“Strategy and the Internet” by Michael Porter

I think the first thing to keep in mind when reading the article is that Mr. Porter wrote the article in March of 2001 around the time of the Dot.com crash.  He also writes it in response to criticism that his Five Forces analysis is obsolete with the advance of the internet.  Today, 2011, we do not really see why critics even tried to dispute Porter’s Five Forces model.  This is because the market has equalized after the growth and bursting of the Dot.com bubble. 

At the height of the Dot.com era we saw a lot of companies do anything to say that they have a presence on the internet.  Web sites were giving away product to get their foot in the consumer’s door.  Executives were reporting significant revenue growth, but in some cases negative impacts to the bottom line. 

What I like about Porter’s article is that he proves that his original model still works.  On page 5 of the article it shows how the original Five Forces are affected by the internet.  The forces that stand out to me are the lowering of the barriers to entry, the shifting of bargaining power to the customer and the increased threat of substitutions because of the expansion of the market by the internet.

Clearly the advent of the internet has empowered the consumer.  They can instantly check prices, look at reviews of the product by other consumers, search other brands and even look online for other items that could be substitutions.  All without leaving the comfort of their home.  It allows them to efficiently shop saving gas money and time without having to drive all over town comparing prices.