This proper plan is made by IM Smart Management Consulting Firm and will start off examining Google's exterior environmental affects. Next, in-depth examination on the industry's competitive five pushes which influence Google's profitability will be achieved. Lastly, Google's internal durability and weaknesses will be examined to create its competitive implication. From these analyses, we learned that Google will face legal and performance issues due to its offensive strategy over time. We've developed three proper alternatives (Strategic Alliances, Defensive Strategies and Broadening Diversification Bottom part) which Yahoo can adopt to improve its competitive position. The program will be concluded with a recommended strategic alternative and its own pitfalls.
Political: The extension of Google was obstructed by the government such as US and Chinese authority. They viewed Google as a monopoly and submission authority to keep an eye on its activities (Yahoo, 2009). However, this barrier does not have an impact on Google's operations as Google responded immediately to the customers by addressing its policies in regard to politics/legal aspects. Example: Yahoo China announced that it's still providing filtered serp's on its website to satisfy the censor search results' insurance policy (China Daily, 2010).
Economic: Google targets highly targeted, measurable advertising, thus rendering it more successful than other rivals. The crucial need to stay current and continuously linked keeps its core services vibrant despite the parched surroundings anticipated to economic recession (Google, 2010).
Social-Cultural: Folks are getting more educated and competent. Therefore lifestyle and demand of people are changing rapidly. Google has to observe such changes in order to compete with its competitors by giving addition services such as email. Person are also becoming increasingly more connected due to the increased method of communication available through the internet such as MSN, face booklet and cellular phone with internet capacity. Yahoo has responded by building their mobile devices and released its own Android Mobile Phone Platform and OPERATING-SYSTEM. By tapping on these, Google shall have great benefits with increased variety of search queries and better competitive standing.
Technological: The wide-spread diffusion of information and communication technology allows plank geographic dispersion and integration of business activists. Progressive web applications establish trends browsing, internet immediate advertising and lightweight applications thus triggering a more swift and disruptive change in technology. Yahoo must take detailed actions to stay ahead by keeping rate with technology progress and maintains low cost (Refer to Show A for Overview of PEST examination).
Porter 5 Makes Analysis
Buyers: The bargaining power is high. The approach to life of users on using the search tool is becoming more superior and strenuous. Substitutes are often available at less expensive or even free. Example: Google online picture storage priced at $5 per time for 20GB, but face e book provided it for free. Google must satisfy both client groups equally. Example: organization's customers would prefer their ad broadcasting in big banner on the web site; however, specific customers will feel very troubling as they just want the search results.
Substitute: The bargaining vitality is high as buyer's transitioning cost is low. There are many replacements such as ad on television, radio, magazine, poster and search hotline.
Suppliers: The bargaining power is low. Yahoo is regionally not globally prominent and hardware buys are one-time off. Yahoo search is closely depending on its opponents Microsoft and Apple software. If there are any new software releases from them, Yahoo search might not exactly succeed if no timely update is performed.
Potential entrants: The bargaining electricity is low. Yahoo and Microsoft have improved their se's and can on complete their search tool through their products. There is no specific requirement for internet search engine, thus a much better search engine invented by another will critically affect Yahoo. Also, the monitoring of specialist from its political environment could impact Google's current technology and idea.
Competitors: The bargaining ability is high. There is no patent on internet search engine therefore the environment can be easily exploited or manipulated. The switching cost is low. Example: Microsoft and Apple have inlayed their search tool to their Explorer browser. Also, rival search tools have their own unique strength (Such as Yahoo draws in audience by its nice appearance). (Make reference to Show B for Overview of Porter 5 pushes analysis)
INTERNAL ANALYSIS (VIRO Examination)
We have witnessed that Google's net revenue keeps growing from 2001- 2008. Because the 2004 IPO, the stock price has soars from significantly less than $100 to above $700. The amount of Internet users retains increasing around the world, especially Asia. As the number one Internet search giant, Google attract majority of the new Internet surfers to be its customers. Yahoo is aware of customer demand and keep an eye on how individual lifestyle is changing quickly every day. This understanding allows Google's business strategy to outshine among its opponents. Overall, we feel that Google's business strategy works excellent at present but better proper alternatives have to be set up.
Value: Google owns the Page-Rank technology, which allows them to provide the most accurate serp's. The dominant market show and huge devotion from customers gives Yahoo competitive advantages.
