Question 1: Evaluate Google using the competitive forces and value chain models.
Five forces affecting competitive strategy:Harvard Business School Professor Michael Porter identified five forces that drive competition within an industry:1.Threat of entry by new competitors -Many new entrants effectively decreases profitability2. Intensity of rivalry among existing competitors - Sometimes rivals compete aggressively and sometimes rivals compete in non-price dimensions such as innovation, marketing, etc.
3. Pressure from substitute products -The more substitute products, the more customers can put the firm under pressure to lower their prices4. Bargaining power of buyers - Buyer concentration to firm concentration ratio5. Bargaining power of suppliers - Suppliers of raw materials, components, and services (such as expertise) to the firm can be a source of power over the firm. Suppliers may refuse to work with the firm, or e.g. charge excessively high prices for unique resources. (Porter, 1979)This model is beneficial to new and existing companies who are trying to be competitive.
According to the strategy, as the intensity of competition grows, margins and returns are driven down. An organization may require a change in strategy to compete and stay in business.
Porter's 5 Forces diagram: Source: Porter, 1980The forces determine the competitiveness and attractiveness of a market. Attractiveness refers to the overall industry profitability. An "unattractive" industry is when the forces drive down overall profitability. A very unattractive industry would be one approaching pure competition. A change in the forces normally requires a change in the company's strategy. The overall industry attractiveness does not imply that every firm operating in the industry will return the same profitability. Firms are able to apply their uniqueness in resource, business model or network to achieve a profit above the industry average.
Evaluation of Google Using Competitive ModelMicrosoft is being threatened by Google's power in the...