Does Porter’s Five Forces Model Fit with Practitioner’s Experience? The Case Study of Google
1.0 Introduction: As a norm of Google’s have the form of strategic direction in which it serves in response to the area of different external forces in the environment of its industry atmosphere. Porter’s Five Forces analysis model that is used by the organization to understand the way of the strategic direction as a common norm of the strategic policy. Since 1998 Google was established and now they are holding the leading position in various the various forms of markets, such as in the market of the online advertising market. In the leading position Google as a large organization as a large brand in the online business as well as the online advertising market, now it has more than 57,000 employees in different locations around the world. (Adamkasi, 2017). So, by using the model of porter’s five forces (Does Porter’s Five Forces Model Fit with Practitioner’s Experience) and analysis with it, it could be very significant to understand the business situation of it, as well as will be found the significant characteristics of external factors in the area of the environment for the assessment of the organizational environment. The success behind the fact of Google’s progress is based on the ability of the organization like Google that would like to address their external forces. (Khorshed, 2016)
2.0 Overview of Five Forces Analysis
2.1 The Five Forces in an external environment can be overviewed as follows:
- Competitive rivalry or competition (Does Porter’s Five Forces Model Fit with Practitioner’s Experience)
- Bargaining power of buyers (Does Porter’s Five Forces Model Fit with Practitioner’s Experience)
- Bargaining power of suppliers (Does Porter’s Five Forces Model Fit with Practitioner’s Experience)
- The threat of substitutes or substitution (Does Porter’s Five Forces Model Fit with Practitioner’s Experience)
- The threat of new entrants or new entry (Does Porter’s Five Forces Model Fit with Practitioner’s Experience)
In competitive rivalry or competition, there is the factor of the cost and to ensure that the organization is providing the lowest rate in response to that it must have the lower switching cost. (Porter, 2008)
In bargaining power of buyers, there is the factor of pricing where the buyer has the power to bargain with the price and the company is required to concentrate on that factor as it may lead to the quality information about the price of the product.
In bargaining power of Suppliers, there is the factor of pricing and the matter of having good relation with the supplier where supplier has the power to bargain with the price what they will supply and the company are required to concentrate on that factor as it may lead to the quality information about the price of the product.
In the threat of substitutes or substitution product, there must have the threat of it because it is the nature of the consumer behavior that may turn to the use of substitute product but the company are required to concentrate on that factor as the options cannot be more highlighted than the core product.
In threat of new entrants or new entry, there is always a threat of the new business module coming with new business innovation, new and updated technology with belter concept, in that case the company are required to concentrate on that factor as they have also the power and opportunities to use and adopt the new technology or the use of updated technology. (Thero, 2018)
2.2 Criticize of Porters Five forces Model
- It has the more suit to the broader level of an entire industry
- It has the Static to be relied upon outside of short- to medium-term objectives.
- It has to be determined based on the industry level
- It has to demonstrate the subjective attractiveness of a given industry landscape.
- It has the spark discussion and underlines key concerns
- It has the opposed to a stand-alone recommendation.(John, 2017)
2.3 Company Analysis
2.3.1 Competitive Rivalry or Competition
To understand the way of the strategic direction as a common norm of the strategy policy Google have the strong force of competitive rivalry or competition. Under Porter’s Five Forces model, competitive rivalry helps to understand the way of the strategic direction as a common norm of the strategy policy in response to the limits the growth capabilities by the way of business practice. Google must consider the fact to understand the way of the strategic direction as a common norm of the strategy policy by the following external factors that have the extreme level of contribution to such strong competitive rivalry:
- There have large no. of firms (strong force)
- There have low cost as switching costs (strong force)
- Firm high diversity (strong force)
The competitors of Google are the Yahoo, Apple, Bing Comcast thus google have to understand the way of the strategic direction as a common norm of the strategic policy and the condition must have the strong force on the area of the Google’s business. (cazambo, 2014)
2.3.2 Bargaining Power of Buyers
As there has the phenomenon to understand the way of the strategic direction as a common norm of the strategy policy Google have the weak force of Bargaining Power of Buyers. Under Porter’s Five Forces model, Bargaining Power of Buyers helps to understand the way of the strategic direction as a common norm of the strategy policy in response to the buyer’s behavior by the way of business practice. Google must consider the fact to understand the way of the strategic direction as a common norm of the strategy policy by the following external factors that have the extreme level of contribution to such bargaining power of customer:
- There have individual buyers small size (weak force)
- There have moderate quality information (moderate force)
