Suppliers in Google+ and Potential Entrants - Report Example

Task Suppliers and Potential Entrants Suppliers in Google+ Google plus is the latest invention by Google which allows its usersto share messages, photos, and videos among themselves. To Google pus, the customers, employees and stockholders are the most prestigious stakeholders. Suppliers have a small participation percentage in the company. Google makes use of numerous organizations and companies to supply to its technological and monetary supplies. For a powerful company such as Google, it also requires powerful suppliers to provide services. Powerful suppliers, however, have disadvantages because they tend to charge higher costs for the services they provide (Morrow). This restrains their profits. Google, however, has established standards concerning their suppliers so that they are able to counteract the power of the suppliers. Google’s commercial system is a consistent source of revenue because both the making and receiving associates are customers of Google plus. The invention of Google plus has raised Google’s supplier bargaining ability. This is because the company does not only provide the search product but also a networking site. Google has maintained an average supplier-seller relationship. Google plus requires suppliers to provide web pages for its customers. In terms of providing for monetary needs, Google relies on the advertiser. Its advertising, however, grew weaker because of the popularity of Facebook. The establishment of Google plus was, therefore, a big step to achieving successful advertising, though it may have been a bit late. Google also relies on applications such as android to enable customers to take pictures and record videos. Online advertisers use these social networking places to advertise their products because they are exceedingly common (Rayport and Jaworski). The development of electronic marketing has been on the rise for the past few days. Suppliers such as JavaScript provide interactive web sites while providers such as Amazon provide a basis for electronic business. They use these to provide for customer needs (Yang, Andrew, Kim, Dan, and Dhalwani, Vishal, 7). Google plus is estimated to have over 100 million users, and this provides a sound basis for suppliers to establish themselves. In Google plus, suppliers who provide hardware and software usually play a less significant role in the social networking site. The supplier power is dependent on the level of popularity of the social networks. When the number of members of the Google plus increases the supplier power supposedly reduces (Porter, 2). In order to be successful, Google plus has to offer quality and attractive services which will attract new customers and maintain the existing ones. The suppliers must also be willing to offer superior services so that they will be retained and increase their popularity among other social networking sites. The suppliers are, therefore, expected to provide better products than their rivals, which will assist in increasing popularity of Google plus. These features include circles; sparks, instant upload of items and huddles. Its purpose is to provide everything in the same site so that customers will find it easy to navigate. For the management to understand the competition that they are facing, they have to investigate the industry’s organization in terms of supplies and customer power. If the forces of competition are too much, then there are little returns that are expected. If the forces of competition which includes supplies are benevolent, then profits are gained. The industry structure largely influences the profitability in that industry. Potential Entrants in Google+ Potential entrants help in shaping competition as products cannot exist on its own in the market (Porter, 3). Google plus allows its users to chat, share photographs and video clips. There are various networking sites in the world with some being less popular and others more popular. The less popular sites are trying to establish themselves among the big sites. The large sites compete among themselves. The strongest competitive powers establish the success of a company. A potential entrant faces a lot of problems and threats from existing companies of the same type. New entrants usually provide a new capability, and a need to achieve market share. This need is the one that adds pressure on the cost of service provision. The threat increase especially when a new entrant is from an existing company that wants to diversify its products. This is the same case as Google plus which diversified from Google Inc they, therefore, influence existing capacities and competition. The threat of new entrant largely influences the profitability in that industry. When the rate of the entrant is high, the companies achieve moderate profitability. Decline in the cost of products largely creates a barrier to potential entrants (OECD, 2). This is what is referred as economies of scale. The cost of establishing Google plus was quite high; this is the same for new entrants in the market. This discourages new companies that want join the business of social networking. Social networking is associated with high risks and new entrants must be prepared for anything. Google plus had a bit of advantage because its mother company had been successful and is still experiencing success. This is not the same case for potential entrants who have to establish themselves and make customers believe in them. Google plus had an access to low-priced resources and had a familiarity in the technological expertise (Morrow). Potential entrants will also face the threat of government barriers that can influence their entry into the market. The risk of fresh entrants is extremely high because numerous social networking sites are being established almost every day. This is a task to the operating social networks such as Google plus which has to put up with competition and establish barriers of entry. The competition is, therefore, exceptionally stiff and Google plus has to find ways to withstand the competition. Google plus is currently competing with Facebook which has over 800 million users compared to its 100 million users. Potential entrants must work to target the right group, of individuals and attempt to offer them with the proper services, preferably better than the existing ones (Porter, 6). The entry of new firms into the industry of social networking influences the profitability power of the existing firms as they have to struggle to ensure that it does not affect their business. It the responsibility of Google plus management to ensure that it survives and achieves its benefits. The threat of new entrants may pose as an influence on short-term achievement of goals, and objectives and this explains the reasons for caution of the outside environment. However, a new entrant will have to provide better products for networking that will be more acceptable than Google plus. Social networking sites do not seem to have problems when it comes to entry as compared to other fields such as banking. Google hopes that Google plus will be a great success and overcome its competitors since it has experience. Works cited Abernathy, William and Wayne, Kenneth. The Limits of the Learning Curve, Harvard Business Review, 1974, p. 109. Morrow, Ben, External Analysis of Google Inc. 2008. Web: J. Rayport and B. Jaworski, Introduction to E-Commerce, McGraw-Hill: New York, 2001. Porter, Michael. The Five Competitive Forces That Shape Strategy, Harvard business review, 2008. Pp 1-9 OECD, Competition and Barriers to Entry. Policy Brief, 2007, pp 1-5. Web: Yang, Andrew, Kim, Dan, and Dhalwani, Vishal. Social networking as a new trend in e-marketing. 2007: Texas, pp 7-10. Web: Read More