strategic management ii

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Contemporary Strategic Issues

Internet Era


Internet is an integrated network of user’s connected with computers, digital switches, routers and telecommunication equipments.

It involves millions of interconnected computer networks that include billions of host computers.

Internet is an information system that offers information on business,science,government and others.

It provides communication flows among millions of networks around the world


Internet technology transmits information quickly and at lower cost than other communication means such as telephone, fax, postal and currier service

It helps to store gather,retrive, format and display information quickly and efficiently.

The users of information are students, businesses, academicians, researchers, scientists etc.


Demand for internet services There are an estimated 400 million people

worldwide using internet in 2000. 167 million in North America,105 million in

Europe,122 million in Asia Pacific,2 million in Latin America and about 7 million in rest of the world.

Internet users have been growing day by day. People use internet technology for

communication, information gathering, shopping, entertainment etc.

Majority of internet users are students,academicians,researchers,businessmen,scientists,government and its agency etc.


Suppliers of internet technology and services The major suppliers of internet technology are as

follows1. Makers of the specialized internet related

communication components and equipments Digital switches,routers,cables etc Cisco System2. The providers of internet communication services These are known as ISPs (internet service providers) These include local telephone company, cable

company, wireless communications providers, they provide dialup, cable and wireless internet.


British Telecom,Broadband,Worldcom,Mercantile,World Link, Nepal Telecom,Ncell,UTL etc.

Suppliers of computer its components and computer hardware

There are several companies engage in manufacturing and assembling of computers,servers,data storage, and peripheral devices.

Intel,IBM,Dell, Sony, Apple HP, Toshiba and Acer etc.


Developers of specialized software Computer software makes people’s day to day

works simple,quick,accurate,effective and efficiency.

Microsofto,IBM,Oracle,Novell,Macromedia,Linux,Java etc.

Ecommerce Enterprises B2B:Cisco,Intel,Oracle B2C:eBay,Amazon Media enterprises:Disney,Sony,EA sports Content Providers:Yahoo,MSN,Google,AOL etc.


Strategic Challenge of Computing Technology During last years the suppliers of internet

technology and equipments have enjoyed the booming demand.

Lots of opportunities have been increasing They have been facing lots of challenges as

well. They have been facing tough competition

among alternative technologies for building various components of internet infrastructure and creating global market.


They have to establish a globally connected internet infrastructure, building telecommunication system, install millions of servers, develop necessary software, and provide internet connection to individuals and business houses at cheaper price to gain competitive advantage in this industry.

The following are the techniques to manage technological challenges

1. Investing aggressively in R&D to win innovation race against rivals

2. Forming strategic alliances with suppliers, potential customers and complementary technology builders


3. Differentiating the company’s products by investing sufficient resources to best fit the needs of the customers

4. Acquiring other companies with complementary technological expertise to broaden and penetrate the companies technological base.

5. Broadening the area or scope of the company so that the company can shift its capability and core competencies to another technological approach


6. Standardizing the products to realize economies of scale and learning effects

7. Shifting production facility at optimum location to realize location economies


Impact of internet on competitive environment The internet highly influences the competitive

environmental forces It helps to alter the strength and balance of

competitive rivalry, barriers to entry, bargaining power of buyers and suppliers.

Impact on competitive rivalry Internet has increases the competitive rivalry. Producers are offering their products worldwide

from internet. It is replacing traditional middlemen and cost It is making price competition rather than quality


Impact on barriers to entry Entry barriers into ecommerce are relatively

low. It does not require large amount to set up the

business. specialized services and knowhow can be

easily outsourced. The relatively low entry barriers push

companies in intensive rivalry. The software required for ecommerce is

readily and widely available


The impact on buyers bargaining power Internet makes it easy and convenient for

buyers to gather extensive information about competing and substitute products and brands.

Customers can use internet to search products, its features,quality,price and specification of products.

The buyers bargaining power will be enhanced by the excessive use of the internet.


Impact on suppliers bargaining power Internet allows companies to identify and then integrate

foreign suppliers into their supply chain. Local companies also get access to global market via

internet for searching the best suppliers. Internet reduces the bargaining power of suppliers.Impact on threats of substitute products The domestic product can access into foreign market and

foreign product into domestic market. Customers can get necessary information about various

alternative products via internet. The choices of customers become wide. The threats of substitute products rise due to internet and

ecommerce


The End

strategic management ii

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