MIS 250 Chapter Notes - Chapter 2: Switching Barriers, Open Shop, Network Effect
10 Feb 2017
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Document Summary
Five interrelated forces that in uence industry competition: porter"s model: threat of new entrants is very high when start-ups can open shop with little capital, few employees, and next to no experience. Industry incumbents must nd new ways to ward off newcomers and pro tability suffers. Existing incumbents in an industry try to keep newcomers out in many different ways, drawing on innovative use of information systems (is) Network effects increased value of a product or service that results simply because there are more people using it. Switching costs incur when customers change suppliers: loyalty programs raise switching costs and discourage new entrants, switching costs can be extremely high for is that organizations buy to manage their own records, power of buyers. Power rises when they have leverage over suppliers and can demand deep discounts and special services. Buyer power also rises when many suppliers offer similar products and the buyer can switch easily: power of suppliers.
