Michael E. Porter presented the model, named as porter’s five forces model. What is this model all about? This model is all about the 5 forces that serve as the basis for shaping any industry thus focus deeply on identification as well as analysis of the following five competitive forces.
1. The competition in the concerned industry
2. New entrants threat into industry
3. The supplier’s power
4. The customer’s power
5. The threat of substitute products
If you are looking to get to know about the profitability, attractiveness as well as the competition intensity of your concerned industry, this model is the best option for you. Here is the short overview of each force of the model to proffer you a proper understanding about this and also the example of its implementation on Google.
Porter’s Five Forces Model on Google
Google, I think it doesn’t need any introduction as all of us are well-aware about this popular business as well as its functionality that it proffers to the worldwide users. Being one of the largest search engines throughout the world, it gives all the other websites a platform to get searched by the community all over the world. So, the implementation of porter’s five forces model tells us about the 5 competitive forces that serve as a basis to make this site successful or unsuccessful. Being one of the largest as well as the successful organization, it also faces different sorts of challenges from the environment.
A short summary of the porter’s five forces analysis on the Google is the following:
1. The competition in the concerned industry – Strong
2. New entrants threat into industry –Moderate
3. The supplier’s power –Weak
4. The customer’s power – Weak
5. The threat of substitute products – Moderate
Competitive Rivalry
This force of this model tells us about our competitors in the concerned industry so that we could understand all the threats related to it and we could prepare and mold ourselves accordingly. As clearly mentioned above, the Google faces really tough and strong competition. As per porter’s five forces model, the tough competition limits the firm’s growth. What are the external factors that are a part of such a strong competition against Google? There are three most common external factors, which are, high firm’s diversity, a large number of firms as well as small switching costs.
What are the main competitors against Google? Being one of the largest search engines that are widely being used around the world, the Google has a number of a competitor, for instance, Yahoo, Apple, Bing, Comcast and much more. The Biggest service provider is still under development as it proffers the Google Fiber, Google Class, as well as Chromecast. The main reason for which it faces a tough competition is the low switching costs as it is really very easy for all the users to switch to the other competitors.
Bargaining Power of Buyers
This force of the porter analysis deals with the bargaining power of buyers. For Google, the influence of the bargaining power of the buyers is really weak. According to the porter’s five forces model, such weak force of the buyers is merely considered minimal in the strategic decision of this largest Search Engine. What are the external factors behind the weak buyer’s bargaining power? The small size of individual buyers, moderate information’s quality and increasing demand from the buyers.
Bargaining Power of Suppliers
According to the porter forces analysis, the power of the suppliers that is experienced by the Google is really weak for the reason that there are a number of suppliers to select from. What the potential external factors that contributes? A Large number of suppliers and the high availability of supply are the two most common external factors that contribute to the weak bargaining power of suppliers. As a matter of fact, the effect of any single supplier is weakened to the minimal level when we look at a large number of suppliers as well as the availability of the supply. So, in this scenario, it becomes really easy for a company to switch from one supplier to the other. The suppliers of Google are diverse for the reason that the company has a wide array of products that are varied in nature, for instance, Google search, Google Fiber and the Google Glass.
The Threat for New Entry
This force of the model tells us about how easy or difficult is it for the new entrants to enter into the concerned market. The reason is that the power of the company definitely has a huge impact of it as newcomers come to the concerned marketplace for the reason that the powerful and effective competitors can definitely weaken the company’s position in its market.
This force is moderate for Google. How?The cost of starting up a business for any new firm is not so high so it is really easy and simple for the other firms to enter the concerned marketplace and compete with Google. Also, it is not a hard thing to proffer the utmost satisfaction to the regulatory requirements of the users so the new entrants can easily get the high reputation to compete well against Google.
The Substitution Threat
The last but not the least force of the porter five forces model is about the threat of substitutes. For instance, if your company isn’t proffering the satisfactory quality and fair prices, all the potential customers can switch to the other available substitutes.
The television, printing media, radio as well as lots of other advertising channels serve as the basis for creating the threat of substitution for the Google but up to some moderate level. The two major external factors that contribute are the availability of substitutes in large number as well as the less switching costs. Especially the one that is listed later, i.e. low switching cost makes it really unproblematic for the customers to switch to other services as they have a number of options available in this scenario.
References
Dess, G.G. and Davis, P.S., 1984. Porter’s (1980) generic strategies as determinants of strategic group membership and organizational performance. Academy of Management journal, 27(3), pp.467-488.
Hlavacka, S., Bacharova, L., Rusnakova, V. and Wagner, R., 2001. Performance implications of Porter’s generic strategies in Slovak hospitals. Journal of Management in Medicine, 15(1), pp.44-66.