It in Competitive Advantage

PART 1

1) 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.

A company can have advantage by using IT to develop switching cost from a couple of various stand points. Using to pull in including forming lifetime consumers and keeping long time suppliers are the two methods which a business can benefit from this technique. Switching cost is explained as the cost in time, money, effort and problems which it would take a consumer or manufacturer to switch its business to a company’s rival. Businesses like Walmart keep their suppliers locked in to what they required as soon as it left the store, which reduces inventory costs and quantities. Walmart’s current success just goes to explain how they have gained benefit from using IT. It is due to their performance in operations that Walmart is able to offer lower costs of better quality apparels. Keeping suppliers in the cycle with the flow of apparel leaving the store keeps the apparels flowing from the supplier docks. This flow basically holds a tight association between the company and the supplier. 

2) How could a business leverage its investments in information technology to build strategic IT capabilities that serve as a barrier to new entrants into its markets?

A business can leverage its investment in IT to create strategic IT capabilities which serve as a barrier to new firms into its market by forming new products and services which would not be possible without strong IT capability. Firms with no strong IT capabilities cannot afford the investment it will take to compete with the established company. Without strong IT capabilities smaller firms are not able to manufacture and sell their products to compete with an established well known firm. Second barrier a strong IT network brings is the complication of the product itself. If Company A develops a very complicated product or system which...