- From buyers, there have high and increasing demand (weak force)
On the area of the Google’s business to understand the way of the strategic direction as a common norm of the strategy policy each buyer there is only a weak force on the company if they cannot give the proper response to the customer high and increasing demand for products but need to ensure high moderate quality of information refers then it focuses on the limited knowledge to the area of the customer concentration. (Thompson, 2017)
2.3.3 Bargaining Power of Suppliers
This is very required to know the fact as there has the phenomenon to understand the way of the strategic direction as a common norm of the strategy policy Google has the weak force of bargaining power of suppliers. Under Porter’s Five Forces model, bargaining power of suppliers helps to understand the way of the strategic direction as a common norm of the strategy policy in response to the supplier behavior by the way of business practice. Google must consider the fact to understand the way of the strategic direction as a common norm of the strategy policy by the following external factors that have the extreme level of contribution to such bargaining power of supplier:
- There have large population suppliers (weak force)
- There have high availability supply (weak force)
To understand the way of the strategic direction as a common norm of the strategy policy each buyer there is only a weak force on the company if they cannot give the proper response to the customer high and increasing demand for products from Google. (Alex, 2017)
2.3.4 Threat of Substitutes or Substitution
If this is to consider the experience of google required to know the fact as there have the phenomenon to understand the way of the strategic direction as a common norm of the strategy policy Google have the moderate form of threat of substitutes or substitution. Under Porter’s Five Forces model, the threat of substitutes or substitution helps to understand the way of the strategic direction as a common norm of the strategy policy in response to the advertising channels, such as radio, television and print media by the way of business practice. Google must consider the fact to understand the way of the strategic direction as a common norm of the strategy policy by the following external factors that have the extreme level of contribution to such threat of substitutes or substitution:
- Moderate to the extent of the high availability of substitutes product (moderate force)
- There have low cost as switching costs (moderate force)
To understand the way of the strategic direction as a common norm of the strategic policy of advertising channels, such as radio, television and print media by the way of business practice and the condition must have the moderate force on the area of the substitution Google’s business. (Smithson, 2017)
2.3.5 Threat of New Entrants or New Entry
This is very required to know the fact as there has the phenomenon to understand the way of the strategic direction as a common norm of the strategy policy Google have the moderate threat of new entrants. Under Porter’s Five Forces model, the threat of new entrants helps to understand the way of the strategic direction as a common norm of the strategy policy in response to the threat of new entrants by the way of business practice. (Emerald, 2016)Google must consider the fact to understand the way of the strategic direction as a common norm of the strategy policy by the following external factors that have the extreme level of contribution to such threat of new entrants as new entrants can be new ventures with large technology companies to contribute to the moderate threat of new entrants/new entry against Google:
- Moderate cost in business (moderate force)
- Easily fulfilled the aspect of regulatory requirements (strong force)
- High-cost brand development (weak force)
To understand the way of the strategic direction as a common norm of the strategy, there is always a threat of the new business module coming with new business innovation, new and updated technology with belter concept, but have to face the legal law requirement in that case the company are required to concentrate on that as there have the moderate forces on the area of the threat of new entry. (Bartleby, 2013)
Summary of the Porters Five forces Model on Google
| Five Forces | Recommendation |
|
Competitive rivalry or competition |
Strong |
| Bargaining power of buyers | Weak |
| Bargaining power of suppliers | Weak |
| The threat of substitutes or substitution | Moderate |
| The threat of new entrants or new entry | Moderate |
2.4 Uses of this model theory in the practical world
For rivalry competitor, the competitors of google are the Yahoo, Apple, Bing Comcast, and like others. As there is diversity in response to all of its products, Google also has a diverse set of competitors. In response to this diversity it has the new area of offers to the customer like the product of the Google Glass, Chromecast, Google Fiber moreover they have the more under development diversified product like the Google driverless car is that will be a great development. To understand the way of the strategic direction as a common norm of the strategic policy and the condition must have a strong force in the area of Google’s business. There have the chance of the positivity in Customers experience where they may have low switching costs because it is easy for the customer to switch from Google to other companies if there found any misappropriation as they internet online market is open to all. Thus, it is very required to provide the surety of the low switching costs to the customer and it will help to understand the way of the strategic direction as a common norm of the strategy policy as well as develop a strong force by the organization like Google. (Singh, 2017)
