Teaching Notes

Case 12 Teaching Note Google’s Strategy in 2010*

Teaching Outline and Analysis

1. Discuss competition in the search industry. Which of the five competitive forces seem strongest? weakest? What is your assessment of overall industry attractiveness?

The bargaining power and leverage of buyers—a moderate competitive force Students should not confuse search engine users with buyers of search engine services. The buyer-seller relationship is between the search engine company and the companies that pay for its search-based ads. A second category of buyers includes companies that purchase search appliances to offer search functionality to intranets or corporate websites. Most students will find both types of buyers had a moderate amount of leverage in their negotiations with search engine sellers. The search engine companies have standard fees that are charged for both search appliances and searchbased ads. However, there are no meaningful switching costs for buyers, which puts poor sellers with poor performing search technology at a considerable disadvantage in the marketplace.

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Case 12 Teaching Note Google’s Strategy in 2010*

The bargaining power and leverage of suppliers—a weak competitive force Most of the technology that powers search engines is either developed internally or acquired, so students will likely conclude suppliers to the industry are very weak in their relationships with search engine companies. Computer hardware and telecommunications equipment are the major purchased inputs into delivering search results and students will universally agree that these products are readily available from a number of suppliers. It should be assumed that search engine companies are able to negotiate for low prices when purchasing large numbers of servers and accepting bids on telecommunications services. Competition from substitutes—a weak competitive force Memorization of URLs, using a favorites list, or perusing wiki sites are among the few...