Explore BrainMass

How IT increases the switching cost

How could a business use information technology to increase switching costs and lock in its customers and suppliers? How could a business integrate flexible and rigid solutions?

Solution Preview

The response addresses the queries posted in 744 words with references.
//In this paper, we will discuss the use of information technology in a business in the direction of increasing switching costs and locking-in its customers and suppliers. The significance and different ways of raising switching costs is going to be focused in the sections below. //

Presently, the use of information technology is considered to be an advanced development and a competitive weapon. Many of the competitive strategies are supported with the use of information technology. These technologies help in facilitating a business to cut costs, promote its growth, innovate and differentiate in its products, lock-in customers and suppliers, increase barriers to entry, build up alliances, generate switching costs, and leverage its investment in IT resources. Therefore, information technology is supportive for a business to gain a competitive advantage in its relationships with competitors, customers, suppliers, new entrants and the producers of substitute products (Dubé, Hitsch & Rossi, 2009).

The switching costs are the costs, to which a customer becomes liable when he switches from one supplier to another. It is more difficult for a customer to switch if the ...

Solution Summary

The response addresses the queries posted in 744 words with references.