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 as marketing, brand name, knowledge of employees. * I think the suppliers have the strongest competitive power and the substitutes have the lowest competitive power. * The overall industry is still very attractive even though there’s an ongoing recession in the US. The users of Internet increase almost 55% in the US and Asia has a faster and larger growth. Internet advertising becomes the second most common form of advertising used in the US in 2007 and search-based ads accounted for the largest portion of Internet advertisements in the US in 2007. All these evidences show this is a growing market with lots of opportunities. Besides, with a low barrier of entry, many new investors would want to join the business.
2. How is the search industry changing? What forces seem most likely to bring about major change to the industry within the next three to five years? * Google believe that most computer software programs used by businesses would move from local hard drives or intranets to the Internet. And the Cloud Computing would become ta common software platform. So the first trend is the cloud computing. This would possible benefit corporate users lower software acquisition costs, lower computing support costs, and easier collaboration among employees in different locations. * The second trend can be mobile search or advertising. Google launched the Andriod operating system for mobile phones in 2008, allowing wireless phone manufacturing to produce Internet-enabled phones boasting feature similar to iPhone. * The other trends might include; internationalization of the search market, competition between Baidu and Google in China, merger with other search companies, or specialized engines for customer needs.
3. What are the key factors that define success in the industry? What are the key competencies, capabilities, and resources of successful search engine companies? Factors define success
* Consumer demand for innovative and interoperable...