Google Inc.

Group-5 | Section-A
Aman (19/064)
Dharmanshu
(19/076)
Rishi Tarkesh
(19/313)
Shubham (19/346)
Suraj (19/350)

1.

Key Factors
behind
Googles early
success

Factors Behind Googles Success

(1/2)
Technical Superiority

Page rank algorithm developed by Google

Strong Corporate Values

Dont be evil refusal to compromise the

solved the problem of searches returning

integrity of search results helped them to

irrelevant results that frustrated users

gain users trust

Superior pricing mechanism for

Technology Matters heavy investment

advertisements as compared to

in infrastructure helped Google to achieve

competitors helped Google to maximize

lightening fast returns on search queries,

its revenues

thus providing better service to customers

Continuous fine tuning of search

We make our own rules -

algorithms as well as features like

unconventional management practices

personalised search helped them to gain

helped them achieve steady growth

competitive advantage

Factors Behind Googles Success

(2/2)
Higher Benefits for
Advertisers

Access to more users increased the

Better Management of
Innovation

benefits that advertisers can reap

of time working on project of their own

Lower minimum CPC bid of 1 cent as

choosing spawned many initiatives like

compared to competitors (5 cents)

Google news and Orkut

Provided free software to optimize paid

Considered listing relevance along with

Geographic targeting systems helped

Willingness to invest in promising long

shots encouraged innovative culture

CPC bids for ranking paid listings

Working in small teams helped in better

management of projects

listing campaigns like Google trends

Encouragement to engineers to spend 20%

Setting priorities through proper allocation

advertisers to focus their adds in the right

of time and engineering efforts improved

regions

their efficiency

2.

Is search a
winner-take-all
business?

Porters Five Forces Search Engine

Industry
Bargaining power of suppliers

Information provider are the

supplier in the industry.
The power of supplier is low
since information is dynamic
and complex online
advertising industry

Low

Bargaining power of Buyers

- - - - -

Industry Rivalry

Threat of new entrants Low to Medium

Any new entrant can enter

market easily with no entry
barrier
Again the cost of doing
business is low
Surviving is difficult as it
requires capturing market
share and building a major
brand which creates an
edge over other factors

Large numbers of
competitors
Rapidly evolving and
changing technology
Low switching cost
for the users and
advertisers

High
+ +

- -

- -

+ +
Threat of substitutes

- -

There are two side of buyers,

advertiser and search engine
user.
Advertiser has low power as
they generally form a minor
revenue generator for the
company.
Advertiser rely on companys
increased size and reach
Users can easily shift to other
networks

Low

Low to Medium

Search Engine generally dont have any substitutes.

Other substitutes in advertising
segment includes TVs, print
media etc. But with advent of
technology digital and online
marketing is future.

Winner Takes All

Multi-homing
Costs

ADVERTISERS
Low: They have no
homing cost as they can
easily spend in other
search engines. Again,
as they are charged on
cost per click basis,
overall expenditure is
less
USERS
Low: They can easily
move to another search
engine depending on
their requirements

Network effects

ADVERTISERS
Negative: They create
a negative effect on the
user as their number
increases user try to
avoid search
enginesless
USERS
Positive: If the number
increases, more
advertisers comes in
and creates positive
cross-side network
effect.

Strong
Preference for
special feature
ADVERTISERS
Medium: They have a
preference for ads
being displayed in
relevant websites and
to relevant customer.
USERS
Low: No specific
preference other than
easily available results

Hence, the industry is not WTA

industry and so chances of becoming
concentrated is low

3.

Should Google
also branch out
into new
arenas?

Should Google also branch out into

new arenas?
Building a full-fledged
portal like Yahoo!

Multi-Homing costs are

high for at least one
user side

Network effects are

positive and strong at
least for the users on
the side of the network
with high multi-homing
cost
Neither sides users
have a strong
preference for special
features

Targeting Microsoft's
desktop software
hegemony

Becoming an ecommerce
intermediary like eBay?

