Question

Explain how the Internet and e-commerce have impacted the five forces in industry competitiveness.  

Answer 1

The entry of new competitors- No doubt digital business is changing the nature of competition. Today, not only do you need to worry about conventional industry players, but new entrants from outside your market, armed with new digitally driven business models and value propositions. This is often tech giants and startups who imagined and built a new business model from the ground up, powered by a new digital business platform ecosystem. They leverage common social, web, analytics and cloud technology, but also add to their platform's value proposition in people and meaning, smart automation, the Internet of Things, and cybersecurity. Digital organization changes laws by reducing the conventional entry barriers. A digitally based business model requires much less capital and, for example, can bring great economies of scale.

The threat of substitutes- The danger of substitutes refers to the threat posed by alternative goods or services. This can come from a purely digital substitute or a digital / physical hybrid substitute in terms of the digital business. Taxi services, such as Uber and EasyTaxi, provide a hybrid model for consumers and taxi drivers, coupled with the physical taxis, through a digital app. Another example is digital services that are bundled around a physical product that can range from one extreme such as the industrial Internet to another such as home automation devices or personal health products. Moreover, the long-term revenue stream from digital services could well be worth much more than the one-time selling of the physical product

The bargaining power of buyers- Perhaps the strongest of the five factors influencing competition in industry is buyers ' bargaining power as the main driver of digital business comes from the demands and desires of consumers and customers themselves. Because of quick access to information, insights from social media including access to reviews and feedback, low switching costs through digital channels, price responsiveness, access to alternative goods and services with greater ease of use and convenience, and increased competitiveness of the industry as a result of the other powers, customers and consumers have accrued even more bargaining power today.

The bargaining power of suppliers- Suppliers can speed up or slow down the adoption of a business model based on how it affects their own situation. Some who follow their own digital models, such as using APIs to streamline their ability to form new partnerships and manage existing ones, can help speed up your own model. Many who are suppliers to the traditional models, and who challenge or still decide their new position in the digital version, may use their bargaining power to slow down or deny the legitimacy or legality of the new model.

The rivalry among the existing competitors- Finally, existing competitors are all looking at the digital business, trying to understand and prepare their response to the disruptions that are occurring. The responses can vary from defensive steps to offensive, and even a first-mover attack. This rivalry between competitors is always in play, but the digital business has added fuel to the fire in recent years, just as the e-business era did many years ago.The competition is heating up because barriers to entry and exit are dropping due to the comparative low cost of digital business models, and new entrants do not even need to own physical assets or resources in many instances. In particular, by simply linking stakeholders and adding a range of peripheral resources to improve customer experience, the "network" model is seeing tremendous success on the marketplace.