Impact of Internet on Porter's Five Forces: A Modern Business Analysis

This essay examines the impact of the internet age on Michael Porter's Five Forces model, a framework traditionally used to analyze a company's competitive strengths and weaknesses. It discusses how the rise of digital business and the internet have disrupted the competitive landscape, transforming traditional definitions of product, market, and customer. The analysis covers the threat of new entrants, the intensity of existing competition, the bargaining power of customers and suppliers, and the availability of substitutes, highlighting how each force has been altered by information technology and the internet. The essay concludes by emphasizing the need for businesses to understand these changes in order to gain a competitive advantage and maximize profitability in the modern digital world.

Running head: Information management
Information management
2018

Information management
Table of Contents
Introduction.................................................................................................................................................3
How the five competitive forces have changed in the internet age..............................................................3
Conclusion...................................................................................................................................................4
Bibliography................................................................................................................................................5
2

Information management
Introduction
The paper discusses how the porter five forces have affected the internet age as it further outlines
that how this model helps in attaining competitive edge.
How the five competitive forces have changed in the internet age
It is stated that digital business and internet age have been disrupted by porter five forces model.
A useful and effective way to analyze and identify the situation is by seeking at porter’s diamond
model of the five forces of industry competition and expanding how digital business is direct
impacting each of the different forces. In today’s modern world, the internet has changed the life
of people and way of working. The porter five forces analysis is a popular model or framework
for identifying and analyzing the competitiveness. This model is initiated to build demonstrates
on how information technology could upgrade the rival of a company. This model is used by the
IT companies to maximize competitive edge1. It is analyzed that nature of the competition is
personified in five forces including:
Threat of new entrants: It has been found that information technology or internet is
characterized by high and effective people dependence thus, can see experts detach from current
organizations to invest in new business. There is a low or little threat of new entrants in
information technology.
Existing competition: There is high and intense competition in today’s globalization world that
may affect the business of companies to a large extent. There are various internet firms in the
global market rendering similar internet services to the customers and thus it is quite complex to
1 E. Dobbs, Michael. "Guidelines for applying Porter's five forces framework: a set of industry
analysis templates." Competitiveness Review 24.1 (2014): 32-45.
3

Information management
distinguish based on these services rendering. Various organizations focus on the social media,
cloud computing, internet of things, analytics, enterprise mobility and other technology.
Bargaining power of customers: The buyer are working with international IT providers in the
market therefore they posses high bargaining power in the international market.
Bargaining power of suppliers: The suppliers maintain low bargaining power in information
technology.
Availability of substitutes: There is no substitute to IT services along with IT internet
departments.
With the help of porter five forces analysis, the customers have the options to purchase over the
internet and can make online comparisons among tremendous products and services. Wireless
technology is further increased. In this way, the porter five forces has changed the today’s
modern world completely. 2
Conclusion
It is concluded that porter five forces analysis is needed to gain competitive benefits and to
maximize profitability and outcomes.
2 Rothaermel, Frank T. Strategic management. McGraw-Hill Education, 2015.
4

Information management
Bibliography
E. Dobbs, Michael. "Guidelines for applying Porter's five forces framework: a set of industry
analysis templates." Competitiveness Review 24.1 (2014): 32-45.
Rothaermel, Frank T. Strategic management. McGraw-Hill Education, 2015.
5