Google is among those few business names which are popular like among public without concerns of their demographics and geographies. Everybody is well aware of what Google is, and the basic functions that it provides to the users. Google is a very well-known search engine that provides the biggest platform for all the websites to get searched by the people who need them. Porter’s five forces model would tell us about the major forces that play part in making business successful or unsuccessful (Michael, 2008). Google has now become a very big organization and people from all over the world are part of this organization and thus it faces different challenges from the environment, which are discussed below. Porter’s five forces model has been used to discuss these forces.
Bargaining Power of Suppliers
Google is locally not internationally dominant. Suppliers are different from different sectors. As the competition level is too low right now so the supplier’s bargaining power is less, but still it has to look forward to future where huge search engines can strike the customer base of Google. No of suppliers are huge in each sector thus it makes Google to stand at a stronger position (Siohong, Sean and June, 2008).
Microsoft is trying to embedding their search engine tool into their Explorer browser and thus this would increase bargaining power of suppliers. Threat of forward integration could also be a possible threat which would raise the bargaining power of suppliers existing in the market. Google search might not be working in combination with the new software releases from Microsoft and Apple.
Threats of New Market Entrants
[large]No perfect search engine exists till yet and thus it always remains a threat that any time a new entrant will enter the market and will wipe the previous search engines like Google did. And as almost 40% of the company revenue generation is through advertising which comes from the search engine, so this threat has to be taken very serious and Google has to work on the principles of continuous improvement.
Few major actors which are in the favor of Google are that being highly embedded in user’s mind it’s very difficult to take over such customer loyalty. Switching costs are also hardware related which again needs huge accuracy standards thus would require high level of efficiency in the system. But as there is minor ‘legislative interference’ so this will almost certainly alter web reference to Google.
Competitive Rivalry in Existing Firms
Although if we look at the existing search engines like Yahoo and Microsoft they are also getting faster in reaching the standards of Google and may be later sometimes if they work with commitment and innovation they may pass the search tools with their features. Online technologies that have been advertised daily about good and bad practices might affect the Google’s expertise or attitude.
As the rules and laws for the online businesses have not yet been defined properly so, the exploitation and manipulation is easy. Presently there are just two rivals (Microsoft & Yahoo) so the degree of rivalry wipes in form of monopolistic competition and this could attract the consideration of UN or other countries as a constraint of trade in the upcoming year. Another point is that the existing names do not have any switching costs which make them work more strongly and free of tension.
Brand identity is very important when it comes to rivalry and existing firms so Google has a very strong impression and string brand identity which would make it more competitive in the present times. Search engines are of multiple uses they can be used in combo with different tools like eBay’s searching tool is Google. While beyond all this improvement in the features and tools of the search engine is a very important task that the specialist have to perform for these search engines.
Threat of Substitutes
Substitute product here for the online business and secondly a search engine would be based on the speed and accuracy of the searching tools. Along with that he overt ads and pages that are downloaded with the wanted links are also an issue to go for a substitute. The users of these search tools like Google are challenging more services and intricacy or superiority with the search tool to persistently ‘loyal’ to its usage.
Ad Revenues are right away related to usage, even if Google loses a very little number of users on its search engine this would cause a huge loss to the revenues being generated by the company. Technology innovation requires tremendously skilled labor; high intensity of rivalry for limited sources is very tough. If a company losses trade secrets or if skilled labor moves from one search generating company to another so it can create huge losses.
Bargaining Power of Buyer
Buyers here would be the people who are using Google throughout its existence till now. As there are a lot of search ranking forums where the visitors and users can take part in bargaining so this increases there bargaining power. Low rankings would highly influence the users choice. Another upcoming issue is that users of the search engines are getting more erudite and thus asking for other value added services also for free. Although competition level is low but quality would certainly take away all the users in a blink of eye. No search tool can be perfect as people’s demands change with the changing technology and easy to use tools every day and company who want to pace up with that has to focus on day to day research of customers’ needs and demands. Threat of backward integration also makes the system to be more competitive and to increase the power of buyers.
Siohong Tih, Sean Ennis and June M. L. Poon (2008). Attitude towards Online Retailing Services: A Comparison of Student and Non-Student Samples. Asian Academy of Management Journal, Vol. 13, No. 1, 113–126.
Micheal Porter. (2008). The Five Competitive Forces That Shape Strategy. Website: http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/ar/1 Retrieved: 25th September, 2012.