Strategy and the Internet by Michael E. Porter Harvard Business Review, Vol. 79, No. 3, March 2001...
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Transcript of Strategy and the Internet by Michael E. Porter Harvard Business Review, Vol. 79, No. 3, March 2001...
Strategy and the Strategy and the InternetInternet
by Michael E. PorterHarvard Business Review, Vol. 79, No. 3, March 2001
指導老師 林娟娟教授資碩專一 史元瑜 99756009資碩專一 林仲葦 99756014報告日期 2010/11/22
OutlineOutline
BackgroundMyth of InternetReturn to fundamentalsInternet and industry structureFuture of Internet CompetitionInternet and Competitive AdvantageAbsence of StrategyInternet as ComplementConclusion
BackgroundBackgroundDot-com bubble (1995-2000)Distorted Market Signals
Discount provided by enterpriseCuriosity , freshness and discount that
influenced consumersDistorted revenue from capital gains
instead of profitability from products and services
Myth of InternetMyth of InternetFirst mover
◦Switching costs◦Brand advantages
Proprietary makes winner-take-all
Partnering improves industry economics
Return to fundamentalsReturn to fundamentalsStrategy creates economic value,
not Internet technologyBasis of economic value : price and
costEconomic value of Internet
◦Uses of Internet◦Internet technologies
Factors determine profitability ◦Industry structure◦Sustainable competitive advantage
Internet and industry Internet and industry structure(1/8)structure(1/8)Impacts of Internet
◦Reduce cost of communicating, information gathering, transaction accomplishing
Internet and industry Internet and industry structure(2/8)structure(2/8)Five underlying forces of
competition◦Bargaining power of suppliers◦Threat of substitute products or
services◦Rivalry among existing competitors◦Barriers to entry◦Buyers
Bargaining power of channels Bargaining power of end users
Internet and industry Internet and industry structure(3/8)structure(3/8)
suppliers
substitutes
competitors
barriers
buyers
Internet and industry Internet and industry structure(4/8)structure(4/8)Bargaining power of suppliers
Advantage Raise bargaining power over suppliersDisadvantage Suppliers access to more customers Reducing the leverage of intervening
companies Gravitate procurement to standardized
products that reduce differentiation The proliferation of competitors
downstream shifts power to suppliers
Internet and industry Internet and industry structure(5/8)structure(5/8)Threat of substitute products or
services◦ Advantage
Expand the market size by making the overall industry more efficient
◦ Disadvantage Creates new substitution threats
Internet and industry Internet and industry structure(6/8)structure(6/8)Rivalry among existing competitors◦ Disadvantage
Reduces differences Migrates competition to price Increasing competitors Lowers variable cost relative to fixed cost
Internet and industry Internet and industry structure(7/8)structure(7/8)Barriers to entry◦ Disadvantage
Reduces barriers to entry Difficult to keep proprietary from new
entrants New entrants has come into many
industries
Internet and industry Internet and industry structure(8/8)structure(8/8)Buyers
◦Advantage (bargaining power of channels) Eliminates powerful channels
◦Disadvantage (bargaining power of end users) Shifts bargaining power to end
consumers Reduces switching costs
Future of Internet Future of Internet CompetitionCompetitionContinuously put pressure on
profitabilityStrengthen customers and
advertisers’ power because of low switching cost
Opportunities of profitability from Internet
Internet and Competitive Internet and Competitive AdvantageAdvantageSustainable competitive
advantage◦Lower cost ◦Premium price
Cost and price advantages◦Operational effectiveness◦Strategic positioning
Absence of StrategyAbsence of StrategyDrought of distinctive strategic
positioning Advantage of Internet with
traditional IT service
Internet as Internet as Complement(1/3)Complement(1/3)Internet complements
companies’ traditional activities and ways of competing
Critical corporate assets vs. noncompetitive activities
Examples: Wal-greens , W.W. Grainger
Internet as Internet as Complement(2/3)Complement(2/3)Virtual activities amplify
importance of physical activitiesReasons of complementarity
between Internet and traditional activities◦Internet in one activity places
demands on physical activities◦Using Internet in one activity can
have systemic consequences◦Restricts of Internet
Internet as Internet as Complement(3/3)Complement(3/3)Internet and value chainFirm infrastructure
Human resource managementTechnology departmentProcurement
Inbound logistics
Operations
Outbound logistics
Marketing and sales
After-sales services
Web-distributed supply chain management
Conclusion Conclusion Internet makes competitive
advantage more importantDot-coms must pursue distinctive
strategies rather than emulate established companies
“New economy” is more like an old economy access to a new technology
Thanks for your listening