Google Case
1. Discuss competition in the search industry. Which of the five competitive forces seem strongest? Weakest? What is your assessment of overall industry attractiveness?
Search engine industry is built on search and also advertising. It seems like there are only five major competitors in this industry competing with Google. I think the competition is tight because most of them are target the same market and conducting the similar business and technologies. The five major companies are Yahoo!, MSN, Baidu, Ask, and AOL. * Bargaining power of buyers- in both 2007 and 2008, 97% of Google’s revenues came from advertising business. The rest 3% of its revenues were made by other businesses. The advertisement customers have power to bargain because Google relies on its advertisement sales too much. In addition, since this industry is relatively new, there are still growth opportunities for Google’s current or potential competitors which result in high bargaining power of buyers. * Bargaining power of suppliers- talent people are Google’s suppliers. It’s too hard to get a person with the knowledge and skill that it wants, and therefore, Google provides lots of benefits and flexible working schedule to attract and keep them in company. Therefore, suppliers also have a high bargaining power. * Substitute- as a search engine or as a advertisers, there’s few powerful or suitable substitutes can replace Google. * Potential entries- Internet search engine industry has a low barrier to prohibit new potential entries to enter. Current big players exhibit a high technology and a lot of know-how. Although the barrier is low, new entries must provide better and quicker search results then other competitors. They have to win others with better and quicker service, which are hard. * Rivalry- the major rivalries are Yahoo! And Microsoft. However, the truth is that all competitors have a similar services and products. Competition is based on non-price dimensions, such
Search engine industry is built on search and also advertising. It seems like there are only five major competitors in this industry competing with Google. I think the competition is tight because most of them are target the same market and conducting the similar business and technologies. The five major companies are Yahoo!, MSN, Baidu, Ask, and AOL. * Bargaining power of buyers- in both 2007 and 2008, 97% of Google’s revenues came from advertising business. The rest 3% of its revenues were made by other businesses. The advertisement customers have power to bargain because Google relies on its advertisement sales too much. In addition, since this industry is relatively new, there are still growth opportunities for Google’s current or potential competitors which result in high bargaining power of buyers. * Bargaining power of suppliers- talent people are Google’s suppliers. It’s too hard to get a person with the knowledge and skill that it wants, and therefore, Google provides lots of benefits and flexible working schedule to attract and keep them in company. Therefore, suppliers also have a high bargaining power. * Substitute- as a search engine or as a advertisers, there’s few powerful or suitable substitutes can replace Google. * Potential entries- Internet search engine industry has a low barrier to prohibit new potential entries to enter. Current big players exhibit a high technology and a lot of know-how. Although the barrier is low, new entries must provide better and quicker search results then other competitors. They have to win others with better and quicker service, which are hard. * Rivalry- the major rivalries are Yahoo! And Microsoft. However, the truth is that all competitors have a similar services and products. Competition is based on non-price dimensions, such