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Chapter 3 Strategy and Information Systems
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positively, by making it easy to connect to and work with the organization. Finally, competitive
advantage can be gained by creating entry barriers that make it difficult and expensive for new
competition to enter the market.
One advantage a company can Another means to gain competitive advantage is to establish alliances with other organizations.
create is ensuring that it produces Such alliances establish standards, promote product awareness and needs, develop market size,
secure products. For more reduce purchasing costs, and provide other benefits. Finally, organizations can gain competitive
information, see the Security Guide advantage by reducing costs. Such reductions enable the organization to reduce prices and/or to in-
on pages 136–137.
crease profitability. Increased profitability means not just greater shareholder value but also more
cash, which can fund further infrastructure development for even greater competitive advantage.
All of these principles of competitive advantage make sense, but the question you may be
asking is “How do information systems help to create competitive advantage?” To answer that
question, consider a sample information system.
How Does an Actual Company Use IS to Create
Competitive Advantages?

7
ABC, Inc., is a worldwide shipper with sales well in excess of $1B. From its inception, ABC
invested heavily in information technology and led the shipping industry in the application of
information systems for competitive advantage. Here we consider one example of an informa-
tion system that illustrates how ABC successfully uses information technology to gain competi-
tive advantage.
ABC maintains customer account data that include not only the customer’s name, address,
and billing information, but also data about the people, organizations, and locations to which
the customer ships. Figure 3-14 shows a Web form that an ABC customer is using to schedule a
shipment. When the ABC system creates the form, it fills the Company name drop-down list with
the names of companies that the customer has shipped to in the past. Here the user is selecting
Pearson Education.
When the user clicks the Company name, the underlying ABC information system reads the
customer’s contact data from a database. The data consist of names, addresses, and phone num-
bers of recipients from past shipments. The user then selects a Contact name, and the system in-
serts that contact’s address and other data into the form using data from the database, as shown in
Figure 3-15. Thus, the system saves customers from having to reenter data for recipients to whom
they have shipped in the past. Providing the data in this way also reduces data-entry errors.

Figure 3-14
ABC, Inc., Web Page to Select a
Recipient from the Customer’s
Records