The Impact of E-Commerce on the Competitive Environment
Erica Reid
1) Describe 5 forces of competition in any market.
Five forces of competition in any market are the threat from existing competitors, threats from substitute products, threat of new entrants to the market, power of buyers, and power of suppliers. The threat of existing competitors depend on the number of competitors in your region and the ability for people to get to your store compared to how they can get to your competitors'. Another threat is the threat of substitute products which means a specialized line you put out will be mimicked by other stores of that genre and department stores and the fact that your business must keep up with ever changing product trends. New entrants to the market can also be a large threat because the market may not be able to sustain that many businesses. The main threat is power of buyers, meaning you have to accommodate your target audience to keep them happy and coming back. Finally, the power of suppliers; they can exert power over you by raising their prices and reducing the quality of goods and services you buy from them.
2) Explain the impact that e-commerce has had on direct competitors.
E-commerce has allowed people to share files in which they would generally be charged if the got in person such as music and movies for free or a very small fee. This will eliminate the need to go out and pay full price for products.
3) Describe how geographic boundaries have changed with the entrance of e-commerce product and service providers.
Geographic boundaries are no longer an issue in competitive markets because through the web and ecommerce, all businesses are at your fingertips. You can access any business from your computer and if a store is in a very remote location, it doesn't matter because people from any region can access products and services by ordering them through the site.
4) Explain how you think small e-tailers can compete with the larger counterparts in the world of ecommerce.
Small e-tailers can compete with larger counterparts in the world of e-commerce because a web site can be a company's online brochure. The better it looks, the better your company will be regarded, therefore nobody will have a chance to judge your business by size and people will have no trouble accessing your business like people generally do with smaller businesses. It leaves out the issue of size.