Baidu, Inc. is a Chinese multinational firm dealing in the internet and technology industry, offering products and services related to the internet, search engines, and artificial intelligence worldwide. Coping in the internet industry, the firm was founded in January 2000 and had its headquarters located in Beijing, China. The firm has shown a strong figure of revenue of 15,429 million US dollars and has occupied the employment figure of more than 37,000 individuals under its umbrella (Baidu, 2019). Keeping in view the global internet industry, porter’s five forces analysis can be a valuable tool for sustaining potential ways to tackle threats and deliver value.
Baidu – Competitive Rivalry in the Market
The competitive rivalry in the internet and technology industry is considered to be high because of the increased demand in technology development or getting awareness and gateways to benefit the business in the best possible way. As a consequence of this behavior, many big tech firms and corporations have stepped in to cater to the ever-changing technological needs in contemporary business. Baidu has a strong position in China, and Asia is now trying to penetrate the market share worldwide. The major competitors of the firm are Google, Bing, Yahoo, and Yandex. As of December 2020, Baidu has captured almost 0.6 percent market share of the world’s desktop search engines. At the same time, Google is leading the market with 85 percent, and the rest is at 6.75, 2.75, and 0.63 percent market share, respectively (Statista, 2021). Therefore, such demand for evaluating technologies for information spreading makes the competition more complex.
Baidu – Threat of Substitutes
The threat of having substitutes is considered moderate in context to the internet industry because the need for information and access to everything is increasing in the community. The internet and search engine area is the most critical need of individuals, companies, and states in the present era. There are many platforms available in the industry with a different range of solutions. Also, the available platforms related to other regions can cater to the community of a specific area or can lead to switching cost factors in case of not providing the relevant content (Blut et al., 2016). However, most of the nature of products and services are merely the same. Therefore, the threat of substitutes in the internet industry is moderate.
Baidu – The Threat of New Entrants
The threat of new entrants in the internet industry is considered to be low because of the big firms already operating and providing services to the community. Therefore, it is tough for a new firm to go into the market and compete on an equal balance with the established big firms. In reality, a new firm requires a lot of capital to establish the infrastructure and technology, also a knowledgeable and skilled force who can tackle the big deals of the firms (Raj et al., 2020). Economies of scale developed and enjoyed by the established firms are difficult to break for the new firms in this industry. Another significant hurdle is to get customer attraction and loyalty, which the existing firms already pull in the market. Hence, making the entry threat low in the industry.
Baidu – Bargaining Power of Buyers
The Bargaining power of consumers is considered high in the internet industry because of the firms and digital platforms available in the market and their capability to handle the demand of different people and user-friendliness. Consumers can negotiate for a better platform in terms of their understanding and required information; otherwise, they have a range of options to choose from and benefit from switching costs (Dan and Davison, 2016). Moreover, consumers of different ages can go through any platform to look for information or service of their interest. Observing such a method, the consumer has more power in terms of accessing information in different conditions.
Baidu – Bargaining Power of Suppliers
The Bargaining power of suppliers is considered moderate in the internet industry as several software suppliers sell licensed software. Although these suppliers supply bulk licenses to the internet and technology firms upon the demand, they are still able to charge a premium for the software they deliver. Other suppliers in the industry could be in term of skilled graduates or experienced software engineers with adequate skills to handle the pressure and tasks. However, the increasing number of consumers in the industry helps balance the supplier’s role (Obal, 2014). Thus, in context to the internet industry, the bargaining power of suppliers is moderate.
References
Baidu, 2019. financial-reports. [online] ir.baidu.com. Available at: https://ir.baidu.com/index.php/financial-reports.
Statista, 2021. Search engine market share worldwide | Statista. [online] Statista. Available at: https://www.statista.com/statistics/216573/worldwide-market-share-of-search-engines/.
Blut, M., Evanschitzky, H., Backhaus, C., Rudd, J. and Marck, M., 2016. Securing business-to-business relationships: the impact of switching costs. Industrial Marketing Management, 52, pp.82-90.
Dan, O. and Davison, B.D., 2016. Measuring and predicting search engine users’ satisfaction. ACM Computing Surveys (CSUR), 49(1), pp.1-35.
Obal, M.W., 2014. Analyzing the roles of buyers, suppliers, and employees on the adoption of disruptive technology (Doctoral dissertation, Temple University. Libraries).
Raj, A., Dwivedi, G., Sharma, A., de Sousa Jabbour, A.B.L. and Rajak, S., 2020. Barriers to the adoption of industry 4.0 technologies in the manufacturing sector: An inter-country comparative perspective. International Journal of Production Economics, 224, p.107546.