Rarity: The services provided by Yahoo are not exceptional. Many other companies also offer alternative services such as search, email, blog, training video writing, online office request and cloud computing.
Imitability: All Google's services can be imitated. For example: the Microsoft Bing Search engine has included several elements of the Yahoo search: The Simple UI, sponsor hyperlink, and page rank.
Organization: Google has strong financial power, research and development features. The company is preparing to delivery services to remain competitive, or acquire potential rivals to eliminate hazards.
We have detected that the key problem with Yahoo is that the offensive ways of improve its market shares/performance will lead to severe problems in the future. Google faces increasingly intensive competition from experienced incumbents like Microsoft, Internet sites and Baidu which had been gaining popularity within the Asia region. They'll always be active in making fresh moves to increase or solidify their market position. With Yahoo seeking to dominate the cloud computing and internet search engine markets, this long-term strategy is backfiring with incumbents producing similar, if not, improved strategies to keep their market status.
In the long term, Google's intend to become the prominent service provider of cloud processing might also lead legal suits and privacy concerns. With increasing use of digital server hosting, more business networks, servers and data storages run almost. Even though good security coverage methods were employed, important data will still be prone and can be supervised for unauthorized uses. This will lead to data security issues like information used for unintended goal and data disruption/damage in the event of natural disasters.
CRITERIA FOR Analyzing STRATEGIC ALTERNATIVE
Strategic alternatives must have the ability to create progress opportunities with high come back of investment. Hambrick & Fredrickson (2001) have stated that strategies are a built-in; overarching idea of how business will achieve its targets. Therefore we recommend that Google assess its tactical alternatives by looking at its vehicles (how Google needs to gets there, including alliances); staging (Yahoo speed and collection of activities); and economic logic (how income and returns will be produced).
STRATEGIC ALTERNATIVES AND EVALUATION
Strategic Alliances with other enterprises
It is futile for Google to fight brain with head against similarly skilled opponents as its unpleasant strategic techniques will causes disruption its dominance in invention in the long run. Hence, we recommend that Google adjust their strategy and join forces with its opponents to add-value to its resources and features (Refer to Exhibit C). With proper alliance, Google can take part in a shared formal romance with several organizations and join forces strategically to achieve collaborative valuable tactical results. It allows joint contribution of resources, features, shared risk, distributed control and mutual dependence. Aim of strategic alliance is perfect for Google to attain synergy where benefits from the alliance will be higher than those from individual efforts.
Google will be able to improve market gain access to via global marketing alliance to have significantly more breakthroughs in international markets such as China. The brand new partnerships will also cause faster and better development of new technology/products to boost competitive position. With alliance, Yahoo can get over deficits in experience and creates new competitive capabilities by combining unique personnel of each partner. Lastly, it can help Google to achieve economies of scale and achieve better efficiency (Gamble & Thompson, 2011).
Defensive Strategies to Protect Company Market Position
Another alternative that people recommend will be for Yahoo to adopt protective strategy (Make reference to Exhibit D) to enrich its competitive position. The purpose of protective strategies is to lower the risk to be attacked, weaken the impact of any attack occurring and affect challengers to aim their initiatives at other competitors. You will find two forms Yahoo may take if defensive strategies are being used. The two forms are obstructing the avenues open to troubles and signaling to potential challengers that retaliation is probable.
For example: if Yahoo were to choose to stop the avenues available to challenges it should be more innovative and become more receptive in learning culture distinctions while embarking on businesses with the Chinese language in China. China is a country that contains massive recruiting with creative brains. Hence to block any new technology or products being produced, Google need to do something fast by thinking differently and improved its research and development when you are more unique and allowing creative imagination to flourish.
If Yahoo were to choose in practicing the second option, its leaders need to be more vocal by publicly announcing management's determination to keep up the firm's market share, publicly committing the company to a policy of corresponding competitor's terms or prices or preserving a war torso of cash and marketable securities. However, Google should not be too vocal in a international land, especially China is highly unadvisable as Chinese language do not enjoy organizations that are too vocal and do not know the meaning of modesty. Because of this, Google can end up losing its market show totally (Gamble and Thompson, 2011).
Broadening the Diversification Base
We think that it is important for Google to diversify into a new business with its existing products as it provides the actual to enhance and build a much better competitive advantage. Yahoo is facing risk due to the increasing vitality of incumbent like internet sites, which inevitably have an impact on the search industry (For example: Facebook has search function in their website). Thus through diversification, Yahoo can tap into the mobile world and reposition itself in the market by enhancing features provided by Android. We also recommend utilizing and incorporating Google's existing services such as Yahoo Images and Yahoo Maps to broaden the company's diversification base with new solutions on the market.
