Discuss the impact of the Internet on Porter’s competitive forces model
Category : Porter's Competitive Forces Model
The Internet is a global network that connects a vast number of internal organizational computer networks worldwide. Some typical examples of internal organizational computer networks are the computer systems of a university, a corporation and a hospital. (Turban p.169)
The model is used to develop strategies of the competitiveness of companies. The component of the model may be various. There are five major forces can be generalized. First, the entry of new competitors is threatening. This would enlarge the capacity of industry because of increase in competition in business.
Secondly, due to the keen competition, buyer would have more choices and would have high buying power, forcing prices down. Higher quality. Also, higher services of flexibility may be required. The Internet services of different companies would differentiate.
Thirdly, supplier power will be higher with raising costs and have more dominating power on quality and availability of supply. Therefore, extended quality control is recommended to exert on suppliers.
Fourth, substitute products are threatened due to potential market and profit are limited. However, products, services and market segments could be redefine to maintain reasonable business value.
Fifth, intense competition from rivals due to price competition and repaid development on products, and the requirement of customer loyalty by different competitors in the industry. Price and service performance have to be improved. The enterprises had to maintain a way to get closer to the end of consumer so as to understand the requirements of the market.
Turban. Mclean. Wetherbe 1999 Information Technology For Management Making Connections for Strategic Advantage 2nd edn, John Wiley & Sons. Inc.