How Could A Business Use Information Technology To Increase

How Could A Business Use Information Technology To Increase Switchi

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.

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?

How could a business use Internet technologies to form a virtual company or become an agile competitor?

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?

a. How does the Wikimedia Foundation meet the criteria for an agile company?

b. How does the Wikimedia Foundation meet the criteria for a virtual company?

c. How does the Wikimedia Foundation meet the criteria for a knowledge-creating organization?

d. How would you recommend that Encyclopedia Britannica adapt to this new threat?

e. How does Wikiversity compare as an educational resource to traditional colleges and schools? How would a degree earned online from wikiversity.com be viewed compared with a degree earned in a traditional learning environment?

Sample Paper For Above instruction

In the contemporary digital economy, businesses have unprecedented opportunities to leverage information technology (IT) to influence market dynamics, customer loyalty, and competitive barriers. This paper explores how organizations can use IT strategically to increase switching costs, build enduring competitive advantages, and adapt to the evolving digital landscape using examples from prominent firms and organizations.

Increasing Switching Costs and Lock-in Strategies

Switching costs are the expenses or inconveniences a customer incurs when changing from one supplier or product to another. Businesses can use IT to escalate these costs thereby locking in customers and suppliers. For instance, Apple’s integration of hardware, software, and services creates a seamless user experience, making it costly for customers to switch to competitors (Miller, 2020). Similarly, Amazon employs sophisticated recommendation engines and loyalty programs that personalize shopping experiences, thereby increasing the effort and cost of switching (Johnson, 2019). Such integrations and personalized services embed customers deeper into a company’s ecosystem, making switchovers less appealing and more costly.

Exploiting IT Investment for Market Barriers

Strategic IT capabilities are not just about deploying advanced technology but about creating a sustainable competitive advantage. Firms like Google have built extensive data centers and AI-driven algorithms that serve as high entry barriers. Their investments in infrastructure and proprietary technology make market entry difficult for new competitors, as they cannot easily replicate or surpass these resources (Brynjolfsson & McAfee, 2014). Moreover, Amazon’s investment in cloud computing infrastructure (AWS) further cements its market power, as new entrants lack comparable scale and technological expertise to compete effectively (Carmichael & Varian, 2018).

Internet Technologies for Virtual Companies and Agility

Organizations can utilize internet technologies to operate virtually, reduce physical boundaries, and adapt quickly to market changes—traits characteristic of agile companies. For example, Shopify allows entrepreneurs to establish online storefronts rapidly without significant capital investment, exemplifying a virtual company’s model (Smith, 2021). Agile firms like Spotify use cloud-based platforms to develop, test, and deploy new features swiftly, maintaining their competitive edge through rapid innovation cycles (Brown, 2018). These technologies facilitate flexibility and responsiveness, essential attributes for competing effectively in digital markets.

The Role of Management in Creating Competitive Advantage

Peter Keen emphasizes that technology alone does not confer a competitive advantage. Instead, it is the management processes—how businesses orchestrate and utilize technology—that are crucial. Effective management involves aligning IT strategies with business goals, optimizing workflows, and fostering innovation culture. For instance, Netflix’s success hinges not only on its streaming technology but also on its innovative content algorithms and organizational agility driven by management practices (Ghemawat & Reiche, 2019). I agree with Keen’s perspective because technological capabilities without strategic management lack the direction necessary for sustainable advantage.

Case Study: Wikimedia Foundation’s Strategic Attributes

The Wikimedia Foundation exemplifies an agile organization by rapidly adapting to digital content needs and continuously improving its platform. Its open-source model fosters community-driven growth, where contributions evolve quickly, aligning with agile principles (Johnson, 2022). As a virtual organization, Wikimedia operates entirely online, with decentralized contributors worldwide, exemplifying the virtual company model (Mason & Burke, 2020). Its focus on knowledge creation—through open editing and collaborative content—positions Wikimedia as a knowledge-creating enterprise, emphasizing knowledge sharing over traditional proprietary models (O’Reilly, 2018).

Adapting Traditional Companies: The Case of Britannica

Encyclopaedia Britannica should embrace digital transformation by investing in online platforms, open educational resources, and collaborative content creation models to remain relevant against free alternatives like Wikimedia. They could leverage their authoritative content by integrating interactive media, personalized learning tools, and fostering online communities (Lee & Lee, 2020). Such adaptations would help Britannica maintain premium branding while embracing the participatory, digital-first approach of modern knowledge dissemination.

Comparison between Wikiversity and Traditional Education

Wikiversity offers a flexible, open educational resource that allows learners to access knowledge, participate in collaborative learning, and develop self-directed skills without the barriers of formal admission or tuition. Unlike traditional colleges, Wikiversity operates with no formal accreditation or degrees, which affects the perceived legitimacy of credentials earned. While online courses from Wikiversity can enhance knowledge, they are generally not viewed equivalently to degrees from accredited institutions in conventional employment contexts, which still favor formal education credentials (Johnson, 2021). Nevertheless, Wikiversity’s open model fosters lifelong learning and democratizes access to education across the globe.

Conclusion

Businesses and educational organizations must strategically leverage IT not merely as a technological tool but as an integrated component of their management and operational frameworks. By increasing switching costs, building barriers to new entrants, adapting quickly to market changes, and fostering knowledge creation, organizations can sustain competitive advantages. Simultaneously, traditional institutions need to innovate continuously to stay competitive in an increasingly digital world, emphasizing the importance of strategic management in exploiting technological capabilities.

References

• Brynjolfsson, E., & McAfee, A. (2014). The second machine age: Work, progress, and prosperity in a time of brilliant technologies. W. W. Norton & Company.
• Carmichael, D., & Varian, H. (2018). Amazon Web Services and the cloud. Journal of Cloud Computing, 7(2).
• Ghemawat, P., & Reiche, B. (2019). Netflix's digital transformation. Harvard Business Review.
• Johnson, M. (2019). Personalization and loyalty in e-commerce. Journal of Digital Retailing, 5(1).
• Johnson, R. (2022). Community-driven content: The case of Wikimedia. Online Knowledge Journal, 4(3).
• Lee, S., & Lee, J. (2020). Digital transformation in traditional educational publishing. Education Technology Review, 8(2).
• Mason, R., & Burke, P. (2020). Virtual organizations and digital workplace. Business & Society, 59(4).
• Miller, T. (2020). Ecosystem effects in technology adoption: Apple's integrated approach. Tech Innovate, 12(4).
• O’Reilly, T. (2018). Open source economics and the future of knowledge. Journal of Innovation and Development, 10(2).
• Smith, A. (2021). E-commerce platforms and business agility. Digital Business Journal, 15(1).