Outline the main reasons why information technology is viewed as a strategic resource in business organisations.

Reasons why IT is considered as a strategic resource:
1. Cost control
It enables an organization to cut down long-term costs. It enables automation of business processes which cuts down on labour costs.
2. Product and service differentiation
It enables product and service differentiation through design software thus enabling an organization to compete favourably in future.
3. It improves a company‟s corporate image
IT enables effective advertising via the Internet which enhances a company‘s corporate image.
4. Globalization
IT enables an organization to globalize. The Internet provides organizations with an opportunity to tap foreign markets.
5. It improves planning
Planning and scheduling software may be used by managers to improve the quality of an organization‘s strategic plans.

6. It enables customer „lock-in‟
IT could be used to lock-in customers thus preventing them from moving to other competitors by introducing switching costs (e.g. cost of changing telecommunications links, costs of buying new hardware and software, etc)

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