Answered Essay: How is the Internet and digitally based capabilities affecting the five competitive forces and industry

How is the Internet and digitally based capabilities affecting the five competitive forces and industry profitability? In 200 Words

Expert Answer

Internet and digitally based capabilities has impacted all companies in a large ways. Organizations willing to change and adopt new technologies and use digital landscape in business model are more efficient and have higher competitive advantage. Porter 5 forces model are affected in below ways:

  • Competitive rivalry: The competitive rivalry has increased due to all small and large organizations coming on a common platform and targeting same set of customers.
  • Threat of new entrants: Threat of new entrant has increased as distribution and supply chain has been made easy due to internet and digital world. Any player with a good product can have easily access to large customer base.
  • Threat of substitution: It has increased as customers have access to large number of substitutes and information about various products is easily available to consumers.
  • Bargaining power of buyers: It has increased as every consumer has all the information readily available to him on all company’s product offering. They have the option to choose and compare among various brands.
  • Bargaining power of suppliers: It has decreased as each manufacturer have access to all suppliers globally and locally. Manufacturer have better bargaining power from suppliers.

Industry profitability has increased due to large consumer base available for all companies. The supply chain, distribution and marketing cost have come down. Sales volume has increased for companies and hence industry profitability has increased.

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