The following document is a representation of our findings of the 6 questions relating to work book Crafting and Executing Strategy (18th edition), Case 9: Google’s Strategy in 2010. The work entailed in this document was equally divided among our team members and is based upon our knowledge obtained from our class participation and research study of the case, as part fulfillment of Strategic Management module for fourth year Bachelor of Business in G.M.I.T.
Discuss competition in the search industry. Which of the five competitive forces seem strongest and which seem the weakest? What is your assessment of overall industry attractiveness?
a) Five forces model analysis for search industry:
1. Power of rivalry : Strong
The rivalry of competing companies in the search industry was very strong. The search industry consisted of Internet search, mobile search and television search. Primary rivalry between search engines Yahoo and Microsoft. * Strong competitors like Yahoo, Microsoft and Baidu and they owned large number Internet users. * While Google had nearly 147 million unique Internet users each month, Yahoo owned 130.5 million Internet users each month. In addition, since Microsoft and Yahoo came to an agreement in 2009 that would make makes Yahoo’s monthly user double. * Baidu owned 65% of market share in Chinese market. (300 million+ Internet users in total) * Microsoft is active in making fresh moves
* In 2008, Microsoft paid more than $100 million to acquire Powerset, which was the developer of a Semantic search engine which offered the opportunity to surpass the relevancy of Google’s search result and Microsoft’s developers were focused on increasing the speed of its Semantic Search capabilities. * In July 2009, Microsoft and Yahoo came to an agreement that would make Microsoft Bing Yahoo’s imbedded search engine for a period of 10 years. * Rapid market growth included Internet search, mobile search and television search. * Mobile search market is competitive through alternative search engines offered through different Operating Systems search Windows Phone, Blackberry, Apple’s iOS. 2. Threat of new entry: Low
* From the fact that after all these years the search industry has probably reached the stage where three big players (Google, Yahoo and Microsoft) are well established and controlling the industry, one could understand the industry has somewhat consolidated and less competent companies have already lost their chance in the race. * Also the fact that two of the main players after Google hold a very small market share (Yahoo 18.4% and Microsoft 12.1%, as opposed to Google’s 63.7%) suggest that new entrants would be looking at a really small market share potential for themselves. * Moreover, new entrants would firstly have to overcome the challenging barriers that represent the highly demanding resources, learning curve and capabilities needed to enter the industry at a big scale.
3. Threat of substitutes: Very Low
Google has developed an online based search tool that serves people across the globe and has indeed created an entire industry. As per such industry, the product here would be the provision of information to the people who search for it. * It can be hard to think of substitute products to Google’s search engine. * However, considering the provision and organisation of information as a product, there are indeed alternatives ways people can search and find the information they are looking for. People can search for information in newspapers and books for instance. Normally these means of information are charged a premium and definitely represent a more tedious search for the information. * Since Google provides its service totally free of charge and retrieves the information instantly, the above substitute’s products are by far less attractive in terms of price and functionality and pose a high...
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