Strategy and internet Essay Example

  • Category:
    Management
  • Document type:
    Essay
  • Level:
    Undergraduate
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    4
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    2913

Strategy and Internet

Question 1: Internet and the Five Forces Analysis

The article on internet and strategy elucidates a number of key issues with respect to internet use and strategy formulation and implementation in business ventures. In this case, the article addresses the market misconception that the internet use negates strategy development and implementation. In contrast, the article develops an argument evidencing approaches through which the internet application complements strategies rather than supplementing them. In this case, the internet application can be evaluated with respect to the five forces in technology application as derived from the porters five forces model namely the buyers’ and suppliers bargaining powers, threat of new entrants and substitutes, and existing competitors’ rivalry (Karagiannopoulos, Georgopoulos and Nikolopoulos, 2005, p.67). This discussion offers a review of how internet application enhances strategy formulation and implementation among these factors.

Buyers Bargaining Power

The buyers bargaining power in any industry represent the influence that the market and the consumers have over an organization. In this regard, increased buyers powers in the market lead to their influence on the organizational process in terms of quality and product costs in the market. As such, buyers with an increased bargaining power control the market and have a major influence on organizational strategic decisions. However, organizations can develop strategies to empower their customer basis. In this empowerment process, organizations enhance the buyers’ active participation in the organizational processes. In this regard, the buyers are involved and consulted in the formulation and development of strategic organizational decisions. Through such an empowerment program, buyers are attached to the organization that not only increases their satisfaction levels but also their overall loyalty levels on the organization. The success of such an empowerenment program is reliant on information and communication transfer between the organization and its customers. In this case, internet application serves as a crucial complement to the application of this strategy.

Elliott and Boshoff (2005, p.45) conducted a study to evaluate the role of internet in enhancing organizational communication and information flow efficiency. In its analysis, the study established that the internet allowed for systems and functions interconnections within and outside organizations. In this case, the study pointed out to the use of intranet and extranet features. Therefore, in empowering customers, organizations can apply the extranet systems to allow customers crucial process information and allow for a feedback receipt mechanist=m based on the customers reactions on the organizational process. Consequently, through this approach, organizations, through internet use can not only increase their customers bargaining power, but also their own market competitiveness through increased customer loyalty that is a relatively sustainable competitiveness.

Suppliers Bargaining Power

A study developed by Chicksand, Watson, Walker, Radnor and Johnston (2012, p.456) established the relevance of organizational supply chain management structures and commitment. In the study, the authors established that increased supply chain management enhanced increased relationships between the organizations and their respective suppliers. As a result this increased the organizational overall acquisition and procurement efficiencies. On one hand, through supply chain management, organizational lead times were considerably reduced as well as reduced acquisition and procurement costs. In this case, the process of supply chain management incorporates sharing of stock and order information between an organization and its suppliers. In the course of implementing the supply chain management strategy the internet plays a critical complementary role. In this case, the internet allows for the development of communication channels between the two stakeholders. As such, through the use of extranet, organizations link their stock systems with their suppliers.

Consequently, once product levels reach the re-order levels, the electronic system initiates an automatic order relayed onto the suppliers system. Moreover, organizations are able to track the order processing process through the linked system. In addition, the reduced paper and manual work reduces the overall procurement cot that allow for shared profitability increases between the organization and their suppliers. Consequently, organization applying internet in their supply chain management, face an increased market competitiveness and organizational functioning potential in the industry.

New Entrants and Substitutes Threat

For any industry to expand and retain increased product quality standards it is imperative that competition is enhanced. In this case, industry competition arises from external threats such as new entrants and substitute threats. On one hand, the threat of new entrants presents fresh business ideas and product models into the market. This is a major enhancement for entrepreneurial activities and business expansion opportunities. In the article it is apparent that the internet plays a critical role in enhancing entrepreneurship businesses growth. In this case, the internet facilitates market entry strategies. In order to penetrate into new markets, it is imperative for organizations to inform the market of their presence and competencies. It is on the basis of this information that the market focuses on the offered products and services. In this case, new entrants in the industry market and promote their services in the industry. In this regard, the internet serves as a key marketing tool. In this regard, organizations have a range of marketing alternatives on the online platform. For instance, organizations can establish an organizations website on which such organizational products, services and skills are published. Moreover, organizations can utilize a more recent marketing platform, the social media. Studies on online marketing, such as one conducted by Vinerean, Cetina, Dumitrescu and Tichindelean (2013, p.68), establish the increasing rationality and merits of social media marketing. The studies argue that the social media platform allows for direct marketing approach implications as well as the informal aspects in which bloggers recommend marketed products to their social media peers in the market.

On the other hand, the internet can play a significant role in reducing substitutes threaten an industry. In this regard, the internet marketing and relationship tools such as the enhancement of the customer relationship systems (CRM) and Supply chain management relationship systems enhance increased loyalty. As such, the market stakeholders partake in the overall product production decision making process to allow for increased product connection. Therefore, the risk of customers and suppliers shifting to substitute products are highly reduced.

