When a Business Effectively Builds in Switching Costs, Its Customers

question 118

True/False

When a business effectively builds in switching costs, its customers and/or suppliers become reluctant to switch to another competitor.

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Definitions:

Cost Object

Any item for which a separate measurement of costs is desired, such as a product, service, project, or department.

Just-in-Time Manufacturing

A production methodology aimed at reducing flow times within production systems as well as response times from suppliers and to customers, by receiving goods only as they are needed in the production process.

Inventory

A complete list of items such as property, goods in stock, or the contents of a building.

Product Costs

Costs that are directly associated with the production of goods, including direct materials, direct labor, and manufacturing overhead.