Michael Porter's Five Forces

850 Words 4 Pages
The topic within the first six chapters of our text that I find important, is the affects that the internet and digital technologies have had on Michael Porter’s five competitive forces.
Porter’s Five Forces that shape strategy includes: the threat on new entrants, the bargaining power of buyers, the bargaining power of suppliers, and the threat of substitutes.
The first force in Porter’s Model is, “The Threat of New Entrants.” This force focuses on “The possibility that the profits of established firms in the industry may be eroded by new competitors” (Dess et. al, 2016, p. 53). Internet-based and digital technologies have had a considerable impact on most industries, as these technologies lower barriers to entry. One of the largest factors
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al, 2016, p. 55). The internet provides consumers with more access and a direct link to suppliers, which cuts out intermediaries and reduces transaction costs and paperwork. This force is a “double-edged sword” as the internet is beneficial for some businesses but is a disadvantage to others. Delivery services are gaining benefits from this because more online purchases mean more deliveries. However, merchandise stores may be at a disadvantage because it may be more convenient for customers and cheaper for customers to shop online. The internet greatly affects industries as customers are no longer limited to purchasing items from stores in their area, as the internet offers access for consumers to purchase items from around the world at the click of a mouse. Furthermore, the internet does offer some stores a competitive edge, as stores that have mobile applications may be more attractive to consumers than stores that do not provide mobile application …show more content…
al, 2016, p. 56). The internet certainly intensifies competitive rivalry as the internet offers more tools to compete. Businesses that offer “faster, smarter, and cheaper” services often become the winner for profitability. In addition, the internet has become flooded with infomediaries. Companies such as hotwire, cheaptickets.com, and mySimon seek, now change the playing field by offering consumers a quick and easy way to compare services as well as price. However, when it comes to businesses, these infomediaries “increase rivalry by consolidating the marketing message that consumers use to make a purchase decision into a few key pieces of information over which the selling company has little control” (Dess et. al, 2016, p. 61).
The knowledge I gained by learning about Porter’s Five Forces and then applying the effects of the internet and other technologies is important because it will not only enhance my business decision making when it comes to purchasing and selling merchandise, but it also will help in making wiser personal consumer decisions as

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