Porter's Five Competitive Forces

Google is a good example of Porter's Five Competitive Forces, they use powerful techniques in order to be succesfull. Porters Five Forces are degree of rivalry, buying power, threats of substitutes, supplier power, and threats of new entrants.

Supplier bargaining power is currently low and should remain low as long as Google maintains strong market dominance. Because of the ad system they use to generate income, both the advertiser and the receiver are Google clients. The Android phone system has been selling with great success for all mobile phone companies, so suppliers of these items want to maintain a good relationship with Google as well, putting them in a somewhat powerless position.

Buyer power is strong in both the Internet and Computer Software industries. There are many competitors that host alternatives to Google’s offerings. While many of Google’s services are free, they rely on advertising to generate a moderate percentage of their revenue. If people choose not to use their services, this could cause a drop in advertising clients, affecting Google’s bottom line. There are also many companies that create mobile phone operating systems, allowing consumers the choice not to buy Google based phones. Because of this, buyers could potentially control pricing if there is a general consensus that prices are too high.

While Google does have current competitors in the search engine game (the two largest being Yahoo and MSN) it still commands a large majority of internet services. Its search engine is by far the most used year after year, and innovations like Google Earth and Street View leave competitors playing catch up. Yahoo and MSN both constantly update their services but they have yet to capture the success Google has.

When introducing the Android operating system, Google put themselves in competition with Apple’s iPhone. While it may be true that Android phones make up a larger share of the market than iOS phones, Apple only has a few versions of a phone that uses their OS. Many different companies have released Android power phones, making the market much more saturated. However, there is no one Android phone that would come close to the market share of the iPhone on its own.

The internet has become the primary source for information gathering and queries, and the backbone of this is built off search engines and other services that return the results needed. With such a commanding presence, Google Inc. has itself positioned for long term success on the internet. As of now, there is no foreseeable substitution for the internet. The closest would be a theoretical step backwards by depending on physically locating information through publications, which would have a large negative impact on both time and money of all involved.

Google Inc. has a low risk of new entry threat because of the high level of entry barriers. It would take a massive starting capital to build a startup network infrastructure to compete with all Google’s online services and products, and would be a considerable feat to maintain and upgrade services and products at a rate that would usurp their current control of the industry.
What could pose a threat of new entry for Google is a company focusing specifically on one of the services offered by Google. BY focusing all of their attention on one product, they could potentially develop a single better product than one of Google's if they have the talent and information necessary.