that human interaction is a process of exchange.In addition, each of them has their own views on human nature, society and social science. Theories of exchange have been an d still are often criticized for the miss of freshness, the evidence of certain statements, ignoring the existence of a extractd situation.Most can be found with the view that this point of view narrows the social living and relations between people only to the physical assets. As a fact, social forms of exchange are perceived other than and communicated, as a sociological and anthropological analysis would be expected to.As the apparent movement of justice, including equivalence of an exchange is directed according to dominant values, or it is judged differently from the representatives of warring values.Social exchange theorySocial exchange theory principal(prenominal) open factor(s)Value and utility profit, rewards, approval, status, reputation, flexibility, and devoteMain case-by-case factor(s)Exchange relation, dependency, and powerSummary of theorySocial exchange theory was formed by the intersection of economics, psychology and sociology. The theory was developed to e xtrapolate the social behaviour of humans in economic infratakings, according to the theorys inciter Hormans (1958). There is a fundamental difference between the two the theories economic exchange and social exchange theories, which is the way in which the actors are seen. Exchange theory views actors (persons or a firm) as dealing not with another actor but with a market (Emerson, 1987, P.11), reacting to various market characteristics darn social exchange theory sees the exchange relationship between specific actors as actions contingent on rewarding reactions from others. (Blau, 1964, P.91)Nowadays, various forms of social exchange theory exist, but all of them possess the same driving force which essentially is the same central concept of actors ex changing resources via a social exchange relationship. Where social exchange (e.g., Ax By) is the intentional transfer of resources (x, y ) between several actors (A, B) (Cook, 1977). A network model (Cook, 1977) with market proper ties (Emerson, 1987) is the evolved form of the theory which previously was a dyadic model. The core of the theory is outflank captured in Homanss own words (1958, P.606)Social behaviour is an exchange of goods, material goods but also non-material ones, such as the symbols of approval or prestige. Persons that give much to others try to get much from them, and persons that get much from others are under pressure to give much to them. This process of influence tends to work out at equilibrium to a balance in the exchanges. For a person in an exchange, what he gives may be a cost to him, just as what he gets may be a reward, and his behaviour changes less as the difference of the two, profit, tends to a maximum.In conclusion, social exchange theory is trump out understood as a good example for explicating movement of resources, in progressive tense market conditions, between dyads or a network via a social process (Emerson, 1987).Agency Theory or Principal-Agent ProblemKey depend ent factor(s)Efficiency, alignment of interests, risk sharing, successful contractingKey independent factor(s) discipline asymmetry, contract, moral hazard, trustSummary of TheoryIn economics, the principal-agent dilemma treats the technical hitches that come up under conditions of unfinished and asymmetric info when a principal hires an agent. A variety of mechanisms could possibly be use in an attempt to align the interests of the agent with those of the principal, for instance piece rates/commissions, profit sharing, efficiency wages, the agent posting a bond, or fear of firing. The principal-agent task is seen in the majority of employer/employee relationships.Agency theory is focussed at the present agency relationship, which essentially is one party (the principal) entrusts work to another (the agent), who carries out that work. The resolution of the two problems in an agency relationship that can occur is the primary concern of agency theory. Firstly, is the agency probl em which surfaces when (a) the desires or goals of the principal and agent conflict and (b) its difficult or expensive for the principal to manifest what the agent is actually doing. The predicament here is the principal cant put up that the agent has behaved fittingly. Secondly, is the problem of risk sharing that arises when the principal and agent have dissimilar attitudes towards the risk. The problem at this point is that the principal and the agent may fancy different actions since they have different risk preferences.Relationship between theory and selective information SystemsAgency theory sees the firm as a nexus of contracts amongst interested individuals. The owner employs agents (employees) to execute work on his/her behalf and delegates some decision-making power to the agents. Agents moldinessiness be under constant supervision and focal point this stems the introduction of management costs. As firms grow consequently management costs rise. Information technology minimises agency costs by providing information without difficultness so that managers can oversee a larger number of people with fewer resources.Simply, technological changes support the agency theory, which enables managers to supervise more employees at a reduced cost. Technology in general, and information systems particularly, save companies carve up of money by reducing the number of managers needed to oversee larger numbers of workers. consummation Cost Theory or Transaction cost economicsMain dependent factor(s)Governance structure, degree of outsourcing, outsourcing success, inter-organizational coordination and collaborationMain independent factor(s)Coordination costs, transaction risk (opportunity costs), coordination costs, operational risk, opportunism risk, asset specificity, uncertainty, trustSummary of TheoryIn the field of economics and its related disciplines, a transaction cost is a cost incurred while making an economic exchange. A variety of transaction costs exist, for instance, search and information costs are the costs incurred in determining if a required good is available on the market, who has the lowest price, etc The costs required to achieve a satisfactory agreement with the other party to the transaction, drawing up an suited contract, etc., is known as the negociate cost. Policing and enforcement costs are costs that make sure the other party abide the terms of the contract, and taking appropriate action (regularly through the legal system) if this turns out not to be the