Could a business use information technology to increase switching costs and lock in its customers and suppliers? Use business examples to support your answers.
Switching costs can be defined as the cost to the business for customer or supplier loss or as the cost to the consumer for switching products; the cost can be monetary or psychological in nature (Kenton, 2019). That is, the switching to another product or service can cost the customer or supplier money or resources, such as time, or it can cause the customer or supplier to experience psychological distress. Indeed, switching brands, companies, or products can be detrimental in the form of stress for the supplier or customer because there is no guarantee that the switch will be successful. In fact, a business could use information technology to increase switching costs so much that it prevents the supplier or customer from leaving. Companies utilize information technology in order to mine the data of its customers for profiling and identifying customers, utilizing data such as cookies and preference features (Chen and Hitt, 2005). That is, employing personalization factors for customers and suppliers locks in these stakeholders: the switching costs for customers and suppliers would be high because those stakeholders would need to find another company that personalizes their experience satisfactorily in the same way. For example, Amazon is successful at retaining its customers because Amazon personalizes each shopping experience, even recommending purchases based on past items bought or items that the shopper has viewed. In addition, Amazon keeps its prices low by scanning the market and offering the lowest price possible to its customers. Intuit, a trusted company by many customers, has high switching costs for its consumers based on the numerous products it has and the easy at which those products interact together. These examples show how a business can use information technology to create a high cost of switching to customers and suppliers, a cost that locks in those customers and suppliers to continue to support its business.
What are several major business benefits and concerns that organizations can realize by connecting all of their employees with wireless mobile devices?
Connecting employees throughout organizations with wireless mobile devices can pose both benefits and concerns for the business environment. Several major benefits to the business include availability of employees, increased communication, and flexibility for customer satisfaction (Waugh, 2017). That is, mobile technology enables employees to be available for business emergencies or availability in general when away from their computer. For example, an employee or employees can be called back from lunch in the instance that a network goes completely down: management would be able to communicate in a fast, direct way with those employees who need to be helping with the emergency. In the same way, employees can be available for those emergencies for customers. That is, customer satisfaction is ranked higher with those employees who can respond to customers at an increased pace (Waugh, 2017). Another major benefit is the increased communication that employees are able to have amongst each other: employees can communicate in a fast, efficient way with mobile technologies such as Slack. However, while there are major benefits for employees having technology, there are several downsides. Two downsides to putting mobile technology in the hands of employees includes safety concerns and less downtime (Root). Safety can be a concern for a business because as employees get distracted with their phones, that distraction can quickly turn into safety concerns. For example, employees who are trying to work as their walk to their car could trip in the parking lot, causing a mishap, which means time and money for the business. As the new generation entering the workforce favors a work/life balance, having less downtime poses a problem to employees. That is, employees do not want to feel that they are tied to work when they go home. With these benefits and concerns, businesses need to examine all facets before putting wireless mobile devices in the hands of their employees.
CRM raises issues of invasion of privacy since conclusions can be drawn about a customer's behavior from the data commonly collected. Discuss the potential privacy issues. How can an organization meet the needs of serving its customers while simultaneously protecting their privacy?
Companies are collecting data more now than ever before. Companies use data to draw conclusions and drive their data processes and business functions, ultimately tying those conclusions back into business decisions. However, data collection of its customers can cause some serious privacy issues. Data breaches put consumers at risk and ultimately put them on the defensive, causing them to disable cookies on their browsers, which companies use to collect data, and deleting or avoiding those applications in which companies have been breached; and, once a company has been breached, consumers are less likely to use that business’ services again (Allegrezza, 2018). If in fact customers are avoiding these companies entirely, there is no way for a business to predict its customer’s behaviors, making it a less effective business. In fact, an organization needs to ensure that it consistently reviews the infrastructure of its information technology, train its employees on a regular basis about cybersecurity and how to prevent data breaches, and follow the International Organization for Standardization, which establishes standards for data control (Allegrezza, 2018). Because information technology is evolving rapidly, reviewing a business’ infrastructure on a regular basis is a good way to employ cybersecurity best practices and standards. It is recommended that businesses employ a dashboard to monitor employee use of customer data frequently (Sreenivasan, 2017). The best way for organizations to protect their customer’s privacy is to ensure they follow the best protocols and procedures and ensure the training of their employees on those most up-to-date security processes.
