Industry competition in the internet economy

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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.

 

 

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0 Comments
  1. vagragenericaar.org 2 months ago

    Thank you.

    Youseful blog. Good post.

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