Discussion: Five Competitive Forces
Discussion: Five Competitive Forces
and it’s a barrier of entry for new entrants that would have to cre- ate something better to compete against Google. New entrants have failed to erode Google’s market share, which holds fast at 65% in the United States and at over 90% in Europe.6 Walmart, another example, effectively blocks competition with its inventory control system, which helps it drive down expenses and ultimately offer lower costs to customers. Any company entering Walmart’s marketplace would have to spend millions of dollars to build the inventory control system and IS required to provide its operations with the same capabilities. Therefore, the system at Walmart may be a barrier to entry for new companies.
Search engine optimization (actions that a firm can take to improve its prominence in search results) has served as a barrier to entry for some businesses. Consider the Web site that has the number one position in a user’s search. There is only one number one position, making it an advantage for the company enjoying that position and a barrier for all other Web sites seeking that position.
Bargaining Power of Suppliers
Bargaining Power of Buyers
Strategic use • Cost effectiveness • Market access • Differentiation of product or service
Strategic use • Switching costs • Access to distribution channels • Economies of scale
Strategic use • Selection of supplier • Threat of backward integration
Strategic use • Buyer selection • Switching costs • Differentiation
Strategic use • Redefine products and services • Improve price/performance
Potential Threat of New Entrants
Threat of Substitute Products
FIGURE 2.3 Five competitive forces with potential strategic use of information resources. Sources: Adapted from M. Porter, Competitive Strategy (New York: The Free Press, 1998); and Lynda M. Applegate, F. Warren McFarlan, and James L. McKenney, Corporate Information Systems Management : The Issues Facing Senior Executives, 4th ed. (Homewood, IL: Irwin, 1996).
6 “Viewed as a Monopoly in Europe, Google Takes on Role as a Wireless Trust‐Buster in U.S.,” New York Times (May 8, 2015), B1, B6.
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