Case 10

CASE 10

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 creation of the Web has forever changed the way people communicate and deliver information as well as products and services around the world. With this, the search industry is created and based upon the ability of providing higher technology to users, lower prices for advertising and the capacity to engage suppliers to subscribe to the search engine. Google’s five major competitors in the industry are Yahoo, Bing, Baidu, Ask, and AOL. Competition is quite tough considering the aim of the same target market with similar if not the same business and technologies.

Bargaining Power of Buyers. High. In 2010, 96% of Google’s revenues come from the advertising. This reliance on advertising sales gives the advertisement customers much bargaining power. Also, the industry is still quite new, thus there are more opportunities for growth for Google’s competitors which results to a high bargaining power of buyers.

Bargaining Power of Suppliers. High. It is hard to find people with the knowledge and skills of Google’s talent people. Thus, Google provides a lot of benefits and flexible working schedules to attract and keep these people in the company.

Threat of New Entrants. Low. The internet search engine industry has a higher than normal barrier of entry. Also, the current big players of the industry have high technology and a lot of knowledge on the industry. As a new entrant, to compete with them, you must have great knowledge and better, faster technology.

Rivalry among Competitors. High. All the competitors have similar products and services. Google has to constantly invent new applications, and improve their services in order to keep a strong competitive advantage.

  Threat of Substitute Products or Services. High. In order to gain and maintain loyalists, Google has to...