Porter ’s Model
Competitive advantage using e-commerce
The Competitive Environment
• To survive requires the competitive
positions not less than the other company
within its market sector.
• Technology can change the way businesses
Strategic Information Systems
• Any kind of information system that uses
information technology to help an organization
gain a competitive advantage, reduce a
competitive disadvantage, or meet other
strategic enterprise objectives.
Porter’s Competitive Forces Model
To survive and succeed, a business must
develop and implement strategies to effectively
– Rivalry of competitors within its industry
– Threat of new entrants into an industry and its markets
– Threat posed by substitute products which might
capture market share
– Bargaining power of customers
– Bargaining power of suppliers
Porter’s Five Forces
Model of Competition
Threat of New
Competing Firms in
Threat of New Entrants
• The ease with which a new company or a company
in a different product area can enter a given trade
• Barrier to entry into market include the need of
capital, knowledge and skills.
• IT can be barrier to entry to a given market. Ether
existing players in the sector are well or the
converse is that development of IT may leave
• Examples: Internet bookshops like amazon.com
compare to traditional bookshops, Internet banks
compare to branch bank.
Threat of substitution
• It’s a threat to a existing players where a new
product becomes available that supplies the same
function as the existing product or services.
• Example: replacing of glass bottles by plastic
alternative in packaging industry.
• IT industry has itself substituted of many products.
• Example: replacement of typewriter by the word
processor, downloaded music from the artist’s web
site being substitute for conventional supply chains.
Bargaining power of buyers
• There are number of competitors in the market or a
surplus of supply the buyer is in a strong position to
bargain for a low price.
• The braded products are defensive that the store will
feel obliged to stock because customers expect it.
• ICT facilitate a level of service that will keep the
• Examples: short cycle times, quick response supply,
and reliable services enabled by E-commerce
Bargaining power of Suppliers
• E-commerce used to reshape the supply chain.
• Organization directly deal with small trade and
members of the public using e-commerce that
replacing the intermediaries.
• Competitive advantage, in all three categories, can
be achieved using e-commerce for direct sale.
• This process of disintermediarisation can save cost
of distribution, allow an organization to differentiate
its products or focus its attention on selected
segments of the market.
Bargaining power of supply
• The organization always trying to get adequate price
from its buyer will be looking to get favorable terms
from its own suppliers at the nest stage along the
• For supplier, the strategies of price and
differentiation such as branding or quality of
services give a strong competitive position.
• Trade electronically is the factor in the quality of
service and now it’s the requirement from the buyer
Competition between Existing
• The competition is to get the buyers and to trade at a
price that produces an acceptable profit.
• Competition won by the generic competitive
advantage of price, differentiation or focus.
• The use of E-commerce:
– To reduces the administration costs of trading.
– To reduce stockholding cause to increase logistic efficiency
and greater reliability of supply.
– To meet the requirements of trading partner that trade is
– To differentiate the product or services from the competitors.
– To disintermediarisation.
– To provide new market or service.
E-commerce for competitive
•Reduces entry cost
•New sales channel
•New service opportunity
(& Trading Buyers)
•New sales channel
Strategic Information system
Porter competitive Forces