Q. Porter 2001 wrote: "The internet then is often ..in many cases it actually makes those sources even more important." Discuss this statement on the banking sector

Porters (2001) statement from his article Strategy and the network summarises his discussion on the relative advantages of the profit and how these ar worthless without a strategic approach. He uses his own five forces analytic thinking to analyse the unverbalised in(p) forces of competition, this analysis is necessary to illuminate aras of potential profitability. Applying this bodily to the banking industriousness uncovers interesting revelations. The threat of substitutes in the banking industry is dark in that switching costs are low or non-existent for domestic accounts, which ensures that rivalry is intense and the market remains dear in the simple sense. However, most established companies have fold up subsidiary online companies to take advantage of arbitrage opportunities. HSBC with basal Direct, Abbey National with Cahoot and Prudential with Egg all these companies illustrate winner as an Internet company that is dependent upon support and photo of an established company. This complies with what Feeny (2001:2) identifies as established companies and new competitors...forging links. In Porters analysis the Internet mess bring substantial cost savings in terms of logistics and communication systems. These cost savings even can be detrimental to the industry in which they are achieved in that they reduce profits by means of creating increase competition.

The Internet as stated by Porter (2001:64) alters industry structures in slipway that dampen overall profitability. This whitethorn be true(a) of the banking industry, as established banks must compete with offers from on-line banking companies in order to remain competitive. Cooke et al (2001) in Wheelen and starve (2001:13-1! ) relates this through a US example of new Internet hardly entrants on-line banks such as Telebank, Netb@nk and Security prime(prenominal) mesh Bank. The suggestion is that bricks and mortar locations are expensive and online transactions are overmuch cheaper and that Internet banks could pass cost savings onto customers as... If you wish to energize a full essay, order it on our website: OrderEssay.net

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