case.Transaction costs consist of costs incurred in the process of looking for the best provider/partner/customer, the cost of drawing-up a supposedly air-tight contract, and the costs of monitoring deviceing and enforcing the carrying out of the contract. Transaction cost theorists state that the total cost incurred by a firm can be grouped basically into two components transaction costs and production costs. Transaction costs, which are often referred to as coordination costs, are the costs of all the information bear on necessary to coordinate the work of people and machines that perform the primary processes, whereas production costs comprise the costs incurred from the physical or other primary processes necessary to create and distribute the goods or dos being produced.Relationship between theory and Information SystemsTransaction cost theory is based on the notion that a firm incurs transaction costs when the firm buys on the marketplace in comparison to making products for itself. Traditionally, in an attempt to reduce transaction costs firms wouldve gotten bigger, hired more employees, integrated vertically and horizontally, and wouldve taken over small-company. IT helps firms reduce the cost of market participation (transaction costs) and helps firms minimise their surface while producing the same or even greater amount of output.In simplified terms, transaction cost theory supports the idea that assistance or through th e help of technology condescensiones can minimize their costs of processing transactions with the same emphasis and enthusiasm that they attempt to minimize their production costs.FrameworksTraditionally, the Chief Information Officer (CIO)s job description entailed ensuring that the Business dodging and Information Systems outline were aligned. Successful information technology/ stage crinkle alignment, however, entails more than executive level communication and strategy translation.Achieving alignment is usually done by establishing a set of well-planned process improvement programs that systematically trailer truck obstacles and go further than executive level conversation to filter through the entire IT organization and their culture.IT/Business Alignment CycleA by and large used methodology is the IT/Business Alignment Cycle, which introduces a straightforward framework that the IT organization can take on to manage a broad range of activities. The cycles four phases are plan, model, manage, and measure. Organization-wide shared expectations between headache and IT managers are fostered utilizing this cycle, and a universal framework is defined for a wide-range of activities that jointly serve to align IT and business objectives. Within the cycle the best practices and common processes deep down and between IT functional groups are identified which makes IT/business alignment sustainable and scalable. When integrated and automated with software applications and monitoring tools the framework functions optimally.Plan descriptorIn this phase business objectives are translated into quantifiable IT services. This phase acquired immune deficiency syndrome in closing the gap between what business managers need and expect and what IT can deliver. Giga Research reports that IT leaders in poorly aligned organizations are still trying to elucidate technology management issues to their business colleagues and havent made that leap to comprehending business issues and communicating with them on a business-minded level.To bridge the gap between what business expects and what IT can deliver, IT must have an current communication to elucidate business needs in business terms. Without any ongoing dialogue, its difficult for IT to determine which IT services to offer or how to efficiently serve up IT resources to maximize business value. Also, when business needs change, IT ought to adjust and modify the service offering and IT resources fittingly.CIOs should consent the use of a regimented service level management process that will lead to agreement on on the button IT services and service levels required to support business objectives. IT management can then translate service definitions and service levels into fundamental rules and priorities that empower and pass by IT resources.Lastly, IT needs a method to measure and track both business level services and the underlying capabilities that support the services.Model PhaseAn root should be designed to optimize business value. The model phase pinpoints resources needed to deliver IT services at dedicated service levels. This phase involves social occasion IT assets, processes, and resources back to IT services, then prioritizing and planning resources that support those business critical services.The rear line in measuring the triumph of an alignment is the extent in which IT is working on the things which business managers care about. This implies that IT must have processes in place for prioritizing projects, tasks, and support. To effectively prioritize resources, IT needs a service impact model and a centralized configuration and asset management monument to connect the infrastructure components back to particular IT services. This amalgamation is vital if IT is to efficiently plan, prioritize, and constantly deliver services at agreed-upon service levels while also minimising costs.Manage PhaseResults should be driven through fused service support. T he manage phase permits the IT staff to deliver pledged levels of service. Assurance from the CIO that the organization meets expectations by providing a single location for business users to submit all service requests and by prioritizing those requests based on pre-defined business precedence.Without a single point-of-service request, it isnt easy to manage resources to achieve agreed-upon service levels. Furthermore, lacking a system for effectively managing the IT infrastructure and all changes, the IT staff is faced with the danger of cause failures.In order for the IT staff to ensure the effectiveness of the service desk they need to provideA technique for prioritizing service requests based on business impact.A well-organized change management process to reduce the risk of negatively affecting service level commitments.An IT event management system to monitor and manage components that support business critical services.The basic operational prosody that enable service deliv ery at promised levels, in addition to the gist for measuring and tracking the advancement of service level commitments using these metrics. posting PhaseInvolves the verification of commitments coupled with improvement of operations. Cross-organization