Googles Strategy in 2010 by John Gamble - Essay Example

?Case analysis on Google’s strategy in by John E. Gamble Introduction Google operates in the in the search engine industry with other companies such as Microsoft and Yahoo. The industry is generally characterized by competition between its three major market players that offer almost identical products. Some consumers even use the companies’ tools without exactly knowing the service provider. Microsoft has however tried to market its product in a bid to distinguish it from others. The industry has majorly relied on advertisements as its major source of revenue. Consequently, each market player has focused developing technologies that can attract more audience to atttract advertisers. Such advertising prospects have been stable by the facts that the society is increasingly dependent on the web and the internet has become the best advertisement media. The industry has also significantly invested in capital and labor to help it meet the demand. Based on its services, the industry operates computer-based technology that utilizes its capital in acquisition and maintenance. Similarly, it requires human resource to update its system continuously, to facilitate search of information and to ensure that contents are constantly updated. The industry also identifies strong barriers to new entrants (Thompson, Strickland and Gamble, 2011). The general trend in the industry, based on its consistency in the past, exhibits the possibility of consistency in future and advertisements are expected to continue dominating the industry’s revenues in future periods. This is because of the increasing trend in reliance on the internet for communication, and other searches. The general trend in technological developments also means that the industry will continue to invest in equipments that power its services. Continuous development of information and the need to meet the advertisers’ needs also means that the industry must continue to update its systems. Another predictable trend in the industry is existence of few market players because of the strong barriers to entry that are expected to persist (Thompson, Strickland and Gamble, 2011). Porter analysis The porter’s analysis model is a tool for understanding competitiveness of a given market towards developing marketing strategies. It includes analysis of potential new entrants into a market, existing competitors, power of buyers, power of sellers, and availability of substitute commodities. All these factors are identifiable in the industry, though with varying significance. Competitive rivalry One of the significant forces in the industry is competitive rivalry, defining competition between established firms in the industry. Three major players that compete against each other in the market whose level of competition is moderate dominate the industry. Even though they do not exhibit strong rivalry among them, their percentage market control varies with Google as the market leader. The firms also have almost similar products, a factor that undermines existence of strong competition among them. There are however established forces by the market players and professional regulations, to expand individual’s market base of each firm, to retain their existing market and to ensure healthy competition among players. Product branding is one of the identified competitive factors as each company tries to reach the market by specialized products. The industry also has well defined rules that govern the three companies’ professionalism and ethical practice. Similarly, each of the industry’s players ensures competitiveness through creativity and innovation towards development of technologies that are aimed at improving competitive advantage through efficiency and utility. Competitive rivalry plays a significant role among the industry’s players and initiates strategies for competitive advantage such as branding, innovation, and product differentiation (Thompson, Strickland and Gamble, 2011). Threats to new entrants The search industry is majorly composed of few and established market players, Google, Microsoft, and Yahoo that have dominated the industry. Threats of new entrants are therefore weak. This is because of the observed trend in which no new entrant has been witnessed in the past years and identified strong barriers to entry. Technological needs in developing the industry’s application is one of the major barriers to new entrants. The already developed market base is also solid and is not likely to be influenced by a new player. These, among legal and economic barriers, ensure weak threat of a new market player into the industry. Threats of new entrants do not therefore affect the industry’s players (Thompson, Strickland and Gamble, 2011). Availability of substitutes Availability of substitutes is another significant factor in the industry and is categorically weak. This is because of the emergence of the internet as most used media in the society. Consequently, there is a shift in preference from other communication industries to the internet search engines. The industry’s product, majorly advertisements, are also more prominent that other advertisements in the internet because they are integrated in the search engines and reaches target audience regardless of their search targets. Other online advertisements are however restricted to their particular pages. Offline advertisements have also become secondary to the internet. Similarly, low cost of developing products together with required skills in developing the industry’s products also offers an advantage over substitute products. Existence of substitutes is therefore not a significant factor on the industry’s players (Thompson, Strickland and Gamble, 2011). Power of suppliers Power of suppliers is weak because it is difficult to identify. The weak supplier’s power means that it does not significantly affect the industry’s players (Thompson, Strickland and Gamble, 2011). Power of buyers Consumers’ power is also weak because of universality and the wide scope. Existence of few providers also contributes to the diminished power of consumers. Like the power of suppliers, buyers’ potential is insignificant on the industry’s players (Thompson, Strickland and Gamble, 2011). Driving forces Innovation and branding are the major driving forces in the industry. The factors play a major role in defining trend in the industry’s products. Innovation drives changes in the industry because it allows for development of applicable technologies and applications in the industry. Its results in product envelopment also add utility in the industry’s products. Similarly, branding promotes product development, and increases competitiveness and consumers’ utility in the industry (Thompson, Strickland and Gamble, 2011). Key success factors Innovation, branding, and advertisement are the key success factors in the industry. While innovation offers a key to product development and product differentiation towards market acquisition, branding offers direct utility and ensures competitiveness and advertisement keeps consumers aware of each company’s products and distinguishes the products from other companies for customer’s choices. Competitive analysis The industry’s competitive analysis identifies fair competitive potentials among the key players. All the players for, example enjoy, potential of the steadily increasing market size as the society increasingly relies on the internet. All the players also share the strengths of innovation and product branding. Google however has an advantage of controlled market share that establishes it over its competitors and is therefore able to benefit from developed image of the best service provider. The larger market share also means a wider economic base that allows Google stronger operational potential to maintain its position in the industry. It is for example in a better position to promote research and innovation towards product and technology development. Microsoft however has the strength of demonstrated ability to develop new products. Its new tool, Bing, which is identified for effectiveness, for example identify its strength and ability to gain more market power through product development (Thompson, Strickland and Gamble, 2011). Strategic mapping The following graph represents the industry’s strategic group map through market analysis. Based on the map, Google controls a larger share of the industry’s market and can therefore be associated with a better advantage over its competitors. Yahoo and then Microsoft follow it. Google should therefore focus more on market retention while Yahoo and Microsoft should focus on expanding their markets. Industry’s market control (Bhatia, Deep and Sachdeva, 2012) Industry’s strategic group map by market share Industry’s profile and prospects Three major players, Google, Yahoo, and Microsoft, therefore dominate the industry. Porter’s analysis identifies competitive rivalry as the major significant factor in the industry. Availability of substitutes and threats of new entrants are insignificantly felt while buyers and sellers’ power are not significantly defined in the industry. The industry’s players enjoy advantages of innovation and product diversification as universal strengths while Microsoft projects higher prospects of developing new products. Google controls a majority of the industry’s market and has the highest competitive advantage in the industry followed by Yahoo and then Microsoft. The developing trend of the industry’s marketability and restricted entry of new players therefore makes the industry attractive to the existing players. Reference Bhatia, A., Deep, G. and Sachdeva, A. (2012). Strategic analysis of search engine giant: A case study of Google Inc. International Journal of Computing & Business Research. Retrieved from: http://www.researchmanuscripts.com/isociety2012/55.pdf. Thompson, A., Strickland, A. and Gamble, J. (2011). Crafting and strategy: Concepts and cases. New York, NY: McGraw-Hill/Irwin. Read More