Business Strategy Flexibility - Michael E. Porter article, “Strategy and the Internet" (2001)

Michael E. Porter article, “Strategy and the Internet” (2001), argues that Internet and strategy should complement each other and that a large number of industries fall in believing internet has the potential to bolster any business competitive advantage by its simple adoption. Porter bases his arguments on description over past events and experiences that companies faced while adopting different types of technology, whether structured or not within its organisation, pointing out advantages and disadvantages of the scenario. He also brings and discuss key categories where the internet has positive or negative effects, and in case of negative explain its possible effectiveness from a different perspective. Porter does not ignore the possibility of dot-coms companies to succeed in the globalization scenario. The author purpose is to point out that Internet could add increasingly value to your business if adhered to the business strategy, he reinforces that Internet “makes strategy more essential than ever.” Due to straight language used in the Article, Porter writes for an audience that has direct interest in Technology and its benefits, such as students/lectures and companies management roles. Although, he does not make use of technical language, so well-educated readers in general are able to follow his arguments.

Reflecting on Porter’s article, he distinguishes interesting scenarios to be discussed. To begin with, the topic that discuss the internet and industry structure has valuable arguments. Reflecting on the 5 forces of competitive advantage, the threat of substitute product or services should have a rapid response in order to remain competitive. For instance, Blockbuster is a real example of how a company has its strategy surpassed from a business rival. Furthermore, leading to a total disaster as happened when Netflix came up with its innovative approach of renting online movies, and Blockbuster did not respond or restructure its business strategy. Using this approach, it is reflected on how important time is, and perhaps crucial on companies at the making decision process. In this case, Blockbuster, might have felt too confident on their business structure and customer loyalty. Perhaps, they did not realize the change in the business environment. Time wasted for not taking the risk, or responding to a threat, can have hugely negative impacts in companies.

Business strategy could be revised and changed if necessary. Companies may benefit from becoming flexible to changes in any aspect, mainly after the introduction of the internet. There is a need on identifying internet impacts to your business, whether positive or not, followed by a fast response to the phenomenon. Companies have higher chances in retaining the competitive advantage and follow the market changes.

The bargaining power of suppliers is powerful in terms of downsizing a company competitive advantage. Because what was, before globalization, perhaps unreachable nowadays could interact directly with the end customer. We can import cheaper and normally good quality products. For example, import from China and without the need of a third company increasing the cost for the final customer. Business such Ali express, Amazon, EBAY and Airbnb, are disruptive technologies that found a way to gain advantage through the increased bargaining power of suppliers. In other words, they facilitate the interaction between customer and supplier.

Overall, internet decreased the barriers for new competitors' entry. Companies do not need to be as big as a branded name to become its business rival. And perhaps have developed a better competitive advantage strategy capable of taking over the market. The internet make viable the entry of service that was done physically and would be very demanding and cost expensive. For instance, airlines claims, that most people, would not claim for airlines flights cancelled, in order to avoid the bureaucratic and time consuming process. However, Airhelp.com, facilitate the channel between solicitor and customers, transforming the whole process in online consultancy which is for free until you claim your fee back, and there is the commodity of registering your claim at the comfort of your house. Additionally, the internet give the ability, for the service provided, in breaking geographic barriers. A higher visibility of the product/service that potentially will gain higher income.

There are so many possibilities to develop, improve and expand business using the internet!