Low

High

Low

User can easily switch

from one portal to other for
required product or service

Switching from MS OS is
difficult due to strong MS
software ecosystem and
compatibility issues

User and suppliers can

use multiple platform for
their product listing and
purchases

Positive and High

Positive and High

Positive and High

The Advertisers get high

returns due to increase in
growth of customers or
viewers of portal

There is a positive and

high symbiotic relation
between customers and
software developers for
OS platform

With increase in customer

base network effect tends
to garner high returns to
the suppliers

Preference-Exist-High

Preference-ExistModerate

Preference-nonexistent

Advertisers look for special

placement position and
click from customers with
high conversion potential

Customers look for a

platform that have wide
application base and
suppliers look for high
compatibility

Suppliers or customers do
not look for any
specialized feature and
there is no scope for
feature convergence

Should Google also branch out into

new arenas?
Building a full-fledged
portal like Yahoo!

Vision Alignment
organize the worlds
information and
make it universally
accessible & useful.

Threat of
Envelopment

Capability and
Future Profitability

Targeting Microsoft's desktop

software hegemony

Becoming an ecommerce
intermediary like eBay?

Yes-High

Yes-low

No

The portal aligns with

companys vision by
connecting customers
with relevant advertisers
of products

The OS platform can serve a

means to allow customer
access, analyze and
disseminate various services,
software and information
available with ease

The ecommerce platform

cannot serve in providing
information universally as the
information sharing will be at
mercy of info providers and
regulators

Moderate

Low

High

Depend upon the type

of services provided on
portal since other portal
may provide greater
bundle

Here OS remains a platform

on which others platforms can
build upon and is not a
standalone service

Since it is an standalone
service it can be enveloped

Low-Low

High-High

Moderate-Low

Google is yet to venture

into portal business and
the market has many
players with all
presenting similar
features

Google has experience in pilot

chrome OS and Android OS
for mobiles. Once a
sustainable ecosystem is
formed the returns becomes
exponential

The Google products and

searches may provide google
an insight into the market but
the market is highly
competitive with low profit

Should Google also branch out into

new arenas?
Porter's 5
Forces

Targeting Microsoft's desktop

software hegemony

Becoming an ecommerce
intermediary like eBay?

Low
There is a wide supplier
base

Low
Wide range of software vendors
and hardware providers

Low
Wide range of suppliers base

Bargaining
power of buyer

High
Customers demand a wide
range of product with
differentiated placement of
products

Low
Very few players and hence very
few choices for customers to
choose from

High
Large no. of players give
customers opportunity to get
high bargaining power

Threat of new
entrant

Moderate
Requires liaison with many
product and service
providers

Low
Requires high capital to build a
strong ecosystem

High
Ecommerce require low
capital and low liaising cost to
get the business start

Low
Development of substitute
may require high innovation
and cost

Low
The ecosystem of desktop PC is
well entrenched to be substituted

High
It can be substituted by brick
and mortar or supermall
models

High
Many platforms provide
portal services and is
dominated by Yahoo

Moderate
Industry is dominated by few
platforms but from highly cash
rich companies

High
Large no. of established
players in the market

Bargaining
power of
supplier

Threat of
substitutes

Industrial Rivalry

Building a full-fledged portal

like Yahoo!

Should Google also branch out into

new arenas?

Google should focus primarily on its core

business
It should leverage its cloud based
services to build its brand image
It should liaison with industries to
promote its cloud based service
It should leverage its Android platform and
cloud success to enter into OS business
It should take Anti-trust laws in mind before
moving into new segment

Portal service may be aligned to Companys

vision but its profitability must be analyzed
and own capability to compete with large
players must be studied before entering

Competing in OS development is challenging

since it is dominated by cash rich Microsoft
with well established business ecosystem
and hence must be proceeded slowly
building own ecosystem
The E-Commerce business must be avoided
as Google lacks capability and the
competition is high with many established
players and the sector is not aligned with the
companys vision

Thanks
!