The business I have made up is a business-to-business company which imports fresh mint tea…
Thomson, Strickland & Gamble
Bargaining power of suppliers As search engines have nearly zero necessity for suppliers. Companies Like Google or Being, have their own programmers and infrastructure, and even though they depend on IT parts suppliers, there are far too many of those available out there in the market to have any relevant bargaining power what so ever. Threat of substitute products There is a high risk of substitutes as it all depends on the relevance of results and how effectively the search engine works to get those results shown to the end user.
In this market It Is essential to stay ahead of competition all times. Intensity of rivalry among competitors Rivalry is very high amongst the 2 main competitors Google and Microsoft (Being), who also sell their services to Yahoo The graph below reflects what has been said previously. Rivalry and Substitute products are the strongest forces in the search industry market.. The Search industry is very attractive due to its high profit margin and revenue growth – Google has made US $36 billion in advertising in 2011 which means 26% to 28% year-over-year growth since 2009.
Question 2 The search industry is rapidly changing in the following ways: * Search engines need to be more and more creative in finding ways of showing relevant ads to end users. Google for example is trying to get on the social networks business, previously tit Resort and now with Google+, in order to be able to capture valuable information to better target potential consumers. * Algorithms are also rapidly changing and this can have major impact on users’ satisfaction * Increase in the number of threats such as black hat tactics (ranking sites and pages based on illegitimate means) and spam * Semantic versus content based search.
Semantic is in its early stages but already being used in some fields. This technique adds a lot more intelligence to SEE (Search Engine Optimization) as it allows determining the probabilities of various meanings of your search, meaning that using the right rewords won’t be that important anymore. * Censorship in countries like China might negatively impact search engines * Technology is rapidly changing and people are becoming more mobile than ever. Searches can be run on the go from any device anywhere.
Question 3 The key factors, key competencies, capabilities, and resources that define success in the search industry are: * Advertising revenue: search engines do not make their living on simple search results, but on their ability to generate revenue from targeted advertising. This is crucial for a profitable business model. Google is investing enormously in this field and has been able to sell its advertising products (Diseased, Towards, etc. ) to over a million businesses all over the globe * R&D and innovation: being able to be constantly improving search algorithms is key to keep up the pace in the industry.