visibility into operations and service level commitments is improved in this phase. Conventional IT management tools operate in functional silos which confines data collection and operational metrics to focused areas of functionality, relating more to technology than to business objectives.Component-level metrics and measures are definitely essential for continuing service availability. Nevertheless, to support real-time resource allotment decisions, these measures must be construed in a broader business context, with the inclusion of their connections to business-critical services. Without a business context for construing measures and metrics, isolated functional groups cant get a holistic view of IT services that sustain business objectives.By committing to the cycle and integration and automating activities using software solutions, its possible to align a whole organization to make logical improvements that prevail over obstacles.Competitive Forces ModelPorters free-enterprise(a) forces and strategies is one of the popular and effective models for formulating a strategy. After studying a number of business organizations, Michael E. Porter proposed that mangers can formulate a strategy that makes an organization achieve a higher level of profitability and reduce vulnerability if they understand five forces in the industry environment. Porter found the following forces determine a companys position vis--vis competitors in the industryThe disceptation among vivacious competitorsThe threat of impudent entrantsThe threat of substitute products and servicesThe bargaining power of buyersThe bargaining power of providersPorters framework ( competitory forces model) has long been acknowledged as a valuable too l for business people to utilize when opinion about business strategy and the impact of IT. Porters framework illustrates why some firms do better than others and how they gain competitive advantage. It also analyzes a business and identifies its strategic advantages, as well as, demonstrating how entrepreneurs can develop strategic advantages for their own business. And lastly, it shows information systems contribute to strategic advantages.The threat of new entrants The threat of new entrants to an industry can create pressure for established organizations, which might need to hold down prices of increase their level of investment. The threat of entry from in an industry depends largely on the amount and extent of potential barriers, such as cost.The power of suppliers Large, powerful suppliers can charge higher prices, limit services of quality, and shift costs to their customers, keeping more of the value for themselves. The absorption of suppliers and availability of substitu te suppliers are significant factors in determining supplier power.The power of buyers Powerful customers, the flip side of powerful suppliers, can force prices down, demand better quality or services, and hence drive up costs for the supplying organization.The threat of substitutes The power of alternatives and substitutes for a companys product or service maybe affected by changes in cost, new technologies, social trends that will deflect buyer loyalty, and other environmental changes.Rivalry among existing competitors In most industries, especially when there are only a few major competitors, competition will very closely match the offering of others. Aggressiveness will depend mainly on factors like number of competitors, industry growth, high fixed costs, lack of differentiation, capacity augment in large increments, diversity in type of competitors and strategic sizeableness of the business unit.Information Systems Competitive AdvantageIn order to be competitive, companies m ust have a degree of quickness, nimbleness, flexibility, innovativeness, productivity, thriftiness and customer centricity. It must also align its IS strategy with general business strategies and objectives.Given the five market forces mentioned above, Porter and others have proposed a number of strategies to attain competitive advantageLow-Cost LeadershipInformation systems can be used achieve the lowest operational costs and the lowest prices. For instance, Wal-Mart has utilized IT to develop anefficient customer response systemthat directly links customer behaviour back to distribution, production, and supply chains.Product DifferentiationInformation systems can be used in the process of enabling new products and services, or significantly changing the customer convenience in the use of an existing products or services. troop customization enables organizations to offer individually tailored products or services through the use of mass production resources.Focus on Market Niche victimisation information systems enables a firm to pinpoint a specific market focus, and thus allowing them to serve this narrow target market better than competitors. Information systems can support this strategy because it can be used to produce and analyze data for use in finely tuned sales and trade techniques. Companies can now analyze customer buying patterns, tastes, and preferences closely so that they efficiently and effectively pitch advertising and marketing campaigns to little and smaller target markets.Strengthen Customer and Supplier IntimacyThe use of information systems tightens linkages with suppliers and develops intimacy with customers. Switching costs increase when and where therere strong linkages between customers and suppliers (expense a customer or company incurs in lost time and use of resources when changing from one supplier or system to a competing supplier or system).STRENGTHS OF THE FIVE COMPETITIVE FORCES MODELThe model is a strong tool for competi tive analysis at industry level, compared to PEST analysisIt provides useful input for performing a SWOT Analysis demarcation OF PORTERS FIVE FORCES MODELCare should be taken when using this model for the following do not underestimate or underemphasize the importance of the (existing) strengths of the organization (Inside-out strategy).The model was designed for analyzing individual business strategies. It does not cope with synergies and interdependencies indoors the portfolio of large corporations.From a more theoretical perspective, the model does not hail the possibility that an industry could be attractive because certain companies are in it.Some people claim that environments which are characterized by rapid, systemic and extremist change require more flexible, dynamic or emergent approaches to strategy formulation.Sometimes it may be possible to create completely new markets instead of selecting from existing ones.