The Impact of Electronic Technologies on Competition - Essay Example

? The impact of E-technologies on competition --River Island Introduction The performance of industries in the global market is influenced by a series of factors. Usually, the potential of industries to keep their competitiveness at high levels is used as a criterion for evaluating the industries’ prospects in the future. The introduction of e-technologies has helped firms in all industries to increase their competitiveness. However, the benefits of e-technologies for each industry are not standardized. The literature published in this field indicates that e-technologies can highly benefit the competitiveness of businesses in all industries under the terms that certain rules are followed. The involvement of e-technologies in business activities is reviewed in this paper. Emphasis is given on a particular industry, the clothing industry. The firm River Island, an important competitor in the global clothing industry is used as an example in order to explain the potential value of e-technologies for the clothing industry, especially in regard to the industry’s competitiveness. 2. The impact of e-technologies on competition – River Island 2.1. Impact on consumers The use of e-technologies in business activities has been related to a series of benefits. E-commerce is a term used for showing the network of technologies available to businesses that choose to use Internet for expanding their operations (Morley and Parker 2009). Through e-commerce consumers have a series of benefits: a) they can have access to ‘a higher range of products and vendors’ (Bushry 2005); b) they are able to make their shopping without leaving their home (Bushry 2005); the convenience related to e-commerce has been characterized as one of this scheme’s major advantage; c) as noted above, through e-commerce consumers have access to a high range of products; as a result, the range of prices involved is also high (Bushry 2005); this means that e-commerce offers to consumers the advantage of choosing among products of various prices (Bushry 2005). In addition, through e-commerce consumers are able to compare among products of different prices and identify the products of the desired price (Bushry 2005). The comparison of products in regard to their characteristics and price is one of the most important features of e-commerce (Qin 2009); it seems that due to this feature the popularity of e-commerce as a business tool has been significantly increased the last decade (Qin 2009); d) Another important feature of e-commerce is the following one: because of e-commerce consumers can have access to valuable information in regard to products/ services available online (Bushry 2005). This type of information would not be retrieved unless through appropriately customized websites. From this point of view, it could be stated that e-commerce has led to the increase of power of consumers, an issue that is also discussed in the next section. 2.2 Impact on Pricing & Profits The use of e-technologies can highly affect the performance of clothing industry. However, in order to understand the potentials of the industry to increase its competitiveness it would be necessary to present and evaluate the industry’s competitive environment. The Five Forces model of Porter would be used for developing this task. In the context of the above model, the global clothing industry has to face five forces: a) pressures from suppliers; there are specific countries that are involved in the global apparel industry; in fact, China and EU are the industry’s major exporters, Figure 1; still, the industry’s prices are kept at standard levels; the industry’s suppliers are not expected to press for an increase in price, at least since the number of potential suppliers is high, as indicated in Figure 1 below. Figure 1 – Exports in the apparel industry (Source: Fernandez-Stark, K., Frederick, S. and Gereffi 2011, p.10) b) Consumers; e-commerce has allowed consumers to become more independent in regard to the review and ordering of products/ services (Qin 2009); On the other hand, prices in the clothing industry vary; consumers can choose the products that most respond to the customers’ needs for low price and specific quality (Qin 2009). This means that under the influence of e-technologies the power of consumers to press for decrease in prices in the global clothing industry has been increased; c) Substitute Products; in clothing industry, as in most industries, the chances for the appearance in the market of substitute products are many; consumers may prefer these products in case that these products are promoted through a website which is based on advanced technology (Lientz and Rea 2012); under the influence of e-technologies, a firm with a better website is often considered as more competitive than one that has not emphasized on its online presence (Lientz and Rea 2012); d) Industry Competition; competition in the global clothing industry is high (Berdine et al. 2008); The industry’s firms focusing on ‘the selling of clothing and accessories’ (Hoover 2013). The number of firms operating in this industry is quite high; the industry’s top firms are the following: ‘TJX Companies (TJ Maxx, Marshalls), Gap, and Limited Brands, Hennes & Mauritz, Zara and Topshop’ (Hoover 2013). One of the key characteristic of the particular industry is the following one: there are ‘50 firms that represent about 65% of the industry’s profits’ (Hoover 2013); Moreover, the performance of the technical textiles sector, a key sector within the above industry, shows trends for continuous increase from 2009 onwards (Deutsche Bank research 2011, Figure 2). In general, it seems that the industry’s performance is continuously increased, even slowly; for example, ‘the global market size of performance sportswear is currently estimated to $6.4bn’ (PRLog 2013); trends exist for further increase of about ‘18.75% by 2014’ (PRLog 2013). In this context, the competition in clothing industry is expected to remain at high levels in the near future. Figure 2 – Technical textiles – rate of growth, from 2000 to 2011 (source: Deutsche Bank Research, 2011, p.1) E) Competitors; most firms operating in the clothing industry have emphasized on technology for the promotion of their products (Schniederjans and Cao 2002); however, not all these firms can invest high amount of money on such projects; firms that can support their online operations more effectively are expected to be more competitive than those that cannot monitor closely their online needs (Schniederjans and Cao 2002). River Island has to face a strong competition not only in regard to its product but also in regard to its online presence. 