Business Level Strategies - PDF

Running head: BUSINESS LEVEL STRATEGIES
Business level strategies
Name of the student
Name of the universities
Author note

1BUSINESS LEVEL STRATEGIES
Impact of internet and digital technologies on five competitive forces
Kuwait is one of the leading economies in the Middle Eastern regions. They are rapidly
developing in terms of the economy and with the inflow of the foreign direct investments; they
are becoming more accustomed with the globalization. One of the major changes they are
witnessing in the recent time with the development of the economy is the growing popularity of
internet and digital technologies (Andre Cavalcante 2013). These factors are having various
impacts on the competitive environment of Kuwait. The following sections will discuss about the
five competitive forces impacted by internet and digital technologies.
Threat of new entry
Initiation of the internet and other online digital medium has opened huge sources of
business opportunities in every sector. Thus, the threat of entry got increased with the initiation
of internet and digital technologies (Gupta, Goktan and Gunay 2014). This is due to the reason
that in past, business organizations has to deal with only the traditional competitors, but in the
current scenario they also have to deal with the virtual competitors or digital mediums. Thus, the
competitors got increased.
In the case of Kuwait, the impact of internet and digital technologies is more due to the
reason that Kuwait is having high market penetration of these technologies. According to the
reports, more than 70 percent of the total population of Kuwait is having access to the internet.
Thus, the market area is also more for the online and digital mediums. This along with the
increased less cost and capital involved in doing business through online mediums are
amplifying the threats of new entrants in the market (Drnevich and Croson 2013). Another key

2BUSINESS LEVEL STRATEGIES
impact of internet and digital technologies in increasing the threat of new entrants is the
reduction in the traditional barriers in starting new businesses.
Figure: 1
Trend showing growing internet penetration in Kuwait
Source: (Kaposi 2018)
Threat of substitutes
The next competitive force is the threat of substitutes. This denotes the availability of the
substitute products in the market for any particular product. The more will be availability of the
substitute products, the more will be the intensity of the competition in the market. One of the
major impacts of the internet and digital technologies in Kuwait is increasing the intensity of the
threat of substitutes (Schwenger, Straub and Borzillo 2014). This is due to the reason that with
the help of the online mediums, more options are coming to the customers. Moreover, with the

3BUSINESS LEVEL STRATEGIES
help of the internet and digital technologies, switching cost for the customers also got reduced,
which further increased the threat of substitutes in the market.
For instance, before the boom of the internet in Kuwait, shopping in traditional and
offline means was the only option for the customers. Thus, the intensity of the substitute
products was also low. However, in the current time, online shopping is attracting huge
customers. According to the recent survey, trend of online shopping is growing rapidly in
Kuwait. Thus, the traditional and offline retailers are facing the threat of online substitutes and
thus, the threat of substitute got increased with the initiation of internet and digital technologies.
Figure: 2
Online shopping trend in Kuwait
Source: (MasterCard Social Newsroom 2018)