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Key Terminology and Evolution of e-Business Read chapter Read first chapter

2020 | OriginalPaper | Chapter

3. External Analysis: The Impact of the Internet on the Macro-environment and on the Industry Structure of e-Business Companies

Authors : Tawfik Jelassi, Francisco J. Martínez-López

Published in: Strategies for e-Business

Publisher: Springer International Publishing

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Abstract

This chapter firstly provides a framework for analyzing the macro-environment. Secondly, it discusses Porter’s five forces framework for analyzing the attractiveness of an industry. It also analyses the impact of the Internet on each force of Porter’s framework, i.e., industry rivalry, barriers to entry, threat of substitute products, and the bargaining power of buyers and suppliers. Thirdly, this chapter presents the co-opetition framework, which offers an alternative perspective for industry analysis. Finally, it addresses the question of how to define industries within which to compete and how to segment specific customer groups that a business should target through its e-business offering.

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previous chapter Overview of the e-Business Strategy Framework
next chapter Internal Analysis: e-Business Competencies as Sources of Strengths and Weaknesses
Footnotes
1
For a detailed explanation of these terms, refer to Forbes Technology Council, “Top tech trends in 2019: 11 experts detail what you need to watch,” Forbes, 20 December 2018.
 
2
A good discussion of macro-environmental influences can be found in Johnson et al. (2005). A more e-commerce- specific discussion of environmental factors is contained in Chaffey (2002), pp. 143–156.
 
3
“Facebook to stop routing ad revenue via Ireland amid pressure over taxes,” The Guardian, 12 December 2017
 
4
“Windows of opportunity,” The Economist, 15 November 2003, p. 61
 
5
Cookies are text files stored on a PC that allow the website operator to identify that PC.
 
6
Spam is unsolicited e-mail messages
 
7
Orendorff (2017). See also: Grant (2018)
 
8
VoIP telephony stands for “Voice over Internet Protocol”. For acquisition details see Microsoft News Center (2011) and Arrington (2005).
 
9
For an illustrative example, see, in the second edition of this book, the case study “Second life. Mercedes-Benz enters the metaverse,” pp. 525–547.
 
10
Anderson (2017). See also Waldhuter (2017)
 
11
TCP specifies how information should be separated into individual packets and reassembled at the destination. IP specifies how individual packets should be sent over the network. HTTP is a method of jumping back between different files. HTML is a computer language for formatting hypertext files. J. Cassidy provides an informative account of the most important Internet standards and technologies in his book entitled Dot.con, Perennial, 2003, pp. 16–24.
 
12
For a detailed discussion of industry analysis, see Porter (1998), pp. 3–34.
 
13
The five forces industry framework is described in Porter (1998), p. 5.
 
14
R. D’Aveni suggests that levels of competition have risen in the past decade, leading to a phenomenon that he calls “hypercompetition” (see D’Aveni 1995). However, G. McNamara, P. Vaaler and C. Devers have empirically tested this thesis and have not found conclusive evidence for an intensification of competition (see “Same as it ever was: the search for evidence of increasing hypercompetition,” Strategic Management Journal, 2003, Vol. 24, No. 3, pp. 261–278).
 
15
“Software’s great survivor,” The Economist, 22 November 2003, p. 70
 
16
The source of the data involved in this paragraph is Statistica, 2018. Available at 7 https://​www.​statista.​com
 
17
The concept of ‘co-opetition’ was developed by A. Brandenburger and B. Nalebuff, Co-opetition, Currency Doubleday, 1998. It entails simultaneously cooperating and competing with other companies.
 
18
For a deeper analysis of these coalitions’ effects in the e-commerce context, see the chapter by J. Prieger and D. Heil, published in F.J. Martínez-López (Ed.), op. cit.
 
19
N. Argyres and A. McGahan published an interview they conducted with Michael Porter in the Academy of Management Executive, 2002, Issue 2, pp. 43–53.
 
20
such as Rita Gunther McGrath of Columbia Business School
 
21
For an extensive discussion of market segmentation, see Kotler (2005), pp. 251–296.
 
22
See also Hutzschenreuter (2000), pp. 28–29.
 
23
The Women in Technology website is 7 https://​www.​wit.​org.​au/​.
 
24
This segmentation becomes apparent on the opening page of 7 www.​dell.​com, where visitors can choose between different segments.
 
