7 bu481 midterm 2 questions list 1 2 2010 16 from the

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BU481 – Midterm #2 Questions- List 1 & 2 2010 16. From the article “Strategy and the Internet”, define and describe the concepts of cannibalization and channel conflict as they relate to the Internet in business. Porter discusses a number of shortcomings of the Internet. Define and describe two shortcomings of the Internet and how traditional business models can strategically overcome them. Cannibalization refers to the business process whereby engaging in one activity or practice necessarily eats into another activity or practice. Cannibalization can take place within a firm, between businesses, or across industries. Cannibalization became a crucial concern as e-commerce flourished in the late 1990s and early 2000s, since the efforts to cash in on the new commercial medium often sacrificed other business practices and sales channels Channel Conflict: Channel conflict refers to a situation in which business partners clash in some of their operations, such as distribution networks, in such a manner that it causes stress to the relationship, effectively turning them into both competitors and partners simultaneously. In the Internet-driven business world, channel conflict is a well-known phenomenon. As the online medium has forced separate players closer together, it has resulted in many of them stepping on each other's toes. 8
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BU481 – Midterm #2 Questions- List 1 & 2 2010 Shortcomings: Customers cannot physically examine, touch, and test products or get hands-on help in using or repairing them. Knowledge transfer is restricted to codified knowledge, sacrificing the spontaneity and judgment that can result from interaction with skilled personnel. The ability to learn about suppliers and customers (beyond their mere purchasing habits) is limited by the lack of face-to-face contact. The lack of human contact with the customer eliminates a powerful tool for encouraging purchases, trading off terms and conditions, providing advice and reassurance, and closing deals. Delays are involved in navigating sites and finding information and are introduced by the requirement for direct shipment. Extra logistical costs are required to assemble, pack, and move small shipments. Companies are unable to take advantage of low-cost, nontransactional functions performed by sales forces, distribution channels, and purchasing departments (such as performing limited service and maintenance functions at a customer site). The absence of physical facilities circumscribes some functions and reduces a means to reinforce image and establish performance. Attracting new customers is difficult given the sheer magnitude of the available information and buying options. MISSING: how traditional business models can strategically overcome them.
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