Page 132 -

131
Q3-7 How Do Information Systems Provide Competitive Advantages?

3. Creating driverless vehicles that can operate safely is clearly a 5. How would you feel riding in a car that is changing lanes and
complex problem. Based on the promising results found in this swerving to avoid debris or poor road conditions all without
domain, what other complex tasks exist that may prove feasible your control? Do you think a driverless vehicle is something
for automation? that everyone would want to own, even if it is sold at an
4. New innovations often disrupt existing markets and force affordable price?
them to adapt or be eliminated (e.g., look at how iTunes and
Apple devices have reshaped the music industry). How might
the proliferation of driverless cars influence the automotive
insurance industry?

Information systems create competitive advantages either as part of a product or by providing
support to a product. Consider, for example, a car rental agency like Hertz or Avis. An informa-
tion system that produces information about the car’s location and provides driving instructions
to destinations is part of the car rental, and thus is part of the product itself (see Figure 3-13a).
In contrast, an information system that schedules car maintenance is not part of the product but
instead supports the product (see Figure 3-13b). Either way, information systems can help achieve
the first three principles in Figure 3-12.
The remaining five principles in Figure 3-12 concern competitive advantage created by the
implementation of business processes.

Competitive Advantage via Business Processes
Organizations can lock in customers by making it difficult or expensive for customers to switch
to another product. This strategy is sometimes called establishing high switching costs. Orga-
nizations can lock in suppliers by making it difficult to switch to another organization or, stated

C +PHQTOCVKQP 5[UVGO CU 2CTV QH C %CT 4GPVCN 2TQFWEV

D +PHQTOCVKQP 5[UVGO 6JCV 5WRRQTVU C %CT 4GPVCN 2TQFWEV

&CKN[ 5GTXKEG 5EJGFWNG s ,WPG
5VCVKQP+&
5VCVKQP0COG .WDTKECVKQP
5GTXKEG&CVG 5GTXKEG6KOG 8GJKENG+& /CMG /QFGN /KNGCIG 5GTXKEG&GUETKRVKQP
#/ (QTF 'ZRNQTGT 5VF .WDG
#/ 6Q[QVC 6CEQOC 5VF .WDG
5VCVKQP+&
5VCVKQP0COG #NKIPOGPV
5GTXKEG&CVG 5GTXKEG6KOG 8GJKENG+& /CMG /QFGN /KNGCIG 5GTXKEG&GUETKRVKQP
#/ 6Q[QVC 6CEQOC (TQPV GPF CNKIPOGPV
KPURGEV
5VCVKQP+&
5VCVKQP0COG 6TCPUOKUUKQP
Figure 3-13 5GTXKEG&CVG 5GTXKEG6KOG 8GJKENG+& /CMG /QFGN /KNGCIG 5GTXKEG&GUETKRVKQP
Two Roles for Information #/ (QTF 'ZRNQTGT 6TCPUOKUUKQP QKN EJCPIG
Systems Regarding Products