The Internet or World Wide Web - which is the network of computers linking individuals and organisations worldwide - has undoubtedly enabled some firms to gain a competitive advantage, through reducing the cost and increasing the efficiency of transactions. There are some celebrated examples of firms which have seemingly changed the nature of competition in their markets, and used the Internet to forge new markets. For example, Amazon.com's entire business proposition is to supply low-cost products to consumers through a direct relationship conducted over the Internet. Similarly many airlines - e.g . Ryanair, British Airways - are reducing the cost of ticketing operations and cutting out intermediary agents by selling directly to the consumer. Some markets where there is no 'physical' product - e.g financial services - are particularly suited to being bought and sold over the Internet, and there are industries under genuine threat from the Internet e.g.
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Yet clearly not all business is suitable to be conducted over the Internet. For example, I cannot get my car fixed without taking it to a mechanic. However, there is often scope for the Internet to play in the 'value chain' process - e.g. my mechanic could buy discounted spares over the Internet. The short answer to the question therefore is that it depends upon the particular circumstances in which the firm is operating and there are no simple rules. Nevertheless, it is clearly important for firms to be aware of the potential offered by the Internet for conducting business, particularly in reducing cost and efficiency to the customer. It is therefore recommended that all firms, whatever size or in whatever industry, think strategically about how to respond to the challenges posed by this new mode of doing...