The Impact of Internet Economy on Competitiveness of Traditional Enterprises - Airline Industry

Abstract

In the era of the accelerated development of the network, the Internet economy has been applied to various industries. Traditional enterprises combine their business with the Internet, which is called "Internet +" strategy. It is commonly thought that the development of Internet has positive effect on companys’ competitiveness. This paper provides quantitative data evidence for the viewpoint by doing regression analysis based on airline industry. The regression result shows that the positive relationship is valid in the respect of both external environment and company’s own development. Then, ratio analysis is also carried out to further study the changes in competitiveness of enterprises during the development of the Internet from the perspectives of financial indicators and market share. It can be found that IT development could improve a company’s revenue and profitability. However, assets turnover ratio may not be improved in the short period due to the possible mismatch of the increase of non-current asset and revenue. And the market share may even decrease because of simultaneous IT development of competitors, unless the company starts the transformation much earlier than others. And when a competitor starts the "Internet+" strategy, if the company does not catch up, there is a risk of being eliminited from the market.