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 network and how these ar worthless without a strategic approach. He uses his own five forces compend to analyse the covert in(p) forces of competition, this analysis is necessary to illuminate areas of potential profitability. Applying this temporal to the banking attention uncovers interesting revelations. The threat of substitutes in the banking industry is luscious in that switching costs are low or non-existent for domestic accounts, which ensures that rivalry is intense and the market remains heartfelt in the simple sense. However, most established companies have softwood up subsidiary online companies to take advantage of arbitrage opportunities. HSBC with rudimentary Direct, Abbey National with Cahoot and Prudential with Egg all these companies illustrate winner as an Internet company that is dependent upon support and picture s how 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 nest egg in terms of logistics and communication systems. These cost savings barely can be detrimental to the industry in which they are achieved in that they reduce profits by means of creating change magnitude 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 offer s from online 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 neediness to energize a full essay, order it on our website: BestEssayCheap.com

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