Existing Competitors Rivalry

A key challenge in organizational market success and influence exertion is the existence of competitor in the market. In this regard, organizations face market ousting form the existing and established competitors in the industry. Miles, D. A. (2011, p.23) established that industry competition served as a leading cause of business failure and eventual collapse from the market. As such, the authors stated that in order to enhance increased market influence in the industry, it is imperative for business venture to develop proactive measure of dealing with internal competition. In this case, Clifford and Thorpe (2007, p.12) stated that a key strategy in this regard is the establishment of a competitive advantage. Organizations can establish competitive advantages with respect to product features, marketing approaches, and production process or suppliers relationships. As such, the internet as already established facilitates the development and enhancement of these strategic approaches in the market. Therefore, based on this analysis, it is apparent, as the article established, that the internet plays a significant role in facilitating organizational success through strategic competitiveness enhancement. Therefore, the internet enhances increased organizational growth through strategies support and efficiency enhancement.

Question 2: Research Goals and Objective

The article is written ad developed with an overall aim of establishing the role of internet in strategy formulation. In this case, the overall aim of the article is to develop the argument that the internet plays a significant role in supporting and facilitating the implementation of organizational diverse strategies. In this case, the stud developed research objectives and questions on establishing what internet is, internet application beneficiaries, and impacts on industry structures and subsequent implications on organizational strategic competitiveness sustainability. In this case, as the article establishes there exists a large pool of literature on the content.

On one hand, it is apparent from the article that the internet is a complementary tool in business. In this case, the study analysis can be compared with the findings developed by Webb and Schlemmer (2008, p.138) in a study on the internet application in business ventures. In this case, the study established that the internet serves as a key complementary tool in business strategies development in the current global market environments. Therefore, these study findings collaborate with the article perception on the internet.

In addition, the article develops an argument to evaluate the implications of internet application in business and the major beneficiaries in such an application. On its part, the article content analysis reveals that internet application results to increase benefits to all stakeholders in the market right from the organizations, customers, the society and the suppliers. This is evidenced by a study conducted by Muhammad, Manaf and Azlina (2010, p.272) on internet application. In this case, the study evaluated the implications of internet application in the market. Consequently, the study established that internet application benefited diverse stakeholders diversely.

On one hand, the organizations acquired increased efficiency, and market relationships allowing for increased suppliers and customers loyalty. On the other hand, organizational customers acquired increased bargaining power through information flow efficiency that allowed for increased control and participation in products production processes. In addition, suppliers through extranet application as well as the supplier management systems application achieve increased efficiency as the cost of delivering and receiving payments are considerably reduced. Tracking of respective organizational stock levels allow for increased systems adjustment s where the suppliers’ budget and plan for eventual ordering schedules reducing on delivery delays thus considerably reducing on lead time costs. As such, the application of the internet serves the industry with the possibility for the application of quality enhancement processes such as the enabling of the six sigma and just in time (JIT) production processes.

Finally, the article develops an analysis on the industry structure implications of internet use. In this case, the article analysis establishes that the internet has implicated on the overall organizational structures. In this case, the article adopts the Porters five forces model to showcase these changes. In essence the internet increased the buyers bargaining power, reduces exiting competitors’ differences, raises suppliers bargaining power, reduces substitute’s threat and allows for increased new entrants into the industry. Therefore, the article develops an argument that the internet application has an impact on industry and respective organizations competitive advantages due to the established restructuring. Therefore, as Casillas, Martínez-López and Martínez (2004, p.5) argue, the internet diminishes exiting organizational competitiveness while enabling the development of new sustainable competitive edges based on efficiency and products quality factors.

Question 3: Internet Application in the Banking Industry

Internet and technology application as evidenced in the article have played a significant role in developing industries. In this case, internet application directly implicated on the overall organizational and industry structures. As such, a majority of the industries have acquired increased processes and systems changes in a bid to acquire and retain market competitiveness. Gossieaux and Moran (2010, p.15) conducted a study to evaluate the causes of industries processes changes in the wake of internet application. In this case, the study established that the internet has implicated on the society social and cultural life Therefore, this has changed the overall consumer buying behaviour on the global market. Consequently, industries have been force to change their processes to adapt to the new societal buying behaviours. One such largely affected industry is the banking industry.

Traditionally, the Australian banking industry was highly bureaucratic. In this regard, the financial system was bureaucratic for the organizations and the customers alike. On one hand, the Australian government has instituted strict regulatory requirements for firms’ entry into the industry. In this case, regulations such as 1988 Act Transaction Reports Financial, served as key entry requirements. In this case, the Act required the new entrants to submit their documentation to the Australian central bank. As such, huge deposits as security were required. On the other hand, the banking institutions replicated this bureaucracy on the customers. In this regard, upon depositing or loaning funds, customers were required to undergo rigorous identification and verification processes where their documents were duly verified. Often, this system was slow and led to increased inefficiencies in the industry. As a result, the Australian banking industry attracted a few stakeholders. This is evidenced on a study by Al-Hajri and Tatnall (2008, p.22) on the Australian industry traditional condition. The study revealed that the Australian industry had reduced investment attraction with a registered low number of banking organizations. Further, the study established that the market registered few numbers of customers as a result of increased delays and systems inefficiencies. As a result, few banked their funds. Instead, as () argued, the Australian market resulted to shyloking business that was increasingly fast and reliable. However, studies on the industry establish that it was reliable stable and secure with minimal fraud cases.

