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Chapter 3 Strategy and Information Systems
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Figure 3-17
ABC, Inc., Web Page to Print
a Shipping Label

errors in the preparation of shipping labels, but it also causes the customer to provide the paper
and ink for document printing! Millions of such documents are printed every day, resulting in a
considerable savings to the company.

How Does This System Create a Competitive Advantage?

Now consider the ABC shipping information system in light of the competitive advantage factors
in Figure 3-12. This information system enhances an existing service because it eases the effort of
creating a shipment to the customer while reducing errors. The information system also helps to
differentiate the ABC package delivery service from competitors that do not have a similar system.
Further, the generation of email messages when ABC picks up and delivers a package could be
considered to be a new service.
Because this information system captures and stores data about recipients, it reduces the
amount of customer work when scheduling a shipment. Customers will be locked in by this system:
If a customer wants to change to a different shipper, he or she will need to rekey recipient data for
that new shipper. The disadvantage of rekeying data may well outweigh any advantage of switch-
ing to another shipper.
This system achieves a competitive advantage in two other ways as well. First, it raises the
barriers to market entry. If another company wants to develop a shipping service, it will not only
have to be able to ship packages, but it will also need to have a similar information system. In ad-
dition, the system reduces costs. It reduces errors in shipping documents, and it saves ABC paper,
ink, and printing costs.
Of course, to determine if this system delivers a net savings in costs, the cost of developing and
operating the information system will need to be offset against the gains in reduced errors and pa-
per, ink, and printing costs. It may be that the system costs more than the savings. Even still, it may
be a sound investment if the value of intangible benefits, such as locking in customers and raising
entry barriers, exceeds the net cost.
Before continuing, review Figure 3-12. Make sure you understand each of the principles
of competitive advantage and how information systems can help achieve them. In fact, the