Question

Use the five competitive forces model to describe how information technology might be used to provide a winning position for each of these businesses:

a. A global advertising agency

b. An insurance company

Answer 1

As per porter's five forces following are the forces we need to evaluate here:
1) Threat of new entrants
2) Bargaining power of suppliers
3) Bargaining power of Buyers
4) Threat of substitute products
5) Rivalry among existing players

	Impact	Advertising Agency	Impact	Insurance company
Threat of new entrants	Low	All the engagements/Projects are based on long term relationships and requires intensive capital	Low	As this space has become so much crowded already , new entrants are difficult to cope up with the demands and handling of large clients
Bargaining power of suppliers	High	As supply is less than demand which gives suppliers an upper hand in bargaining, IT is for sure reducing this leverage for them as it is increasing the advertising space.	Low	As there are lot of players in this space hence the bargaining power of suppliers has reduced with time. With IT coming into play this will further reduce as buyers now have more information online to understand the insurance policy
Bargaining power of Buyers	High	Long term relationships drives the bargaining power of buyers, longer the relationship is, more is the power	High	With internet at everyone's disposal, bargaining capability of buyers has increased manifold
Threat of substitute products	Low	With the advent of IT, threat of substitue will increase but this is a costly space which makes it less lucrative for the entrants.	High	Since buyers have lot of options available online to choose from hence threat of substitution increases manifold
Rivalry among existing players	High	Very high rivalry in this space as number of players are less and clients are more hence to get the best client is everyone's priority	High	Large number of players have entered this space making it a difficult space,and with IT coming in, it has become more crowded space