2.3 SWOT analysis In order to check whether e-technologies could help River Island to increase its competitiveness it would be necessary to review primarily three of these technologies’ aspects: Reach, CRM and Delivery Services. The SWOT analysis would be used for developing the above task. The findings of SWOT analysis are presented below, in three tables, one for each of the elements mentioned above. The section Overview, as included in each of these tables, shows the potential value of the relevant aspect of e-technologies for River Island, especially in regard to the increase of the firm’s competitiveness. A. Reach Strengths E-technologies is a unique means for reaching consumers worldwide (Dann and Dann 2011) Weaknesses The information provided to consumer through e-technologies may not be carefully checked; in fact, the systems based on e-technologies have been related to safety problems of various types (Dann and Dann 2011). Opportunities The popularity of e-technologies, especially of social media, as a tool of reaching consumers, is high (Dann and Dann 2011); also, the number of users of social media seems to be continuously increase worldwide (Dann and Dann 2011). Threats A high percentage of consumers does not trust e-technologies in regard to daily transactions, including shopping (Dann and Dann 2011) Overview The use of e-technologies can help River Island to reach more consumers worldwide. B. CRM Strengths E-technologies help towards the improvement of communication between firms and consumers (Hinchliffe and Kim 2012) Weaknesses Failures in e-technologies used for enhancing CRM cannot be avoided (Ramesh 2008); these failures can refer to a variety of issues, such as the accuracy of data related to customers’ orders, the safety of customers’ personal details and so on (Evans 2010) Opportunities The number of consumers preferring e-technologies for communicating with retailers worldwide is quite high, with a sign of further increase (Hinchliffe and Kim 2012) Threats A high number of consumers is not able to use the Internet for shopping (Hinchliffe and Kim 2012) Overview The website of River Island can be considered as an important effort of the firm to increase its customer base; the firm’s website is well structured, securing the safety of transactions and the access of consumers to valuable information regarding the products available (River Island About Us 2013). Still, the improvement of its website, probably by the introduction of additional features, would help the firm to expand further its customer base and to develop its relationship with its customers. C. Delivery Services Strengths Through e-technologies the ordering of products/ services is facilitated (Skersys et al. 2012). Time is saved in regard to the ordering of products/ services, a fact that also helps to save time in the delivery of products/ services. Weaknesses Buyers cannot check the quality/ characteristics of products/ services (Skersys et al. 2012). Losses of products before their delivery to the customer are considered as a negative aspect of e-technology, as used in the clothing industry. Opportunities The online ordering of products/ services shows signs of continuous increase (Skersys et al. 2012) Threats The percentage of consumers who prefer to buy products by visiting the physical setting where the product is available is still quite high (Skersys et al. 2012) Overview River Island needs to secure the effectiveness of its website so that risks from safety failures are minimized; in this way, the firm will be able to increase the use of e-technologies in the delivery of its products 3. Conclusion The potential of organizations to increase their competitiveness can be limited under the influence of various problems. Even industries that are considered as quite powerful in the global market, such as the clothing industry, can be highly affected by economic pressures in markets internationally. The use of tools such as e-technologies can secure the performance of the industry’s firms; however, the ability of these tools to support the industry’s growth in the long term is not guaranteed. Of course, as explained above, e-technologies can offer a series of advantages to firms in all industries. For the firms operating in the clothing industry a similar assumption can be developed. Still, it has been made clear that e-technologies can enhance an industry’s competitiveness only if certain terms are met: the limitation of global market turbulences and the stabilization of global political environment would help the industry to secure its competitiveness in the long term. References Berdine, M., Parrish, E., Cassill, N. and Oxenham, W., 2008. Measuring the Competitive Advantage of the US Textile and Apparel Industry. Alfred P.Sloan Foundation. Available at http://web.mit.edu/is08/pdf/Parrish.pdf Bushry, M., 2005. E-Commerce. New Delhi: Firewall Media. Dann, S. and Dann, S., 2011. E-Marketing: Theory and Application. New York: Palgrave Macmillan. Deutsche Bank Research, 2011. Textile and Clothing Industry. Available at http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000275381/Textile+and+clothing+industry%3A+Innovation+and+internationalisation+as+success+factors.pdf Evans, D., 2010. Social Media Marketing: The Next Generation of Business Engagement. Hoboken: John Wiley & Sons. Fernandez-Stark, K., Frederick, S. and Gereffi, G., 2011. The Apparel Global Value Chain. Available at http://www.cggc.duke.edu/pdfs/2011-11-11_CGGC_Apparel-Global-Value-Chain.pdf Hinchliffe, D. and Kim, P., 2012. Social Business By Design: Transformative Social Media Strategies for the Connected Company. Hoboken: John Wiley & Sons. Hoovers, 2013. Clothing stores Report summary. Available at http://www.hoovers.com/industry-facts.clothing-stores.1519.html Lientz, B. and Rea, K., 2012. Start Right in E-Business. London: Routledge. Morley, D. and Parker, C., 2009. Understanding Computers 2009: Today and Tomorrow. Belmont: Cengage Learning. Qin, Z., 2009. Introduction to e-commerce. New York: Springer. PRLog, 2013. Global Market Review Of Performance Apparel - Forecasts To 2014. Available at http://www.prlog.org/10138929-global-market-review-of-performance-apparel-forecasts-to-2014.html Ramesh, K., 2008. Conceptual Issues in Consumer Behaviour. The Indian Context. New Delhi: Pearson Education India, 2008 River Island, 2013. About Us. Available at http://us.riverisland.com/inside-river-island/nxyf/about-us River Island, 2013. Suppliers. Available at http://us.riverisland.com/inside-river-island/about-us/nxzd/suppliers Schniederjans, M. and Cao, Q., 2002. E-Commerce Operations Management. Singapore: World Scientific. Skersys, T., Butleris, R., Nemuraite, L. and Suomi, R., 2012. Building the E-World Ecosystem: 11th IFIP WG 6.11 Conference on E-Business, E-Services, and E-Society, I3E 2011, Kaunas, Lithuania, October 12-14, 2011. New York: Springer. 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