Impact of Information Technology on Porter's Five Forces Model

This essay examines the impact of information technology, particularly the Internet, on the competitive landscape, revisiting Michael Porter's five-force model in the context of the digital age. It discusses how the Internet has transformed business practices, especially in banking, by redefining products, markets, and customer interactions. The essay emphasizes the importance of maintaining a competitive advantage through online services and managing information security risks. It contrasts traditional business approaches with the new competitive emphasis on prevention and cost reduction, highlighting the need for higher quality at lower costs. The analysis includes the increased competition from banks and financial institutions, the emergence of new products and services, and the faster competitive reactions driven by readily available information. The essay concludes that quality and prevention are key elements in competitiveness, requiring a shift towards flawless product creation and adaptation to new organizational paradigms that prioritize cost-effective quality improvements.

Michael Porter's five-force model has been widely used to analyze a company's competitive
strengths/weaknesses. However, that model was established before the Internet age. How
has the competitive landscape changed due to information technology, in particular, the
Internet?
In the globalized world, Internet has been working on transforming the ways where the
people do the business and incorporating the new information technologies in banking services
that are set for altering traditional definitions of product, market and customer. The Internet
banking developed as a means for communication mainly in between in banks and customers
with natural or legal or performing the online transaction less time. In competitive era of internet,
the bank needs to maintain the extent with system running and implementation of the risks that
are related to not restriction of areas of information security (Xiang, Magnini, & Fesenmaier, 2015).
Hence, the information technology can help in providing online services for the larger bank
which is important to be maintained with competitive advantage. The emergence of internet in
business is considered to be complement to the traditional trade. The well-execution can be
holding the competitive advantage where the example is about capillarity of Internet is to reach
customers and then driving traffic for the physical stores. The traditional business favors the
inspection and correction of parts with new competitive emphasis that focus on prevention and
generate reductions related to internal costs and external faults (Brettel, Friederichsen, N., Keller,
M., & Rosenberg, 2014).
The traditional business environment works on competitive advantage which is not
important in new eras of internet and business. The tools are determined with higher quality
means and high costs that complies with new organization to see an improvement in the quality
at a lower cost. The increased productivity and lower costs results in greater company
profitability. There are number of competitors which is high where the banks and financial
institutions are mainly engaged in the activities. The financial institutions are for the larger
investments to start competing, technology and security in transactions. The entities are related
to work on the increased forms with new products and services with increased degree of
information which is available for the customer and competitive reaction is faster and then there
is emergence of new substitutes as funds. The Standard Chartered Bank has a major impact on
competitiveness with operations and actions that cannot be assessed (Xiang, Wang, O’Leary, &

Fesenmaier, 2015). The quality is determined with set of activities that is consistent with financial
services and products that it offers the customers which is considered to be a key element in
competitiveness. The new company competitive emphasis is on the prevention, that generates the
significant reductions in the costs. The designing and the tweaking process includes the creation
of mechanisms with producing the flawless products which require the product corrections
(Soma, Termeer, & Opdam, 2016). The new requirements re made with the clear obligations which
require to work on handling the paradigm that includes the higher quality with higher costs to
comply with new organizations to improve the quality which is of lower costs.
References
Brettel, M., Friederichsen, N., Keller, M., & Rosenberg, M. (2014). How virtualization,
decentralization and network building change the manufacturing landscape: An Industry
4.0 Perspective. International Journal of Mechanical, Industrial Science and
Engineering, 8(1), 37-44.
Soma, K., Termeer, C. J., & Opdam, P. (2016). Informational governance–A systematic
literature review of governance for sustainability in the Information Age. Environmental
Science & Policy, 56, 89-99.
Xiang, Z., Magnini, V. P., & Fesenmaier, D. R. (2015). Information technology and consumer
behavior in travel and tourism: Insights from travel planning using the internet. Journal
of Retailing and Consumer Services, 22, 244-249.
Xiang, Z., Wang, D., O’Leary, J. T., & Fesenmaier, D. R. (2015). Adapting to the internet: trends
in travelers’ use of the web for trip planning. Journal of Travel Research, 54(4), 511-527.