Strategy and the Internet

Brief Summary

Companies must distinguish themselves through the strategy to survive, especially those involved in e-commerce. Many will argue that the internet technology has rendered strategy obsolete, but Porter argues that it is just the approach that has changed. He says “the time has come to step back and take a clearer view of the internet,” he calls that marketers return to the basics of business. Porter claims that the internet has not brought any thing new; it just changes the approach that must be taken to remain competitive.

There are two fundamental factors that determine the profitability of business in today’s technological driven business: Industry structure and creating a sustainable competitive advantage. The internet has created some new industries that have revamped internet market structure, such as on-line auctions and the digital marketplace. Porter says “whether an industry is new or old” it still faces the five underlying forces of competition

1. Barriers to entry

2. intensity of rivalry among competitors