Analysis of online search industry

Published Date: 23 Mar 2015 Last Modified: 16 May 2017

The foundation of the operations pertaining to the search engine industry is search and advertising. The search industry has faced a very critical cut throat competition as all the companies associated with it have to conduct their business operations in the homogeneous technology and also the target market of these companies is same. There are five major competitors of Google in search industry they are: AOL, ASK, Baidu, MSN and Yahoo! (Google's Strategy in 2010).

Strongest Five Forces: Competitive Rivalry- Yahoo and Microsoft.

Weakest Five Forces: Bargaining Power of the Customers- Advertisement Customers.

The market of search industry impel by the innovation of products and services and customer relationship management and the search industry have high level of attractiveness due to the high requirement and expectations of customers from the search industry I.e. the upgraded knowledge and information (Google's Strategy in 2010) .

Question: 2

How is the search industry changing? What forces seem most likely to bring about major change to the industry within the next three to five years?

Answer: 2

One of the biggest changes observed in the search industry is the emergence of Cloud Computing Technologies which influenced the software market immensely. The intensified competition pertaining to advertising and mobile search and the significance of social networking also play a major role. The further changes which the industry is likely to face are:

The globalization of search engine market.

Mergers and Acquisitions in the search engine market.

Specialized and more customized search engine will be designed as per the customer's need and requirement.

Target market of search industry will be China, being reasonable in terms of prices and trade restrictions and having prominent mobile market (Google's Strategy in 2010).

Question: 3

What are the key factors that define success in the industry? What are the key competencies, capabilities, and resources of successful search engine companies?

Answer: 3

The key factors defining the success of Search Engine's Industry:

Inconsistent customer demand for innovative products and services.

Enhanced features of search algorithms i.e. quickness, accuracy, easy accessibility etc.

Company's or industry's awareness pertaining to internet, entertainment, media convergence, information and broadcasting etc.

Neutrality of internet services.

Gaining customer trust by providing security and protection in privacy concerns to the customers.

Knowledge and awareness about the tastes and preferences of customers in order to offer solutions to anticipate and fulfill the requirements of the customers (Google's Strategy in 2010).

The Key Competencies, Capabilities and Resources, of successful Search Engine Companies:

Inconsistent innovation in products and services i.e. in search algorithms.

Development of apparent and amiable business culture.

Unbiased use of algorithm in order to rank the data.

Effective implementation of strategic policies, effective human resource management.

Sound financial practices.

Corporate and brand image due to augmented services and trust among customers.

Reverse net objectivity and interoperability along with open sources of services (Google's Strategy in 2010).

Capabilities:

Financial soundness and efficiencies to invest in Research and Development Department.

Global holding of business operations.

Global market dominance in the software and operating system and mobile services (Google's Strategy in 2010).

Question: 4

Describe Google's customer value proposition and profit formula linked to its business model. What strategies has Google relied upon to build competitive advantage in the industry?

Answer: 4

Google Business Model:

Figure : The Google's Business Model:

Source: (Google's Strategy in 2010)

The distinctive features of Google Business Model are:

Consistent strategies and system of pricing pertaining to products and services.

Flexible structure of architecture.

Efficinet and effective system of advertisement media.

Rationality of advertisement (Google's Strategy in 2010).

Strategies which should be implemented by Google to build Competitive Advantage in the Industry:

Implementation of effective differentiation strategy by providing the rationale and qualitative information more quickly.

Identify customer need by their experiences and focus on customer's requirement fulfillment.

Offer customized products and services in the market.

Retention of talented pools of suppliers i.e. its human resource by cultural investment.

It should provide innovative services pertaining to the wireless interface sector (Google's Strategy in 2010).

Question: 5

Have Google's business model and strategy proven to be successful? Should investors be impressed with the company's financial performance? How does the company's financial performance compare to that of Microsoft and Yahoo? Please conduct a financial analysis to support your position-you may wish to use the financial ratios presented in the Table 4.1 of the text as a guide in doing your financial analysis of the company.

Answer: 5

Yes the Google business model and strategies proves to be very effective in having the competitive advantage over Yahoo and Microsoft. These strategies enable Google in becoming the Global market leader of search engine and advertising (Google's Strategy in 2010).

Comparison of Financial Performance of Google with Yahoo:

Figure : Comparison of Operating Profit of Google & Yahoo:

Source: (Google's Strategy in 2010)

The above figure depicts that both Google and Yahoo has been affected by the global economic meltdown of 2008, but Google compete well in comparison to yahoo.

Figure : Comparison of Return on Equity of Google & Yahoo:

Source: (Google's Strategy in 2010)

The above figure depicts that the profitability or return of equity of Google is higher than Yahoo.

Question: 6

What are the company's key resources and competitive capabilities? What competitive liabilities and resource weaknesses does it have? What opportunities exist? What threats to its continued success are present?

Answer: 6

Company's Key Resources and Competitive Capabilities:

Inconsistent innovation in products and services i.e. in search algorithms.

Unbiased use of algorithm in order to rank the data.

Effective implementation of strategic policies, effective human resource management.

Sound financial practices and resources (Google's Strategy in 2010).

SWOT Analysis of Google:

Strengths:

Global market leader in the search engine services.

Global market leader in search advertising.

Advanced search services with rationale algorithms.

Augmented algorithms programming and advertising strategies.

Good infrastructural resources.

Brand image and customer trust.

Financial stability (Google's Strategy in 2010).

Opportunities:

Prospective internet and search advertising customers.

Prospective market opportunity in China.

Wide scope in search marketing and advertising through social media and networking.

Prominent Value Chain.

High customer demand in interoperability and convergence.

Mergers and Acquisitions, joint ventures, strategic alliances with suppliers.

Scope in mobile search services (Google's Strategy in 2010).

Weaknesses:

Interruption in the services of Google.

Tough competition from competitors through strategic actions.

Inefficient operational processes in scaling.

Saturation in the revenue growth.

Inefficient product integration (Google's Strategy in 2010).

Threats:

Customer's privacy issues.

Intense competition in the search engine and advertising market globally.

Innovation process is disruptive.

Risk of foreign exchange.

Global economic meltdown affects the search engine market and internet advertising (Google's Strategy in 2010).

Question: 7

What recommendations would you make to Google's top-management team to sustain its competitive advantage in the search industry? How should it best capitalize on its strategic initiatives in mobile phones, cloud computing, emerging markets, and other ventures?

Answer: 7

The recommendations for Google's Top Management Team to sustain its Competitive Advantage in the Search Industry are:

Google should invest more in Research and Department.

Improve seek alliance with Apple for improving current technology.

Internet security should be enhanced for individuals and systems.

Effective brand management should be done by Google and it should also focus on the mobile search services to increase buyers (Google's Strategy in 2010).

Best Capitalization on Strategic Initiatives:

It can best capitalize its strategic initiatives in mobile phones, emerging markets, cloud computing and other ventures through integrating process implementation of aforementioned techniques keeping in mind the diversified investment of business financial resources. (Google's Strategy in 2010).