Porter 2001 Wrote: "The Internet then Is Often in Many Cases It Actually Makes Those Sources Even More Important"

Porter's (2001) statement from his article Strategy and the Internet summarises his discussion on the relative advantages of the Internet and how these are worthless without a strategic approach. He uses his own five forces analysis to analyse the "underlying forces of competition", this analysis is necessary to "illuminate" areas of potential profitability. Applying this framework to the banking industry uncovers interesting revelations. The threat of substitutes in the banking industry is high in that switching costs are low or non-existent for domestic accounts, which ensures that rivalry is intense and the market remains efficient in the simple sense. However, most established companies have set up subsidiary online companies to take advantage of arbitrage opportunities. HSBC with First Direct, Abbey National with Cahoot and Prudential with Egg all these companies illustrate success as an Internet company that is dependent upon support and image of an established company. This complies with what Feeny (2001:2) identifies as "established companies and new competitors...forging links."…