Google Analysis: The Five Forces and Their Impact

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Table of Contents

Supplier power
Entry barriers
Competitive Rivalry
Threat of substitutes
Buyer power
PEST Analysis
References

Below discussed are some of the five forces and their impacts on Google, and also a conducted PEST analysis on Google.

Supplier power

Since Google is only successful in some regions and not fully embraced across the globe, Microsoft has incorporated a search engine into Explorer, which is their browser, but this may not be as efficient and fast compared to other new software like Apple (Porter, 2008, para 1).

Entry barriers

Yahoo and Microsoft have radically developed their search tools and this will affect Google’s profit levels especially from the fact that about 40% of Google’s income comes from advertising on these search engines. Changes in Online marketing rules and switching costs also are a result of the legislative changes and development.

Competitive Rivalry

This has been another outstanding aspect that impacts a lot on Google, in the essence that there are only two rivals (Yahoo and Microsoft), and it may affect future business in terms of brand, switching cost, etc because the search engines are not similar to those made by Google. Developing these search tools will require high skill and expertise levels.

Threat of substitutes

It’s quite high, and switching costs are small. Customers’ will to change search tools is influenced majorly by speed and accuracy, and since they keep on bringing in new demands to be loyal to the company, Google will have to hire skilled experts to keep up with the customers’ demands (Grappone & Couzin, 2011). If these staff members leave the company, a lot of its confidential information is prone to spread.

Buyer power

With search engine tools becoming more complex, there has been free substitutes entry into the market which has led to a loss of rankings. This may lead to the customers suing Google, demanding compensation, which may lead to the company integrating backward Timpane, 2011, para 1).

PEST Analysis

Political effects

Even with all the impacts, states are comfortable with the services that Google is offering them, as is evident with the Australian Government. It gave Google a go-ahead to give Gmail customized mail services to 1.5 million students.

Social scene

Google is giving back to society through scholarships and by installing solar panels to universities, a project that will lower schools’ electricity bills by 30% ( Staff Writers, 2011, para 2). They have also deployed livestock to grass-landed areas, to curb bush fires.

Economic aspects

Google has been doing well financially, with net income levels rising by 24% to $ US 30.1 billion in the second quarter of 2010. With their rise in economic income also came the rise in expenses, since Google has to invest more in upgrading their search tools Lutze, 2009).

Technological aspects

To offer customers quality services based on accuracy and efficiency, Google has been using the technology PigeonRank^TM, which provides a well-defined basis for all the web search tools that Google uses for example Wikipedia. This technology requires sufficiently trained personnel to manage and maintain it (Girard, 2009).

References

Articles

Porter, James. Porter’s five forces for Google: Analysis of the Strategic options for Google. Google Blog. 2008.

Staff writers. Google launches Global kids science fair. Washington Post. 2011.

Timpane, John. Future of Google digital library is hard to read. The Enquirer. 2011.

Books

Girard, B. (2009). The Google way: How one company is Revolutionizing Management as we know it. San Francisco: No Starch Press. Print.

Grappone, J. and Couzin, B. (2011). Search Engine Optimization (SEO): An Hour a day. New Jersey: Sybex. Print.

Lutze, H. (2009). The Findability Formula: The Easy, Non-technical approach to search engine marketing. New Jersey: John Wiley and sons. Print.

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