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Internet & E-Commerce

Internet & E-Commerce. MGMT 3280 Strategy. Internet Use Worldwide. TRANSPARENCY-70. Exhibit 8.1. Growth in Internet Shopping Activity. Data: Forrester Research Inc. Porter’s Five Forces. Threat of New Entrants Bargaining Power of Buyers Bargaining Power of Suppliers

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Internet & E-Commerce

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  1. Internet & E-Commerce MGMT 3280 Strategy

  2. Internet Use Worldwide

  3. TRANSPARENCY-70 Exhibit 8.1 Growth in Internet Shopping Activity Data: Forrester Research Inc.

  4. Porter’s Five Forces • Threat of New Entrants • Bargaining Power of Buyers • Bargaining Power of Suppliers • Threat of Substitutes • Rivalry of Competitors

  5. TRANSPARENCY-74 How the Internet Influences Industry Structure (+) By making an overall industry more efficient, the Internet can expand sales in that industry. (-) Internet-based capabilities create new substitution threats. Threat of substitutes (-) Technology-based efficiencies can be captured, lowering the impact of scale economies. (-) Differences among competitors are difficult to detect and to keep proprietary. Buyers Rivalry among existing competitors Bargaining power of suppliers Bargaining power of channels Bargaining power of end users (-) More price-based competition intensifies rivalry. (-) Widens the geographic market, increasing the number of competitors. (+/-) Procurement using the Internet may raise bargaining power over suppliers, but it can also give suppliers access to more customers. (-) The Internet provides a channel for suppliers to reach end users, reducing the power of intermediaries. (-) Internet procurement and digital markets tend to reduce differentiating features. (-) Reduced barriers to entry and the proliferation of competitors downstream shifts power to suppliers. (+) Eliminates powerful channels or improves bargaining power over traditional channels. (-) Shifts bargaining power to consumers. (-) Reduces switching costs. Threat of new entrants (-) Reduces barriers to entry such as need for a sales force, access to channels, and physical assets. (-) Internet applications are difficult to keep proprietary from new entrants. (-) A flood of new entrants has come into many industries.

  6. Cost Leadership Strategies • Hiring new employees • Meeting with customers • Ordering supplies • Addressing government regulations • Answering RFQs

  7. Differentiation • Mass customization • Flexible manufacturing systems

  8. TRANSPARENCY-73 Exhibit 8.4 Disintermediation and Reintermediation TRADITIONAL INTERMEDIATION Manufacturer Wholesaler Retailer Consumers DISINTERMEDIATION PROCESS Manufacturer Wholesaler Retailer Consumers Manufacturer Consumers REINTERMEDIATION ElectronicIntermediaries Manufacturer Consumers

  9. Sustainability of E-Commerce Advantages • ? • Combination strategies

  10. Focus/Guerilla Strategies • Examples • E-bags

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