Site Search

Course Navigation


Home| Course Catalog| Career Planning

FREE online courses on Business Strategies - Business Strategy - Effect of Internet on Business-level Strategy

 

Because of the immense flow of information, the Internet allows customers to be in charge of their buying behaviour as never before, eliminating the considerable obstacles preventing an optimal purchase.  Further, finding information about products is no longer the time-consuming task that it was in pre-Internet days when sellers controlled most of the distribution of product information.  Restricting information increases sellers' power relative to that of buyers, but the Internet shifts the balance of this power more toward the buyer. 

 

The Internet also makes it possible for sellers to identify consumers and collect an unprecedented amount of information about their purchase patterns, making it possible for companies to increase sales.  So, based on a purchase profile, a company such as Amazon.com can suggest a specific book or CD to the customer and boost sales and customer satisfaction at the same time.  The Internet also creates pricing options that customers desire.  This allows buyers to pool as groups where they can purchase products at a lower price.  These features of the Internet allow such companies to differentiate themselves from competitors.

 

Internet-based strategies put brick and mortar businesses at a significant cost disadvantage since the former can reach customers faster and for a fraction of the cost compared to traditional businesses with stores and full sales staffs.  These can put Internet-based enterprises in better position to establish low-cost strategies.

 

Amazon.com surpassed $1.2 billion in annual sales revenue, an amount that equals the revenue Barnes & Noble generated from 200 of its superstores.

 

While Barnes & Noble has spent $472 million to renovate and upgrade its 1,000-plus stores, Amazon.com carries only $56 million in fixed assets (mostly warehouses and computers).

 

Cisco Systems reconfigures the value chain to generate added value by purchasing through suppliers' Web-based business models, handling 78 percent of its sales via the Internet (i.e., the company never physically touches at least $4 billion in customer orders).

 

Large traditional companies that respond by establishing their own Internet presence have a tendency to cannibalise their existing businesses, which can increase rivalry inside the company between traditional and Internet operations.

 

The strategic changes resulting from use of the Internet are profound.

Companies such as Hewlett-Packard, IBM, Silicon Graphics, and others have sold plants because they were increasingly regarded as a liability. 

In 1998, companies outsourced 15 percent of all manufacturing, but in 2001 and beyond, it is estimated that as much as 40 percent of manufacturing will be outsourced. 

This approach allows much more customisation in a shorter period of time. 

 

In the Internet age, companies can maintain competitive advantage in three ways:

thinking continuously about accessing and connecting with customers (reach)

maintaining information with depth and detail for (and from) customers (richness)

determining how to build a relationship with customers (affiliation)

 

Taken together, these features of the Internet will have a part in shaping the strategies companies adopt in the future, especially at the business level.

 

In addition to selecting and implementing business-level strategies, companies also must be prepared to anticipate and respond to competitors' actions and reactions (strategic moves and countermoves) that are initiated in response to the company's strategy and to competitors' interpretations of environmental conditions and internal resources and capabilities. (Consider again the cases of Merrill Lynch and Blockbuster Inc.)

 

Our Network Of Sites:
Apply 4 Admissions.com              | A2ZColleges.com  | OpenLearningWorld.com  | Totaram.com
Anatomy Colleges.com                | Anesthesiology Schools.com  | Architecture Colleges.com | Audiology Schools.com
Cardiology Colleges.com            | Computer Science Colleges.com| Computer Science Schools.com| Dermatology Schools.com
Epidemiology Schools.com         | Gastroenterology Schools.com  | Hematology Schools.com     | Immunology Schools.com
IT Colleges.com                | Kinesiology Schools.com  | Language Colleges.com  | Music Colleges.com
Nephrology Schools.com             | Neurology Schools.com  | Neurosurgery Schools.com | Obstetrics Schools.com
Oncology Schools.com    | Ophthalmology Schools.com | Orthopedics Schools.com       | Osteopathy Schools.com
Otolaryngology Schools.com| Pathology Schools.com  | Pediatrics Schools.com  | Physical Therapy Colleges.com
Plastic Surgery Schools.com| Podiatry Schools.com  | Psychiatry Schools.com   | Pulmonary Schools.com 
Radiology Schools.com| Sports Medicine Schools.com| Surgery Schools.com | Toxicology Schools.com
US Law Colleges.com| US Med Schools.com | US Dental Schools.com

About Us Terms of Use | Contact Us | Partner with Us | Press Release | Sitemap | Disclaimer | Privacy Policy


©1999-2011 OpenLearningWorld . com - All Rights Reserved