Impact of Internet Revolution in Business


Worldwide influence of the internet is well-established and acknowledged. Penetration rate of the internet has been phenomenal; almost 1/3rd of Human population are accessing the internet. The way business is conducted in this digital age has changed due to so many people logged on to the internet.

Advancement in communication and information technology has further strengthen the role of the internet in business. The internet is widely used in organization for marketing and promotion of products and services. The internet is used to deliver customer support, share information and provide training to employees.

With the internet becoming a powerful tool for employees, the impact on business is undeniable.

Internet and Porter’s Five Force Model

Porter’s five force model is a framework for industry analysis, business strategy development and study competition. The five forces of the model are the threat from upcoming and future competition, threat from existing substitute, bargaining power of consumers, negotiating power of suppliers and threat of competition. Internet has great Impact on all five force of the model:

  1. Threat of new entrants: The internet has considerably lowered entry barrier in setting up new enterprise. The setting up of a new company does not require much capital investment, for example, online retail sites, etc. Ever increasing competition has lowered the margins.

  2. Threat of new substitute: The Internet has reduced the product life cycle; shelf life of products and encouraged innovation is customer serving.

  3. Bargaining power of customers: The internet has made the customer well informed about products and available substitute. Companies have to be careful in presenting differentiation and pricing.

  4. Bargaining power of suppliers: Suppliers are well informed about happening in the industry thanks to the internet.

  5. Threat of competition: The internet has made transparency and honest important factor in success of the company. Customers tend to know more about the company. The internet has lowered the cost of searching new available products.

Internet and the way business is conducted

The internet has changed the face of business. It has opened up new avenues of conducting business. Below are some impacts of the internet on business:

  1. Communication: communication technology combined with the internet has given a new dimension to connectivity and dispersion of information. Employees are in constant touch through email, instant messaging, office intranet, etc.

  2. Collaboration: The internet has facilitated collaboration among employees of organization. Geographical boundaries no longer hamper project work and sharing of information.

  3. Business Transaction: The internet has encouraged the culture of online business or e-commerce. In recent years many players have opened shops through e-commerce. Internet banking, payment gateways, etc. are part of normal supply chain transaction.

  4. Work Flexibility: The internet has enabled workers to log in from remote location and home. It has helped on the move employees by remaining in touch with happenings of work.

  5. Web based application: The internet has facilitated the development of concept like cloud computing, which has enabled process and storing of data in large proportion. The internet has helped reduce infrastructure cost of the company.

The internet thus has made a big impact in the way the business gets conducted in both positive as well as a negative way. The internet has made many business obsolete example post offices. Online security issues like hacking, identity theft, etc. are a constant threat to internet users.

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