How does Information Technology alter Porter's 5 Forces

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Five Forces (Porter) | Five Forces Analysis > Best Practices > How does Information Technology alter Porter's 5 Forces

How does Information Technology alter Porter's 5 Forces
Thabiso B Chele
How does Information Technology alter each of the five competitive forces in Porter's five forces model?

How does Information Technology alter Porter's 5 Forces
Emmanuel Duru
It may affect Porter's 5 Forces but not totally, considering that there are inherent factors which cannot be manipulated digitally. Any outcome will be an assumption; which may not be absolute. So, it takes a lot of understanding of the environment for which the 5 forces model is applied.

The dynamics of the forces may be changed
Hemant Johri
The 5 competitive fundamental forces do not change with IT. They remain the same. However: IT may change the dynamics of these forces. What IT does is listed below:
1. It can make information available at higher speed.
2. As a tool it provides speed and accuracy in preparation, processing and analysis of available data.
3. When applied in an industry it can lead to transformation or innovation of processes. This may provide competitive advantage to the firm either in terms of cost reduction or by disruptive innovation.

4 ways in which IT alters Porter's 5 Forces
Jimish Shah
1. IT may increase the buyers bargaining power as information of substitutes and prices are easily available.
2. IT can help bring suppliers and the firm together and work in collaborative mode. This will be an added advantage for the firm over its rivals.
3. Software packages like CRM, SRM, PLM can improve the competitive position of the firm and increase collaboration between all the entities in the Supply Chain.
4. IT can be used to improve processes and efficiency. This can help the firm to be cost effective and technologically advanced. This will increase the barriers for entry for new entrants.

Add Stakeholders Concept
carlos medina turon
I recommend to review the concept "STAKEHOLDERS" besides the 5 Forces once you have to ask for opportunities and forces, regarding Labor Markets, Communities, Universities that feed professionals, Media, Banking and Insurance Companies, Environmental Agencies, Non Govt. Organizations, Tax Agencies, all Stakeholders providing opportunities and forces as long as they are related to the company of course.

The validy of Information Technology
I think that IT can influence all of the five forces but we must be careful about information how sure it is. Also: is the technology good enough like it is? And: can it help me to do something in my business? And: how much will be the costs to my budget to use this technology... And: some technologies have a life time and have to be substituted or changed...

Information Arbitrage
Muder Chiba
Essentially, the same points that the other are making... It would affect decision-making using the model insofar that the better users of IT would be able to gain superior leverage. This leverage would come about through faster information flows, enhanced data interconnections / trend spotting and superior information sharing for decision-making.

IT does alter Porter's 5 Forces
Kwame Yeboah
Which ever way one looks at it, IT DOES alter the 5 forces (compared to the traditional forms in which it does).
THREAT OF NEW ENTRANTS: Since the power of the internet has made the world a global village, it is easier for our Chinese brothers (for example) to reach people in Ghana with textile products for instance, hence competing with the industry here in Ghana.
THREAT OF SUBSTITUTES: India is offering a substitute to the expensive American data entry clerk's services by working online at a much cheaper cost to the American employer (via the internet)
BARGAINING POWER OF SUPPLIERS: There are many more suppliers now than those from ones immediate locality or country so suppliers aren't that powerful any longer.
INTENSITY OF RIVALRY: There is surely more rivalry now. Zenith bank is now in Ghana (along side several other Nigerian banks) and they don't only reach me through the local media but also through CNN! The local banks have no choice but to sit up!

The Porter Model and IT Strategy
John D. Ramos, Senior Financial/Business Analyst, United States, Member
The Porter forces are inherent in the 21st century - it's no longer enough to attempt to align information technology strategy with the strategy of the business enterprise; such alignment is integral, but with globalization the world has changed to the point that information strategy needs to be a part of business enterprise strategy from the beginning, not a "me too" follower. Utilizing the forces in unison with business logic can enable several strategic advantages such as, improving operating efficiency by leveraging technology apparatus for automation of payroll, order entry, jit, etc. The key is execution.

Found no Impact of IT on 5F
Harsh Vardhan, Strategy Consultant, India, Member
Having worked through several clients as a strategy consultant I was consciously looking at the Internet impact on 5F. Though temporarily it may add to bargaining power of buyers, may increase rivalry with the online firms as with e-commerce, but in the final run I do not find any significant impact.
In fact I do find great relevance of 5F in explaining many ills in the IT industry especially the online industry, something the industry needs to recognize. Much of the Internet industry is itself in a state of flux thus their momentary impact is not a cause of any concern yet.
However we should certainly keep studying the emerging technologies to see some true disruption.
Yes once force that surely merits mention is the government agencies as business stimulators or inhibitors esp in the emerging markets.

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Five Forces (Porter) | Five Forces Analysis
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