Chapter Summary

Information systems can provide benefits beyond traditional cost saving. Competitive advantages can be gained by creating barriers to entry and gaining control over distribution channels. Using information systems to build ties to suppliers and customers can provide lower costs and better quality products. Computer systems also provide incentives for customers to remain with your company if they incur costs of learning new systems and transferring data when switching to a competitor. Information systems can also be used to differentiate your products from the others in the marketplace. Similarly, innovative services offered with the help of technology can entice customers and expand your market.

You can search for competitive advantages by examining Porter’s external forces of rivals, customers, suppliers, substitute products, and new entrants. You can also search for strategies in research, engineering, and design. In manufacturing, you can look for ways to decrease costs and improve logistics. In marketing, potential gains can be found in better understanding of customer wants, as well as sales and order management. Services can be supported through better information flows and workgroup products. Management can be helped with better data and better decision tools.

Strategic systems face many risks. They tend to be expensive and difficult to create. Any gains created may disappear when competitors pick up the technology and imitate your offerings. Additionally, making strategic changes to your firm might alter the industry, which might adversely affect your firm. And if these problems are not enough to discourage you, remember that attempts to monopolize a market are illegal, so you have to make sure that your plans do not violate governmental regulations.