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How can the Internet be used for competitive advantage in business? Describe three firms which
are using the Internet for conducting business, and speculate as to the underlying technologies
which might be in use in these firms. Will the Internet become an essential business tool like the
telephone or will it go the way of the dinosaurs?
Solution
a) Usage of Internet for Competitive Advantage in Business
At its most fundamental level, competitive advantage is a measure of the value that a firm
is able to create and transfer to its customers. Essentially, a firm can create value for its
customers in one of three ways:
1.By providing their products and/or services at a lower price than its competitors;
2. By differentiating its products and/or services from competitors through the
provision of unique benefits which offset a premium price;
3. Through a combination of both a low price and differentiation strategy which is
focused on a particular market or segment .
Information and networking technologies are creating a new marketing paradigm, this new
paradigm is described as 'one-to-one marketing', where greater emphasis is being placed on
individuality and customisation.
The Internet, as an interactive medium, offers the capability to support the emerging business
ethos more completely than traditional communication media. Empirical surveys show that the
majority of businesses using the Internet have a passive presence, suggesting that strategic
business use of the World Wide Web is still in its infancy.
Information technology will render rivalry between competitors more intense, yet also create
additional opportunities to develop competitive advantage such as ,
i) the creation of new business interrelationships within the value system,
ii) the expansion of industry scope, and
iii) the increased ability to co-ordinate value activities regionally, nationally, and globally.
Porter and Miller suggest that IT will create competitive advantage by providing
companies with new ways to outperform their competitors.
IT can have a powerful effect on the cost structure of a business, can increase opportunities for
differentiation, and can alter a firm's competitive scope.
Examining the impact of the Internet in relation to this proposition, there are a number of
competitive advantages to be realised at each stage of the value system. These include,
i) process inputs from suppliers (upstream value),
ii) internal operations (value chain), and
iii) customer relations (downstream value).
b) Firms that use Internet
Travel Industry:
Travel and Tourism is one of the highest revenue-generating sectors of the internet, The rapid
growth of the internet is having an impact on the distribution of travel services and has
heightened speculation about the potential for disintermediation of the travel agent.
Banking Sector:
Nearly 57 percent of the Indian commercial banks are providing transactional Internet banking
services. The univariate analysis indicates that Internet banks are larger banks and have better
operating efficiency ratios and profitability as compared to non-Internet banks. Internet banks
rely more heavily on core deposits for funding than non-Internet banks do.
E-commerce:
Today millions of users access and use the internet for various purposes throughout the day.
They use the internet for searching, browsing, writing & communication, listening, watching
news, videos, publishing copying, printing, discussions, trading and selling etc. The list of
activities and choices that the internet has got to offer to individuals is ever expanding. With
millions of users actively looking for various products, information and services, there is a huge
opportunity for the businesses to jump on to the internet bandwagon and cash in on the business
opportunity that is presenting itself every minute.
c) Internet an Essential Tool
Whether we like it or not, the internet is rapidly becoming a necessary part of life.
If we want to maintain a decent quality of life, attract visitors, encourage businesses to be
established or have citizens move within the Blue Line, it is imperative that everyone has decent
access to this amazing tool.
Electronic Communications:With the introduction of the Internet, we now have the ability to
send and receive messages through electronic mail- virtually instantaneously and without the
need of a postage stamp.
Online Shopping:Rather than having to drive to a mall and wait in long lines to make a purchase,
you can now do all of your shopping with a few clicks of the mouse. In addition, the Internet
made it easier for individuals to price compare between different online retailers to see which
one offers the best selections and prices.
Online Banking: With the Internet, you can avoid the line all together simply by remotely
logging into your bank account on your computer and completing your transaction from there
any time of day or night.
The Internet Of Things (IOT): The main advantage of the Internet is its ability to connect billions
of computers and devices to each other. Not only does the Internet create convenience in sharing
and receiving information between users, another advantage of the modern Internet is its ability
for automation.

