Making Sense of Strategy

Making Sense 1
MAKING SENSE OF STRATEGY
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Making Sense 2
Making Sense of Strategy
In the current competitive global market, organizations need to understand the impact of
the internet and digital technologies on Porter’s competitive forces to be able to succeed. The
first step to business success is analyzing the external environment to understand the
opportunities and threats in the respective markets and the impact of emerging technologies on
the five competitive forces. Strategic planning helps organizations, especially small-scale
entrepreneurs, to overcome threats of entry into new markets. Several factors such as economies
of scale, differentiated products, and cost of switching are threats of entry to new entrants in
Kuwait, and local organizations rely on strategic planning to overcome them.
Internet and Digital Technologies and the Five Competitive Forces
Competitive rivalry is one of the competitive forces and the internet and digital
technologies are fueling the rivalry as the entry as exit barriers go down. The technologies help
organizations to develop comparatively low-cost digital business models (Michael, 2008).
Currently, new entrants can start operating in a country such as Kuwait without renting or
owning physical assets. Besides, new entrants are able to leverage internet marketing and reach
out a wide audience without necessarily spending much capital. As such, this competitive force
opens the ways for small businesses who understand the market to share the market with existing
competitors, which eventually increases rivalry.
The next force is the threat of new substitutes, which the technologies affect by
introducing digital substitutes or hybrid substitutes. Before the emergence of the digital tools,
taxi services in Kuwait, for example, had offices where clients would find them. Currently, some
of the services such as Uber serve their customers through a digital application so it uses a hybrid
model. Since switching costs are low, the threat of substitutes is higher during the current

Making Sense 3
technological era than before (Grant, 2013; Michael, 2008). In the case of taxi services,
customers have the power to change from the traditional model to the new one by installing the
appropriate application. The new system offers greater convenience than the older one, making
the propensity to switch high.
The internet and digital technologies also affect the bargaining power of buyers as they
help to meet the needs and expectations of consumers. Digital customers have a new set of
expectations, and the technologies bring about continual corporate innovation across operations
and products, which play an important role in amassing a significant amount of bargaining power
(Kamran, 2013; Campbell, et al., 2011). The power is increased due to the current instant access
to information on digital channels such as social media. From these sites, consumers access the
benefits and costs of different products. Other essential pieces of information that they get from
these sources are the availability of substitutes and usage of products. Therefore, the
technologies empower buyers to know what they need and be able to demand to be served
appropriately.
Additionally, the internet and digital technologies have a significant impact on the
bargaining power of suppliers, which is another critical competitive force. Suppliers are pleased
to adopt the technology if it contributes positively to their businesses (Omsa, 2017; Bruner &
O’Connor, 2017). As such, some of them who have not known the benefits of the technology are
trying to slow down the adoption of digitally based business models. Ride-sharing and room-
sharing are some of the most common legal and business issues that embrace the observance of
established rules. In these areas, suppliers work hard to ensure all business process and
innovations accord to the traditional regulatory practices. This new development is essential for
ensuring the emerging technologies do not promote the creating of dishonest business practices.