The mergence on internet and its application in the global banking industry as well as the Australian banking sector changed the global market topography. In this case the internet not only changed the process but also the industry structures. On one hand, internet application and use in the Australian banking industry allowed for increased efficiency. In this case, it was easier to identify individuals in the industry. As such, the industry resulted to the application and use of a technology database in its management. As such, it developed a database for its clientele. Such information included personal information as well as bio data such as finger prints and other bio identification data. Consequently, it was easy for the banking industry to identify the customer negating the need for the manual lengthy traditional identification process. Therefore, this increased the service delivery speed in the industry considerably. Additionally, it was easier for banking organizations to share such data across its branches in the market. Therefore, through internet development, customers acquired the privilege of acquiring banking services on the various branches seamlessly. Therefore, this raised convenience levels in the industry. As such, Muraleedharan (2009, p.312) established that ease of identification and the subsequent seamless services offering across banking organizational branches increased the industry competitiveness that attracted an increased customer base.

In addition, internet application in the Australian banking industry allowed for products and services diversification. In this regard, the banking organizations ventured onto the online platform. In this case, the online platform allowed for two key developments. On one hand, it diversified the organizational products to consultation. Through the online platform, Australian customers can acquire financial consultation services from the banking organizations as well as other specialized financial organizations. Moreover, the online platform allowed for online banking. This is a new industry approach that allows for exclusive online transactions where customers can deposit, withdraw or even transfer funds from their accounts online without physically visiting the banking halls. This has not only increased customer satisfaction, but also reduced banking hall congestion, a traditional industry characteristic. However, the adoption of internet in the Australian banking industry has resulted into an increased marketing challenge. In this case, as Bauer, Hammerschmidt and Falk (2005, p.154) argued, internet application has increased financial fraud cases. The emergences of hoax online banking organizations with no physical premises increases the risk of financial frauds. Moreover, the online banking platform faces increased financial loss risks as a result of increasing hacking possibilities in the industry.

References

Al-Hajri, S. & Tatnall, A. 2008, «Adoption of Internet Technology by the Banking Industry in Oman: A Study Informed by the Australian Experience», Journal of Electronic Commerce in Organizations, vol. 6, no. 3, pp. 20-36.

Bauer, H.H., Hammerschmidt, M. & Falk, T. 2005, «Measuring the quality of e-banking portals», The International Journal of Bank Marketing, vol. 23, no. 2, pp. 153-175.

Casillas, J., Martínez-López, ,F.J. & Martínez, ,F.J. 2004, «Fuzzy Association Rules For Estimating Consumer Behaviour Models And Their Application To Explaining Trust In Internet Shopping», Fuzzy Economic Review, vol. 9, no. 2, pp. 3-26.

Chicksand, D., Watson, G., Walker, H., Radnor, Z. & Johnston, R. 2012, «Theoretical perspectives in purchasing and supply chain management: an analysis of the literature», Supply Chain Management, vol. 17, no. 4, pp. 454-472.

Clifford, J., & Thorpe, S. 2007, Workplace learning & development: Delivering competitive advantage for your organization, Kogan Page Ltd, London.

Elliott, R. & Boshoff, C. 2005, «The influence of organisational factors in small tourism businesses on the success of Internet marketing», Management Dynamics, vol. 14, no. 3, pp. 44-58.

Gossieaux, F., & Moran, E. 2010, The hyper-social organization: Eclipse your competition by leveraging social media, McGraw-Hill, New York.

Karagiannopoulos, G.D., Georgopoulos, N. & Nikolopoulos, K. 2005, «Fathoming Porter’s five forces model in the internet era», Info : the Journal of Policy, Regulation and Strategy for Telecommunications, Information and Media, vol. 7, no. 6, pp. 66-76

Miles, D. A. 2011, Risk factors and business models: Understanding the five forces of entrepreneurial risk and the causes of business failure, Boca Raton

Muhammad, N.R., Manaf, Z. & Azlina, M.Y. 2010, «Internet business strategies by property companies in Asia», Property Management, vol. 28, no. 4, pp. 270-289.

Muraleedharan, D. 2009, Modern banking: Theory and practice., PH Learning, New York.

Vinerean, S., Cetina, I., Dumitrescu, L. & Tichindelean, M. 2013, «The Effects of Social Media Marketing on Online Consumer Behavior», International Journal of Business and Management, vol. 8, no. 14, pp. 66-79.

Webb, B.R. & Schlemmer, F. 2008, «Predicting web services performance from internet performance: an empirical study of resources and capabilities in e-business SMEs», Journal of Knowledge Management, vol. 12, no. 6, pp. 137-140