Final answer:
In the world of the internet, a firm's biggest competitor could either be a well-established company or the firm itself, due to 'winner-take-all' markets and challenges in market entry and competition methods.
Step-by-step explanation:
Based on the provided text, in the world of the internet, a firm's biggest competitor could both be a well-established company in the same industry and the firm itself, as the internet gives smaller firms the ability to reach a broader audience beyond their local geographic area. This could lead to a market with more but smaller competitors. However, the internet also enables the creation of 'winner-take-all' markets, where one large company consolidates much of the market share, such as the cases of Microsoft in software or Amazon in online bookselling. With globalization and improved information and communications technologies, managing extensive operations has become easier, potentially leading to larger firms with more significant market power. The competitive landscape is shaped by factors like product similarity, the difficulty of market entry for new firms, and competition methods like pricing, advertising, and product differentiation.