week 3 & 4
BK 8 D06
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| competitive force |
Now, I want write about Information System (IS) for competitive advantages. Competitive advantages are present a framework for helping firms actually create and sustain a competitive advantage in their industry in either cost or differentiation.
The most well-known framework for analyzing competitiveness is Michael Porter’s competitive forces model (Porter, 1985). It has been used to develop strategies for companies to increase their competitive edge. It also demonstrates how IT can enhance the competitiveness of corporations. The model recognizes five major forces that could endanger a company’s position in a given industry. The competitive force are rivalry of competitors within its industry, new entrants into an industry and its markets, substitute products that way capture market share, bargaining power of suppliers, and bargaining power of customers (buyers). Other than that, global efficiency, local flexibility, and innovation or sharing also is competitive force.
The rivalry of competitors within its industry the visibility of Internet applications on the Web makes proprietary systems more difficult to keep secret, reducing differences among competitors. In most industries, the tendency for the Internet to lower variable costs relative to fixed costs encourages price discounting at the same time that competition migrates to price. Both are forces that encourage destructive price competition in an industry. Other than that, new entrants into an industry and its markets, for the most firm, Internet increase the threat of new competitors. First, the Internet sharply reduces traditional barriers to entry, such as the need for a sales force or a physical store front to sell godsend services. All a competitor needs to do is set up a Web site. This threat is especially acute in industries that perform an intermediation role as well as industries in which the primary product or service is digital. Second, the geographical reach of the Internet enables distant competitors to bring competition into the local market, or even an indirect competitor to compete more directly with an existing firm.
In additional, substitute products that way capture market share are Information-based industries are in the greatest danger here. Any industry in which digitalized information can replace material goods (e.g., music, books, software) must view the Internet as a threat. And the bargaining power of suppliers, The Internet’s impact on suppliers is mixed. On the one hand, buyers can find alternative suppliers and compare prices more easily, reducing the supplier’s bargaining power. On the other hand, as companies use the Internet to integrate their supply chain and join digital exchanges, participating suppliers will prosper by locking in customer sand increasing switching costs. And the last one is bargaining power of customers (buyers) is the Web greatly increases a buyer’s access to information about products and suppliers, Internet technologies can reduce customer switching costs, and buyers can more easily buy from downstream suppliers. These factors mean that the Internet greatly increases customers’ bargaining power.
(words 480)
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