<< Chapter < Page Chapter >> Page >
Bargaining power of suppliers, bargaining power of customers, threat of new entrants, and threat of substitute products, all pointing at the box, competitive rivalry within an industry.
Porter’s Five Forces Model Source
Source: (External Link)

Buyer power can be reduced by using IS in ways that tend to restrict buyers’ choices. A good example is the frequent flyer programs that are offered by most commercial airlines around the world. When they enroll in the program, air travelers are awarded “miles” for every flight they take on, for example, British Airways. Their accumulated miles are maintained by a computer system. Travelers can obtain tickets for free flights once as certain number of miles has been accumulated in their account. What this does is to encourage travelers to always use the same airline so they can qualify for awards more quickly. Frequent flyer programs, of course, have to keep track of a lot of information on the activities of thousands of travelers and would not be possible to manage without computer systems. An airline without a frequent flyer program is at a competitive disadvantage to airlines which have them.

Supplier power is high when a business must rely on just a few suppliers. For example, if there is just one store in a town which stocks office supplies, businesses have nowhere else to buy supplies they need and may be forced to higher than normal prices. On the other hand, if a local business is connected to the Internet, it can choose from many other suppliers and possible find cheaper prices, even when the cost of shipping is considered.

The threat of new entrants can be reduced when IS is used to erect “entry barriers”. Entry barriers are offerings that a business must make available to its customers if it expects to do business in a certain sector simply because most or all of its competitors offer a certain feature to their customers. An example is ATM machines offered by banks. ATM machines would not be possible without the use of computers and communications networks. If you had to choose between a bank that offered ATM machines and one that did not, which one would you choose? Most likely the one with ATM machines. ATM machines are this a barrier to enter the banking sector in a particular locale.

The threat of substitute products can usually be reduced by using IS to bind customers more closely to a business and create what is called “switching costs”. This means that the IS systems offered by a business are so appreciated by the customer that customers are reluctant to switch to a substitute product. For example, there are many free open content software products that equally competitive with the costly brands. Zoho, Google Docs, Thinkfree, are examples. One of the reasons many PC users don’t switch to them is that they would have to learn how to use a new package. Even though the free packages are easy to learn, there is a switching cost involved that binds users to Microsoft Office: The time it would take to learn even a relatively simple package is enough of an obstacle to many users that they conclude that switching is not worth the effort.

The Intensity of Intra-Industry Competition can often be increased by IS-enabled innovations. For example, the global reach of the Internet means that competitors for many products and services can be located anywhere in the world. For example, tax accounting specialists may now find themselves competing with accounting specialists in low-cost countries. This is becoming a common practice as companies conclude that IS makes it possible for many forms of knowledge work to be performed anywhere in the world.

Questions & Answers

do you think it's worthwhile in the long term to study the effects and possibilities of nanotechnology on viral treatment?
Damian Reply
absolutely yes
Daniel
how to know photocatalytic properties of tio2 nanoparticles...what to do now
Akash Reply
it is a goid question and i want to know the answer as well
Maciej
characteristics of micro business
Abigail
Do somebody tell me a best nano engineering book for beginners?
s. Reply
what is fullerene does it is used to make bukky balls
Devang Reply
are you nano engineer ?
s.
fullerene is a bucky ball aka Carbon 60 molecule. It was name by the architect Fuller. He design the geodesic dome. it resembles a soccer ball.
Tarell
what is the actual application of fullerenes nowadays?
Damian
That is a great question Damian. best way to answer that question is to Google it. there are hundreds of applications for buck minister fullerenes, from medical to aerospace. you can also find plenty of research papers that will give you great detail on the potential applications of fullerenes.
Tarell
what is the Synthesis, properties,and applications of carbon nano chemistry
Abhijith Reply
Mostly, they use nano carbon for electronics and for materials to be strengthened.
Virgil
is Bucky paper clear?
CYNTHIA
so some one know about replacing silicon atom with phosphorous in semiconductors device?
s. Reply
Yeah, it is a pain to say the least. You basically have to heat the substarte up to around 1000 degrees celcius then pass phosphene gas over top of it, which is explosive and toxic by the way, under very low pressure.
Harper
Do you know which machine is used to that process?
s.
how to fabricate graphene ink ?
SUYASH Reply
for screen printed electrodes ?
SUYASH
What is lattice structure?
s. Reply
of graphene you mean?
Ebrahim
or in general
Ebrahim
in general
s.
Graphene has a hexagonal structure
tahir
On having this app for quite a bit time, Haven't realised there's a chat room in it.
Cied
what is biological synthesis of nanoparticles
Sanket Reply
what's the easiest and fastest way to the synthesize AgNP?
Damian Reply
China
Cied
types of nano material
abeetha Reply
I start with an easy one. carbon nanotubes woven into a long filament like a string
Porter
many many of nanotubes
Porter
what is the k.e before it land
Yasmin
what is the function of carbon nanotubes?
Cesar
I'm interested in nanotube
Uday
what is nanomaterials​ and their applications of sensors.
Ramkumar Reply
what is nano technology
Sravani Reply
what is system testing?
AMJAD
preparation of nanomaterial
Victor Reply
Yes, Nanotechnology has a very fast field of applications and their is always something new to do with it...
Himanshu Reply
good afternoon madam
AMJAD
what is system testing
AMJAD
what is the application of nanotechnology?
Stotaw
In this morden time nanotechnology used in many field . 1-Electronics-manufacturad IC ,RAM,MRAM,solar panel etc 2-Helth and Medical-Nanomedicine,Drug Dilivery for cancer treatment etc 3- Atomobile -MEMS, Coating on car etc. and may other field for details you can check at Google
Azam
anybody can imagine what will be happen after 100 years from now in nano tech world
Prasenjit
after 100 year this will be not nanotechnology maybe this technology name will be change . maybe aftet 100 year . we work on electron lable practically about its properties and behaviour by the different instruments
Azam
name doesn't matter , whatever it will be change... I'm taking about effect on circumstances of the microscopic world
Prasenjit
how hard could it be to apply nanotechnology against viral infections such HIV or Ebola?
Damian
silver nanoparticles could handle the job?
Damian
not now but maybe in future only AgNP maybe any other nanomaterials
Azam
Hello
Uday
I'm interested in Nanotube
Uday
this technology will not going on for the long time , so I'm thinking about femtotechnology 10^-15
Prasenjit
how did you get the value of 2000N.What calculations are needed to arrive at it
Smarajit Reply
Privacy Information Security Software Version 1.1a
Good
Berger describes sociologists as concerned with
Mueller Reply
what is business
Abdul Reply
how can i know my business best resources, cheap and good quality
cabdi Reply
vikash rawat
jagvir Reply
entrepreneurial mobility
Manish Reply

Get the best Business fundamentals course in your pocket!





Source:  OpenStax, Business fundamentals. OpenStax CNX. Oct 08, 2010 Download for free at http://cnx.org/content/col11227/1.4
Google Play and the Google Play logo are trademarks of Google Inc.

Notification Switch

Would you like to follow the 'Business fundamentals' conversation and receive update notifications?

Ask