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How digital business disrupts the five forces of industry competition

Nicholas D. Evans | Aug. 28, 2015
Exactly why is digital business so disruptive to traditional business models and traditional notions of industry competition?

The rivalry is heating up because entry and exit barriers are going down due to the comparative low-cost of digital business models, and in many cases new entrants do not even need to own physical assets or infrastructure. In particular, the “platform” model is seeing considerable success in the marketplace by simply connecting stakeholders and applying a set of peripheral services to enhance the customer experience.

By doing so, platform operators are moving to the forefront of service delivery and getting closer to the customer without even owning assets or employees working in that particular industry. According to a recent article in The Guardian, “Today, any service provider, and even content provider, risks becoming hostage to the platform operator, which, by aggregating all those peripherals and streamlining the experience of using them, suddenly moves from the periphery to the centre.

Overall, as you prepare your various digital business initiatives, the five forces framework can be a useful way to think about the various headwinds and tailwinds acting on your envisioned model and how various constituents may react. In combination with the usual value chain analysis, it can help to inform your strategy and provide some useful insights into what you may encounter along the way.

If you enjoyed reading this article, and would like to learn more about the topic of transformation, you might want to register for the CIO Summit 2015. Attendance is complimentary for qualified registrants. Please visit http://www.cio-asia.com/summit2015.

 

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