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How can the Internet be used for competitive advantage in business .pdf

  • 1. How can the Internet be used for competitive advantage in business? Describe three firms which are using the Internet for conducting business, and speculate as to the underlying technologies which might be in use in these firms. Will the Internet become an essential business tool like the telephone or will it go the way of the dinosaurs? Solution a) Usage of Internet for Competitive Advantage in Business At its most fundamental level, competitive advantage is a measure of the value that a firm is able to create and transfer to its customers. Essentially, a firm can create value for its customers in one of three ways: 1.By providing their products and/or services at a lower price than its competitors; 2. By differentiating its products and/or services from competitors through the provision of unique benefits which offset a premium price; 3. Through a combination of both a low price and differentiation strategy which is focused on a particular market or segment . Information and networking technologies are creating a new marketing paradigm, this new paradigm is described as 'one-to-one marketing', where greater emphasis is being placed on individuality and customisation. The Internet, as an interactive medium, offers the capability to support the emerging business ethos more completely than traditional communication media. Empirical surveys show that the majority of businesses using the Internet have a passive presence, suggesting that strategic business use of the World Wide Web is still in its infancy. Information technology will render rivalry between competitors more intense, yet also create additional opportunities to develop competitive advantage such as , i) the creation of new business interrelationships within the value system, ii) the expansion of industry scope, and iii) the increased ability to co-ordinate value activities regionally, nationally, and globally. Porter and Miller suggest that IT will create competitive advantage by providing companies with new ways to outperform their competitors. IT can have a powerful effect on the cost structure of a business, can increase opportunities for differentiation, and can alter a firm's competitive scope. Examining the impact of the Internet in relation to this proposition, there are a number of competitive advantages to be realised at each stage of the value system. These include,
  • 2. i) process inputs from suppliers (upstream value), ii) internal operations (value chain), and iii) customer relations (downstream value). b) Firms that use Internet Travel Industry: Travel and Tourism is one of the highest revenue-generating sectors of the internet, The rapid growth of the internet is having an impact on the distribution of travel services and has heightened speculation about the potential for disintermediation of the travel agent. Banking Sector: Nearly 57 percent of the Indian commercial banks are providing transactional Internet banking services. The univariate analysis indicates that Internet banks are larger banks and have better operating efficiency ratios and profitability as compared to non-Internet banks. Internet banks rely more heavily on core deposits for funding than non-Internet banks do. E-commerce: Today millions of users access and use the internet for various purposes throughout the day. They use the internet for searching, browsing, writing & communication, listening, watching news, videos, publishing copying, printing, discussions, trading and selling etc. The list of activities and choices that the internet has got to offer to individuals is ever expanding. With millions of users actively looking for various products, information and services, there is a huge opportunity for the businesses to jump on to the internet bandwagon and cash in on the business opportunity that is presenting itself every minute. c) Internet an Essential Tool Whether we like it or not, the internet is rapidly becoming a necessary part of life. If we want to maintain a decent quality of life, attract visitors, encourage businesses to be established or have citizens move within the Blue Line, it is imperative that everyone has decent access to this amazing tool. Electronic Communications:With the introduction of the Internet, we now have the ability to send and receive messages through electronic mail- virtually instantaneously and without the need of a postage stamp. Online Shopping:Rather than having to drive to a mall and wait in long lines to make a purchase, you can now do all of your shopping with a few clicks of the mouse. In addition, the Internet made it easier for individuals to price compare between different online retailers to see which one offers the best selections and prices. Online Banking: With the Internet, you can avoid the line all together simply by remotely logging into your bank account on your computer and completing your transaction from there
  • 3. any time of day or night. The Internet Of Things (IOT): The main advantage of the Internet is its ability to connect billions of computers and devices to each other. Not only does the Internet create convenience in sharing and receiving information between users, another advantage of the modern Internet is its ability for automation.