How could a business use information technology to increase switching costs and lock in its customers and suppliers? Use business examples to support your answers.
One way is for a business to integrate some of its information systems with its customer systems. With this approach, the customer could receive updated information on a product, track shipping or track where the item is in the production line.
-Fed Ex, USP and USPS provides its customers with package tracking information.
- Porsche allows you to follow the production of you car when you purchase certain models.
How could a business leverage its investment in information technology to build strategic IT capabilities that serve as a barrier to new entrants into its markets?
Investment in IT will allow a company to remain well ahead of its would be competition. By have a large complex IT framework a company would be forcing new entrants to play catch up with systems that may have a larger learning curve.
If I were to try and compete with FedEx, I would have to deploy a tracking system that was faster and more accurate than the one they have in place. I would just be learning what they have decades of knowledge doing. Once a company like FedEX notice that I am trying to enter the field they could easily deploy something that makes my system obsolete in the industry.
How could a business use Internet technologies to form a virtual company or become an agile competitor?
A company could use the internet to advertise their products, services and themselves. Using the Internet allows a company to reach a customer base that it would not be able to reach with a brick and mortar. The internet will also enable a company to reduce cost on the consumer end as well as the business owner end. Without the many costs associated with owning a store front, the owner could pass some of the savings onto the customers.
A perfect example of this would be the electronic cigarette industry. The prices are on average 20% cheaper online for devices and e-liquid.
MIS author and consultant Peter Keen says: “We have learned that it is not technology that creates a competitive edge, but the management process that exploits technology.” What does he mean? Do you agree or disagree? Why?
I believe Mr. Keen is saying that any company can deploy a multi-million dollar IT system, but if they do not have the right people using it, it is worthless. The IT system is not providing customer service nor does it know what people want. The IT system is a tool that management should use as a way to help the success of a company.
Part 2: At the end of the chapter in your…