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Google competitive forces and value chain models

Google competitive forces and value chain models

Considering Porter's Competitive Forces model and The Business Value Chain Model as described by Laudon (2007, p.96-106), we may identify Google's competitive forces and value chain models. From that perspective, I should point out that Google used the Supplier Power through "Differentiation of Inputs" and "Importance of volume to supplier" to create a search engine that combined the technologies of "Page's Page Rank system". In addition, Google has Barriers to Entry, as shown in "Access to inputs" and "Access to distribution" when they created "Brin's Web crawler", which visits Web sites and records summary of their content (Laudon, 2007, p.308). I should point out also that from these two competitive forces, Laudon (2007) has confirmed Google's ability to generate 50 percent of web searches (p.308), a tremendous amount of power to create more revenues.

Google's sources of competitive advantage and how it provides value to its users

In my opinion, Google sources of competitive advantage are: the ability to display number of web pages' indexes; even if it no longer does it, but the technology is used behind applications, which is the main idea that supoort indexing philosophy technology. This indexing idea was and still a source of a huge collection of information, which was never done before by other competitive companies, such as Microsoft. For example, Google could easily bring Usenet newsgroup messages, Web pages, PDF files, Postscript, Text, Microsoft office, Lotus, PowerPoint and Shockwave files in the hands of users. I should however, mention that this couldn't have been possible if Google's IT infrastructures, which still a secret because it is a part of its competitive advantage (Laudon, 2007, p.308) were not intelligently implemented. Consequently, wrote Laudon (2007), Google only needs to spend $1 for every $3 its competitors spend to deliver a comparable amount of computing power (p.308).

Problems and Challenge Google faces in this case; and management, organization, and technology factors that are responsible for these problems and challenges.

It is a contradictory phenomenon that Google has faced technological factors, which influenced its edge in growth and profit, in the same time became a challenge to its survival in advertizing programs. Laudon (2007) mentioned that its management tool, Ad words became vulnerable and "unscrupulous business have tried to use click fraud to drive up the cost of competitors ads and put them at a competitive disadvantage" (p.308). I wouldn't forget to point out Microsoft, one of the leader in personal computing, which has a tremendous constant pressure on Google. You don't want to have a competitor as aggressive as Microsoft in your backyard. I have notice a strong hunger that Microsoft has been showing lately, to purchase Yahoo, which is second to Google in online ads, and Google responded by making some advances to Yahoo, to share ads market (ABC News, 2008).

Does Google's business strategy effectively address these challenges?

To stay away from Microsoft power on Internet delivery, Google has adopted a proactive way to deal with it: "Since Google's applications are Web-based and not tied to windows operating system, Microsoft can't use its operating system monopoly to limit access to Google. Google is giving away its Linux –based programs over internet for free" (Laudon, 2007, p.308). Meanwhile, Google continued to be creative through its innovative spirit, by creating as more competitive services, in response to dominant companies, like Microsoft. They created a series of web-based services such as Gmail, Google Desktop Search, Froogle, Google Maps, Picasa, Google talk, ECT…

How successful Google would be in the future?

Before I have to say something on the future of Google being successful or not, let me examine a little bit what Laudon (2007) said about Microsoft as its competitor: "Microsoft battle for Google's market share goes beyond search engines. To Microsoft, Google has ceased being a search technology company and is now a software company, capable of infringing on the markets that Microsoft dominates" (p.309). Beside its power to continue improving its technological and management superiority to its competitors, Google still have a lot, to work on. AdSense is one the programs, which have demonstrated some failure in security delivery. More over, I believe that, with a Web –based platform applications, Google is vulnerable to fraud. I would however, attribute to Google future success to, its ability to move rapidly with the market, and its power to continue dominate in Web-based Innovation products and services.

Finally, I would agree with Eric Schmidt, Google's former CEO that "Google will need 300 years to organize all of the information in the world" (Laudon, 2007, p.310). I would guess he meant that they have a lot of work to do, and they are not limited in time!

References

Laudon, K. C., & Laudon, J. P. (2007). Management information systems & multimedia student CD package (10th Ed.). Upper Saddle River, NJ: Prentice Hall. ISBN: 9780132337748.

ABC News (2008). Google Assails Microsoft Over Yahoo Deal. Google Rips Microsoft's Proposed Takeover of Yahoo, Saying It Would Stifle Internet Innovation. Retrieved this October 18, 2008 from: http://abcnews.go.com/Technology/WireStory?id=4236209&page=1

About the Author

Nyagatare Valens is a state employee at Minnesota Health Department, and he works with others from private and public sector to support grantees engagements in the areas of audit, compliance and administration of federal, state and local government grants.
As Minnesota Health Department grants managers' team member, he is responsible for managing projects, leading grantees meetings and helping other team members understand the grant management environment. In addition, he has certain responsibilities for business development. He also does interact with other functional areas of grants administration, and other practices to execute work effectively.

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