25
Based upon the Pareto Principle. See also Marshall (2013).
 
Literature
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Arrington, M. (2005, September 12). Skype sells to eBay for $4.1 Billion. TechCrunch.
Bradshaw, T., & Digital Media Correspondent. (2011, July 27). Vodafone and Facebook team up on smartphone. Financial Times.
Bradshaw, T., & Ralph, O. (2019, January 30). Apple and Aetna team up on new healthcare app. Financial Times.
Chaffey, D. (2002). e-Business and e-commerce management. FT Prentice Hall.
D’Aveni, R. (1995). Coping with hypercompetition: utilizing the new 7S’s framework. Academy of Management Review, 9(3), 45–57.
Foster, L. (2006, February 7). Luxury goods create new online market. Financial Times.
Grant, M. (2018, August 14). E-commerce set for global domination – But at different speeds. Forbes.
Hall, W. (2018, December 11). The Internet risks fracturing into quarters. Financial Times.
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Hill, A. (2010, September 26). Michael Porter, Management thinker – Academic who shares his values. Financial Times.
Hungenberg, H. (2014). Strategisches management in unternehmen. Gabler.
Jelassi, T., Enders, A., & Martínez-López, F. J. (2005). Strategies for e-business: creating value through electronic and mobile commerce: concepts and cases. Pearson Education.
Johnson, G., Scholes, K., & Whittington, R. (2005). Exploring corporate strategy. Harlow: Prentice Hall.
Kotler, P. (2005). Marketing management (pp. 251–296). New Jersey: Prentice Hall.
Marriage, M., & Ram, A. (2018, February 22). Big Tech faces UK tax on revenues, not profits. Financial Times.
Marshall, P. (2013, October). The 80/20 rule of sales: How to find your best customers. Entrepreneur.
Microsoft News Center. (2011, May 10). Microsoft to acquire Skype. Microsoft.
O’Hara, K., & Hall, W. (2018, December). Four internets. The Geopolitics of digital governance. CIGI Papers no. 206, Centre for International Governance Innovation.
Palmer, M. (2012, March 1). Cloud computing cuts start-up costs. Financial Times.
Porter, M. (1998). Competitive strategy. New York: Free Press.
Thomas, D. (2014, December 11). UK turns into nation of online shoppers. Financial Times.
Thornhill, J. (2018, April 30). Europe bets its data law will lead to tech supremacy. Financial Times.
Waters, R. (2012, April 12). Facebook shows it gets the message with Instagram deal. Financial Times.
Waters, R., & Bradshaw, T. (2012, January 10). Google searches to become personalised. Financial Times.
Watkins, M. (2011, March 7). Google buys UK price comparison website for £37.7m. Financial Times.
Brandenburger, & Nalebuff B. introduce the concept of co-opetition in their book Co-opetition, Currency Doubleday, 1998.
For a detailed analysis of the macroeconomic and competitive implications of e-business, see Prieger, J., & Heil D. (2013). Economic implications of e-business for organizations. In F.J. Martínez-López (Ed.), e-Business strategic management. Springer.
For a more detailed coverage of electronic markets’ segmentation, see Aljukhadar, M., & Senecal, S. (2011). Segmenting the online consumer market. Marketing Intelligence & Planning, 29(4), 421–435.
For a more in-depth analysis of the five forces, see M. Porter, Competitive strategy. Free Press, 1998b.
For an extensive discussion of market segmentation and market targeting, see P. Kotler. Marketing management. Prentice Hall, 2005, pp. 251–296.
For readers interested in app business, see Roma, P., & Ragaglia, D. (2016). Revenue models, in-app purchase, and the app performance: Evidence from Apple’s App Store and Google Play. Electronic Commerce Research and Applications, 17, 173–190.
In order to provide practitioners and students a practical yet comprehensive set of templates for applying five forces framework for industry analysis, see: Dobbs, M. E. (2014). Guidelines for applying Porter’s five forces framework: A set of industry analysis templates. Competitiveness Review, 24(1), 32–45.
Johnson, G., Scholes, K., & Whittington R. discuss the macro-environment of firms in Exploring corporate strategy. 7th edition, Prentice Hall, 2005.
Specific examples of segmentation variables in electronic markets are presented in Sen, S., et al. (1998). The identification and satisfaction of consumer analysis-driven information needs of maketers on the WWW. European Journal of Marketing. 32(7/8), 688–702.
Metadata
Title
External Analysis: The Impact of the Internet on the Macro-environment and on the Industry Structure of e-Business Companies
Authors
Tawfik Jelassi
Francisco J. Martínez-López
Copyright Year
2020
Publisher
Springer International Publishing
Book
Strategies for e-Business

Print ISBN: 978-3-030-48949-6

Electronic ISBN: 978-3-030-48950-2

Copyright Year: 2020

DOI
https://doi.org/10.1007/978-3-030-48950-2_3