In our day to day course of work as consultants, we came across a new technology known as the 'Bokodes'. This latest technology provides users with a more interactive approach to information at anywhere and anytime. It starts up a fresh selection of applications in the areas of tagging, user relationship and close to field communication. Yahoo can also create an application using Bokode technology that mention of its current services such as Yahoo Images or Yahoo Maps (Refer to Exhibit E. ) These can typically cause extensive co-marketing by giving Yahoo many opportunities to widen its share of banner/video recording ads which in exchange builds more revenues as well concerning be the pioneer in offering an impressive method of consumers (Gamble & Thompson, 2011).
RECOMMENDED ALTERNATIVES/ Analysis AND LIMITATION
Among the three recommended alternatives, we recommend that Google implements the defensive strategy. It is futile for Google to fight brain with head against its rivals so protective strategy will minimize the impact of rival's harm moves. This alternative won't cause much disruption and trade-off to Google's procedure. As Google has already a huge market base because of its existing innovative products, it will focus its existing product categories in a specific market segment/geographic area. Furthermore, Google has impressive people plus they have dynamic capabilities and main competencies to strive for continuous improvement and develop discovery defensive strategies. We will take on a SWOT analysis (Refer to Exhibit F) to judge power, opportunities and limitation (Weaknesses and Hazards) for this alternative.
In conclude, Google is a company that has great potential to extend its market position. However, extension is not a fairly easy task and it requires great strategy and careful planning for Yahoo to achieve its targets. Hence Google need to adopt an open head in doing its businesses and practice a strategy that will profit them over time.
Exhibit A (Overview of PEST Evaluation)
Political / Legal
Regulation by US and China government
Sensitive data to be leak to terrorism, such as bomb making / map
Legal suit against Google for 3rd parties content and personal privacy such as Yahoo map
Maintains competitive prices with progress technology
Suit the public lifestyle such as photography posting, search trend
Allow more business from across the world to using internet
Ensure technology do not overstep to unnecessary legal issues
Hardware getting cheaper
Survival during 2009 financial crisis
High give attention to advertisement
Seen risk as opportunity, such as problems. Individual tend to be more keen on job search and financial new. Google will be their main concern search
No age group limit
Life style changing
Individual are more educated
Demand increasing such as addition service, picture sharing, email, storage
More individual to own computer / cellular phone.
Technology easy to reproduce.
No specific standard for search engine
Large customer bottom part, Low switching cost
Capital requirement is minimum
No geographic restriction
Authority is monitoring Yahoo activities
Supplier is limited
Supplier is also competition, such as Microsoft, Apple
Google is greatly trustworthy on Microsoft and Apple OS
Supplier has more control than Google
Easy to replicate
Switching cost is low or free
Supplier is also their competitor which are well informed of the product
Competitor has their own unique strength
Customer lifestyle is changing rapidly
Switching cost is low or free
Customer with all different demands
Customer are well inform of the price
Many competition to choose.
Advertisement on traditional method
Newspapers, press, radio, search hotline
Switching cost is low
Exhibit B (Overview of Porter 5 Makes Analysis)
Exhibit C (Suggested Plans for Strategic Alliances and Benefits)
Alliance between Google and Microsoft: Microsoft has improvise their Live search, Semantic Search capacity and own approach to cloud computing to contend with Google's unpleasant strategy in alternative products. Semantic se's would be the biggest risk to Google as it outshines its internet search engine by attaining more relevant search results thus intimidating its core business because they build a new search engine empire.
Microsoft acquired a firm in the semantic field however the present technology has many constraints. Therefore, we recommend that Google reach a development alliance to totally develop this internet search engine. Google has highly competent individuals who are impressive, the joint work will 'bury the hatch' and make Semantic search a more powerful tool. Along with the alliance, both can incorporate this fully developed technology into their products, developing a win-win situation.
The two companies can also collaborate together in cloud clouting whereby Yahoo can use online Microsoft Office (rather than Google online applications). Aside from using a great internet search engine and endless enhancements, Google continues to be relatively new to applications that want high amount of consumer relationships. Tapping onto Microsoft's cosmic experiences in solutions which drive the famous Home windows and Office suites, Yahoo will undoubtedly reap the benefits of Microsoft's great resources and branding. As Cloud clouting will also lead to higher risk of level of privacy lawsuits, the cooperation allows development of an improved security program with encryption tips which provides reliable capacity in the cloud can be injected to avoid intrusions, resulting in reduced dangers for both in authenticity issues.
