How does the internet affect the international strategy Use Porter's 5 Essay

How does the internet affect the international strategy Use Porter's 5 Forces and tell how internet shape and change the busine - Essay Example Most companies in the modern business environment have executed some or the other form of Internet machinery into their business operations. While some enterprises faced a major conversion when emerging into an e-business function, others may have enjoyed an edge of this technology before the use of the Internet became pervasive to the present extent. (Kotler, 1997; Rainer, 2009) Internet creates economic value for business either by creating new industries such as online auctions and digital marketplaces, or by reconfiguring existing industries through reduced communication costs, easier transactions and faster information dissemination. Though catalogue retailers and toll free numbers have been always there, the internet provides a more efficient mode to order products and services. For instance, distance learning has been prevalent in the education sector for decades with almost a million students enrolling annually for various correspondence courses. But a modified and improvised version of distance learning is E-College. It is a full-service provider that works in collaboration with many universities and publishes their courses over the internet and operates the delivery network for a fee. The profitability of a business is influenced by the internet based on two main factors- industry structure and competitive advantage. While the former determines the profitability of an average competitor, the latter imparts the capacity to outperform an average competitor. (Castells, 2003; Chadwick, 2009) In today’s rapid pace of technological change in business environment, industrial analysis becomes all the more important. The structural attractiveness of an industry, whether old or new, is governed by five forces of competition. These forces, alternately known as Porter’s Five Forces, are existing rivalry among competitors, threat of substitutes, barriers to new entrants, bargaining power of suppliers and bargaining power of buyers. Though the nature of the five forces varies across industries, the profitability of an enterprise still depends of these. Due to the variable nature of the five forces, it is difficult to draw any general conclusion about the impact of the internet o business environment. But some dominant trends can be inferred through an inspection of a wide range of industries where the internet plays a vital role. Most of the industries show a positive trend owing to the expansion of markets, improved position compared to rivals and new channels to reach out to customers. (Porter, 1979; 2008; Karagiannopoulos, 2005) However some negative impacts of internet on businesses have also been in picture. It enables the buyers to have an easy access to information about products and services, thus strengthening their bargaining power. It helps in growth of new substitutes due to birth of new approaches to meets costumers’ needs. By reducing the need for an established sales force or affiliation to existing channel s, it removes barriers to entry. It dissolves geographical borders and expands the geographical market, bringing more companies into competition with each other. The increase in fixed costs, accompanying the favourable decline in variable costs, leads to the promotion of destructive price competition amongst the existing industry rivals. (Seybold, 1998; Angell, 1994) The inherent paradox is that the benefits offered by the internet expand the market through reduced operational costs, enhanced