Industry competition in the internet economy



The Impact on Competitive Rivalry

  • Use of Internet widens a firms geographic market reach
  • Rivalry is often increased by freshly launched e-commerce initiatives of existing rivals
  • Rivalry is often increased by entry of enterprising dot-com rivals with sell-direct strategies
  • Rivalry is often increased when an industry consists of online sellers against pure brick-and mortar sellers against combination brick-and-click sellers


The Impact on Barriers to Entry

  • Entry barriers into e-commerce are often relatively low
  • Can be easy for new dot-coms to gain entry into some businesses
  • Can be easy for many existing firms to expand into new geographic markets via online sales


The Impact on Buyer Bargaining Power

  • Use of Internet allows buyers to gather extensive information about competing products and brands
  • Buyers can readily use the Internet to “shop the market” for the best deal
  • Buyer efforts to seek out the best deal spurs competition among rival sellers to provide the best deal
  • Internet makes it easier for buyers to join buying groups and store their purchases to negotiate better terms and conditions



Impact on Supplier Bargaining Power

  • Helps companies extend geographic reach for the best suppliers
  • Sometimes via online marketplaces or “emarkets”
  • Helps companies collaborate closely with suppliers across a wide front—fosters long-term partnerships with key suppliers


Impact on threat on substitution of products

Internet fosters the R&D activity which in turn increases the threat of product substitutions.



The following two tabs change content below.
We, at, believe in sharing knowledge and giving quality information to our BMS students. We are here to provide and update you with every details required by you BMSites! If you want to join us, please mail to [email protected]
  1. 2 months ago

    Thank you.

    Youseful blog. Good post.

Leave a reply

Your email address will not be published. Required fields are marked *


* is aimed at revolutionising Bachelors in Management Studies education, also known as BMS for students appearing for BMS exams across all states of India. We provide free study material, 100s of tutorials with worked examples, past papers, tips, tricks for BMS exams, we are creating a digital learning library.

Disclaimer: We are not affiliated with any university or government body in anyway.

©2020 BMS - Bachelor of Management Studies Community 

A Management Paradise Venture

Ask Us On WhatsApp

Log in with your credentials


Forgot your details?


Create Account