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As palladium prices have increased, one electronics components manufacturer has invested millions of dollars in new equipment to substitute a less noble metal for component leads. Automobile manufacturers are substituting plastics and aluminum 16 Chapter 1 for steel. The recreational boat industry converted almost entirely from wood to fiberglass, and is currently in transition to composite fibers for some parts of the vessel. How have the Internet and electronic commerce affected the five forces in the model?

Several of these involve brokerage and auction services. These new types of markets change the way in which buyers and suppliers interact and, thus, represent a new balance of power. It is safe to say that technological innovation like the Internet and electronic commerce affect all of the forces in the Porter model. Core Competence Another important view of strategy stresses the “core competencies” of the organization (Prahalad and Hamel 1990, 79). ” Management must combine corporate-wide technologies and production skills into competencies for competition.

Ford and GM are working on plans to allow the customer to specify and order a vehicle on the Internet through dealers. One problem is that dealers offer different prices and do not have to follow the manufacturer’s suggested price. B2B, as mentioned in chapter 1, is likely to dwarf business-to-consumer purchases. With companies like the automakers buying tens of billions of dollars’ worth of parts and supplies each year, shifting a small percentage to the Internet would make B2B far exceed B2C commerce.

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