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According to Porter, five forces influence competition in any sector or industry. These forces include threat of new entrants, threat of substitute commodities or services, buying power of customers, bargaining power of suppliers, and rivalry (Porter, 2008).
These forces determine the intensity of competition in any industry. They determine the strategies that organizations and businesses adopt. Google is a multinational corporation that provides services in the internet and software industries. These industries are crowded with many technology companies thus making it highly competitive.
There is low supplier bargaining power because Google has dominated for a very long time. Google is one of the largest technology companies in the world. It has dominated many aspects of the internet and software industry. However, some of its products have not satisfied the needs of consumers. Its growth has stagnated due to threats of forward integration.
Rival companies that include Apple and Microsoft continually release new software that challenge the dominance of Google as the preferred search engine (Tar, 2011). On the other hand, these companies continue to use different strategies to eliminate competition. For example, Microsoft embeds its search software into its browser (Tar, 2011).
This makes its tool the search engine of choice for people who use its browser. Suppliers mainly rely on Google for services such as advertisements. For example, the ad system was developed in such a way that advertisers and other beneficiaries are Google clients. Therefore, they try to maintain good relationships, thus rendering themselves powerless.
There is strong buyer power that promotes Google’s dominance. However, rival companies offer products that intensify competition in the internet and software industries. If customers opt for products from other companies, then its revenues would drop due to reduction in clients that seek advertisement services. Google expanded its dominance by developing an open source operating system (Android) (Tar, 2011).
Currently, it is the most preferred and used mobile phone operating system in the market. Other operating systems such as Windows from Microsoft and iOS from Apple have fewer customers (Tar, 2011). Google’s products are affordable hence the high demand compared to products from rival companies.
There is moderate competitive rivalry. Google commands the largest share of internet searches. Its greatest rivals include Yahoo and MSN. However, it is the most preferred and used search engine. The corporation has dominated the internet for many years because of its innovativeness and creativity. Features such as Google maps, Google Earth, and Street View have attracted users to the search engine (Tar, 2011).
These features are unique to Google only. Even though rivals make improvements on their products, they do not propel them to dominate the markets. They lack creativity and innovativeness. After development of the Android operating system, demand for Google’s products soared (Hamen, 2011).
Rival products that challenge its dominance include Apple’s iOS and other software developed for computers and mobile devices. Competition is moderate because very few mobile devices use the iOS. The greatest percentage of mobile devices on the market today uses the Android operating system. However, the iPhone has a larger market share compared to any phone that operates on Android.
Threat of substitution
There is a very low threat of substitution for Google. The internet is the main source of information and data in today’s information age. Reliance on the internet for information is based on use of search engines and other services that retrieve information from searches conducted by users.
For many years, Google has been the dominant search engine. With such dominance, the corporation has established itself as the search engine of choice (Tar, 2011). This eradicates any possibility of Google’s substitution in the near future. Moreover, the corporation’s innovativeness guarantees its survival and continued dominance.
Threat of new entry
There is moderate threat of new entries on Google’s dominance. The technology industry has many entry barriers that prevent emergence of new entrants. Examples of entry barriers include stiff competition, dominance by few companies, and large amount of capital required (Hamen, 2011). Google has developed a wide array of products that make its dominance almost insurmountable (Hamen, 2011).
The only threat could come from a company that enters the technology market and chooses to focus on only one product. For example, a new entrant could use resources on development of a search engine to compete with Google. However, this would be detrimental to growth because in case of failure, the entire investment would be lost.
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The internet and software industries are highly competitive and lucrative. Google has successfully dominated the internet sector through innovation and creativity. There is low supplier power and strong buyer power. Competitive rivalry is moderate thus promoting Google’s dominance of internet search engines sector. There is low threat of substitution because Google’s products are dominant in the internet and software industries.
On the other hand, the threat of new entrants is moderate. The corporation’s wide array of products and services cushions it against competition and threats from new entrants.
Hamen, S. (2011). Google: The Company and Its Founders. New York: ABDO.
Porter, M. (2008). Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York: Simon and Schuster.
Tar, A. (2011). Google Inc.-An Industry Power House. New York: GRIN Verlag.