The Internet has influenced the power each force has in
Michael Porter’s Industry Structure Model and has impacted companies by giving
more power to the consumer.
The Internet has made it easier for competitors to access
new channels because consumers can now view companies from all across the country
to search and find the best price and value. As a result, the barriers to entry
have been reduced. This in turn has put
the power into the consumer’s hand. Because the power now resides with the consumer,
the consumer can put more pressure on companies to stay competitive and offer
lower prices on their goods and services.
Now that the end user has more options made available to
them via the Internet, this has made it easier for companies to offer
additional substitute products and services to the consumer. The benefit in
this is that it has made the overall industry more efficient but at the same
time it has made it more difficult for companies competing within the same
market. This rivalry amongst competitors has forced companies to cut their
profits in order to offer attractive prices to consumers. Not only does the Internet put the power into
the consumer’s hands but also in the suppliers’ hands . Having the ability to
network amongst multiple companies from all geographic regions as well as
having the ability to reach the end users, suppliers now can control companies
by further reducing the barriers of entry.
The internet has changed the way we do business and for most consumer oriented businesses, the competition has become fierce. To remain competitive, you have to provide a service or product that others don't have or can't easily duplicate. Hopefully your reputation will provide you with loyal repeat customers that will recommend your services to others!
ReplyDeleteWhen I think about the product based companies, one point Porter makes about rivalries has stuck in my head. The internet has been reducing the differences among competitors due to the consumer's ability to view all options, as you mentioned. This is true as a google search for any product you'd like will result in 298 sellers, all within 5% of each others price. It is great, as a customer, we have so much power.
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