Alliance between Google and China Companies: China has limited internet regulatory adjustments which put Chinese language companies like Baidu at benefit. In addition, Chinese companies will understand local culture better and can create products which will charm to the Chinese more. Hence, it will be beneficial for Yahoo to enter alliance with Chinese partners to acquire exploit knowledge on product market in order to touch on more china market stocks and enhance competitive status.
To start the procedure, we recommend that they collaborate with companions (example: internet search engine and social mass media) on marketing as it'll entail learning what the china market desires and also build on knowledge with its resource market. Following that, Google can customize and through their sales associates, market to complete of China in an inexpensive manner. For instance: free download videos from the web are extremely popular in China. Perhaps, Yahoo together with partners can provide free traditional western Hollywood videos to China. This will help bolster its training video offering/advertising revenues for advertisings display during the video.
Other than that, they can sell Yahoo devices or other smart devices bundled with Yahoo/Android operating-system. This will help them enhance their mobile search market shares, banner advertisings and video ads within the China market.
Exhibit D (Illustration of Placing Protective Strategies in Its Place for Google)
Google could revisit its strategy anticipate an ongoing basis to be able to improve its profits on return and position in the technology industry. Projected is the suggested strategy plan in implementing defensive strategy.
Trends in the user's choice, especially browsing engine consumption, advertising and China market
Environment forecast (inside/external)
Analyzing rivals development esp. from Baidu
Assessment of Yahoo SWOT diagram
Specific focuses on (for example to be more innovative and creative in the search engine area of expertise internationally).
Supporting Organizational Arrangements
Policies and profiles
Google's creative/progressive personnel
Concept how Google will perform the defensive technique to improve market position
Exhibit E - Bokode: Imperceptible Visual Tags for Camera Based Discussion from a Distance
(Data implemented from MIT Marketing Lab, 2009)
It is a camera-based conversation technology which an ordinary camera can find small optical tags from a comparatively far distance. Comprising a low-cost optical design whereby the tags reduces up to 3mm noticeable diameter, unmodified common camera several meters away can be setup to decode the personality plus comparative distance and viewpoint. Bokode use brilliant binary coding to calculate the comparative distance and viewpoint to the camera and show prospect of application in augmented certainty and motion catch.
A user who's standing right in front of a shop wishes to determine information about the shop and its own environment. Hence, he do a search by using his camera mobile phone to tag onto an image of the shop which has a visual Bokode label inserted on its signboard. His mobile phone that has a built-in Bokode reader enables the user to assemble information in a kind of indifferent directions such as providing information about restaurants near by, hotels information, travelling guide or it says the other make of cereal are available at a dollars cheap at the other supermarket store This technology can works in a multitude of ways including classrooms, general public places, print ad, outdoor billboards, presentation and labels.
Exhibit F - SWOT Research of Google's implementing Defensive Strategy
Innovative and creative workforce. Labor force has strong passion in what they do and monetary value is not actually a concern. Hence Google can 'defend fast'.
Strong brand reputation so trusted by consumers. So it better for Yahoo to build protection using existing products/services.
Google leaders are young business owners hence performing fast/defensive may well not be a concern to them.
Competitor (Baidu) has superior usage of distribution channels.
Innovations are not too difficult to be imitated so good defensive tools might be duplicated.
Google has a brief history of having offensive strategies which can cause the company to lose large amount of revenues.
Google has too many services to be able to dominate search marketing and be before others to get competitive edge but a few of these services are not widely used. Hence, being defensive they need to be more focus in developing the right protective tool.
Massive human tool in China to fully develop good defensive strategy (capability to tap on Chinese language creative minds to improve Google research bottom).
Strategic alliances to become listed on forces (Defensive) instead of fighting against competitors.
New product incorporation (example: Bokodes) thus creating good option to develop its defensive strategy.
Imitation is a norm in China so rivals it's still fast enough to match any defensive strategy.
Uncertainty in the exterior environment that is beyond control therefore thorough protective strategy will still backfire.
Chinese users are usually more faithful to local company leading to smaller market show for Google (Defensive strategy in China backfires).
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