For customer bargaining power, it is the matter of the product has a high demand on the market and having the buyer’s intention to grab those products that are really different from others. To understand the way of the strategic direction as a common norm of the strategic policy and the condition must have a strong force in the area of Google’s business. There was the chance of the positivity in Customers experience where they may have a moderate quality of information because it is easy to take the concentration of the customer by providing quality information. Thus, it is very required to provide the surety of the high quality of information to the customer and it will help to understand the way of the strategic direction as a common norm of the strategy policy as well as develop a strong force by the organization like Google. To understand the way of the strategic direction as a common norm of the strategy policy each buyer there is only a weak force on the company if they cannot give the proper response to the customer high and increasing demand for products from Google and if it is seen the other competitor is doing very well then it may create only minimal influence on the company. But if there have the moderate quality of information refers then it focuses on the limited knowledge to the area of the customer concentration. (Bemmorrow, 2016)
For supplier bargaining power, it is very required to provide the surety of the high quality of response to them and it will help to understand the way of the strategic direction as a common norm of the strategy policy as well as develop a strong force by the organization like Google. To understand the way of the strategic direction as a common norm of the strategy policy each buyer there is only a weak force on the company if they cannot give the proper response to the customer high and increasing demand for products from Google and if it is seen the other competitor is doing very well then it may create only minimal influence on the company. But if there have the moderate quality of information refers then it focuses on the limited knowledge to the area of the customer concentration. Google’s suppliers are diverse because the company has a diverse array of products, such as Google Glass, Google Search, and Google Fiber, among other competitors. (Sarah, 2017)
For the threat of substitute product, it is the way of the strategic direction as a common norm of the strategic policy of advertising channels, such as radio, television and print media by the way of business practice and the condition must have the strong force on the area of the substitution Google’s business make it easy for customers to move from Google’s advertising services to the substitute services like newspaper advertising, television advertising to the moderate force and to the moderate to high availability of substitutes means that customers have considerable options and it has the impact of these external factors as to the aspect of the moderate threat of substitution against Google’s products. (Dudovskiy, 2017)
For the threat of new entrants, It is the way of the strategic direction as a common norm of the strategy, there is always a threat of the new business module coming with new business innovation, new and updated technology with belter concept, in that case, the company are required to concentrate on that factor as they have also the power and opportunities to use and adopt the new technology or the use of updated technology and if it is seen the other competitor is doing well then it may create minimal impact on to satisfy customer need and find it difficult to sustain their operations in the long term as there are problem of legal law regulations, because Google already is top the customer satisfaction as the most valuable brands in the world. (Ram, 2016)
3.0 Conclusion
Porter’s Five Forces analysis model that is used by the organization to understand the way of the strategic direction as a common norm of the strategic policy. Thus Google has the high and the leading market as the strategic management to have on the area of cost leadership in the scope of competitive rivalry, in bargaining power of the customer they have the weak market forces in response to the quality of information and they have to strategic management to have the quality of information on Google search, in bargaining power of the supplier they have the weak market forces in their diverse array of product like Google Glass, Google Search and Google Fiber, in threat of substitute product they have the moderate forces in response to their advertising as there some substitute product for advertising, and finally they have the moderate forces in the threat of new entrants as the new entrants have to face huge competition in the market and meet up the customer satisfaction properly. Thus there are mixtures of market forces on which Google are doing business and for each, they have the required strategic management application to deal with this market forces. (Dudovskiy, 2017)
4.0 Recommendation
- To be the cost leader and taking cost leadership advantage from the market.
- To have the quality of information and product for the customer as they can be loyal to google.
- To have the good responses from the supplier and doing good to the diverse array of supplies like Google Glass, Google Search, and Google Fiber and ensure the best use of it.
- To have the proper information to deal with substitute product regarding the customer attention to the core product.
- Must consider the business policy of the new entrants and they are coming with which technology to read the new entrants business steps. (Pratap, 2017)
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