Assume you are starting a Web-based business. Are any economic, business, or societal developments occurring that are being overlooked as new Web-based business opportunities, or would you choose a second-mover strategy against an established Web-business? Discuss the reasons for your choice of a Web-based business.
Employing a second-mover strategy would be an easier way to establish a business (Lema, 2017). In fact, Lema (2017) explains that a employing a second-mover strategy is essentially using other companies as a piggyback. That is, a business could use another business’ model and space to define what the core business functions are and how that drives the business. However, there is one Web-based business opportunity that is being overlooked in terms of some economic, business, and societal developments: virtual reality. Indeed, virtual reality is going to be a driving force for businesses as virtual reality will revolutionize the market in terms of content and applications (Business.com Editorial Staff, 2018). That is, products can be introduced to the market in the form of virtual reality. Business.com Editorial Staff (2018) explain that you can help establish a “stronger emotional attachment to a product” by employing virtual reality as a “try before you buy” option. That is, a virtual reality Web-based business would create brand recognition and loyalty from consumers. As a Web-based business, this enables a business to be more flexible for its customers, changing with the market as it changes, and it allows the business to be innovative: there is no need to wait for another business to flood the market with its baseline model.
How can a manager demonstrate that he or she is a responsible end user of information systems? Give several examples.
A manager can demonstrate that he or she is a responsible end user of information systems by always completing their trainings on time and advocating for those trainings to be completed by their own employees. That is, a manager should be the first in line to ensure that employees get their security training done in a timely manner and on a consistent basis. In addition, managers should understand the roles and responsibilities of each employee in their department and how they are to handle data in those information systems (Rochester Institute of Technology). For example, if there was a breach in data, the manager should know immediately who should be involved to resolve that breach. In addition, managers should ensure that they are always aware of safety protocols when dealing with data from information systems. Security breaches can happen because a sensitive document was left out for other employees to see. That is, a manager should always ensure that they treat sensitive documents and information to the best of their abilities as company policy states. Employees will emanate the way a manager treats information: the more careful a manager is with data from information systems, the more careful an employee will be.
- Allegrezza, J. (2018, October 2). Safety Check: CRM Data Privacy and Security. Retrieved June 19, 2019, from https://www.influencehealth.com/blog/safety-check-crm-data-privacy-and-security
- Business.com Editorial Staff. (2018, July 3). Virtual Reality Uses for Business. Retrieved June 20, 2019, from https://www.business.com/articles/virtual-reality-business-use-cases/
- Chen, P., & Hitt, L. (2005, September). 1Information Technology and Switching Costs. Retrieved June 20, 2019, from https://pdfs.semanticscholar.org/afdf/0863ea0aacc4a4185fc45543a103a97ca5ae.pdf
- Kenton, M. G. (2019, May 14). Understanding Switching Costs. Retrieved June 20, 2019, from https://www.investopedia.com/terms/s/switchingcosts.asp
- Lange, A. (2019, May 23). Intuit's Wide Moat Is Underpinned by High Switching Costs and Positive Network Effects. Retrieved June 19, 2019, from https://bit.ly/2WVqlpa
- Lema, C. (2017, January 12). What is second mover advantage? Entering a market late. Retrieved June 20, 2019, from https://chrislema.com/second-mover-advantage/
- Rochester Institute of Technology. (n.d.). Roles and Responsibilities. Retrieved June 20, 2019, from https://www.rit.edu/security/content/roles-and-responsibilities
- Root, G. N., III. (n.d.). Advantages & Disadvantages of Mobile Communication Technology. Retrieved June 19, 2019, from https://www.techwalla.com/articles/the-advantages-of-mobile-phones-to-society
- Sreenivasan, S. (2017, November 13). How to Protect Your Customer Relationship Management (CRM) Data from Hackers. Retrieved June 19, 2019, from https://staysafeonline.org/blog/protect-customer-relationship-management-crm-data-hackers/
- Waugh, R. (2017, January 12). How mobile technology can transform your business. Retrieved June 19, 2019, from https://www.telegraph.co.uk/connect/small-business/business-support/samsung/seven-ways-technology-transform-business/
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