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Google: Porter’s 5 Forces Analysis
Porter’s 5 Forces analysis is a framework for industry analysis and business strategy development relative to the competitors of the firm.
Threat of New Entrants (Potential New Entrants)
The barriers to entry in the internet search market are high. Today, each competitor has its own thousands of servers set out in every location all over the world and continues to accumulate data for years about the internet users. In this industry, a new entrant must need to provide better search results at faster speeds to compete in a highly competitive market. It must have been realized by Google as it competes with the other search engine provider such as the Yahoo, AOL, Netscape and Microsoft’s MSN.
One aspect of this is the capital requirements. It is not easy for every company to enter this industry because of the substantial amount of capital and resources to put up to. Google have tried to differentiate its product of search engine of not only providing internet services but advertisement as well. There is no strict government policy that regulates internet services so this barrier is low.
Bargaining Power of Suppliers
Google is a popular and trusted search engine but is not globally dominant. However, Google’s advertising system is a unique feature of a search engine and has been a reliable source of income because of the makers of the advertisements and the receivers of these ads are both customers of Google. This capability of Google search product made its market dominance thus the supplier bargaining power is low. But, there is a threat of forward integration is possible because of the increasing capacity of its competitors such as Yahoo and MSN.
Rivalry among Existing Firms (Current Competitors)
Google’s stated goal has stated its goal as to “organize the world’s information” and they have created products to complement their main internet search service. In this industry, only few companies have the ability...