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Google External Analysis - Jon Pigg

Google External Analysis - Jon Pigg - Jon Pigg External...

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Jon Pigg External Analysis of Google Inc. Porters Five Forces Analysis The following analysis is based off of the Porters Five Forces which are: competition, the threat of new entrants, buyer and supplier power, and barriers to entry. Using this model, we can effectively analyze the external environment that Google Inc. faces. Current Competition Many People may wonder: where does Google make their money? In determining this, we must first find out what Google’s objective is. Their stated mission is “to organize the world's information and make it universally accessible and useful. (3)” So they begin with what they are primarily known for: internet search service. From the search service, advertisements bring in the revenue. In 2008 Google Inc.’s revenue was $21.8 billion (1). Yahoo’s revenue was only $7.2 billion. There are millions of searches on the Google website daily. With all of these searches, there are billions of advertising dollars to be had. Google Inc. currently holds 83.13% market share, followed by Yahoo at
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6.84% (2). Obviously, there are competitors to Google, but with a 76.29 percent lead in market share, it is hard to decide whether Yahoo could be considered a threat at all. External Environment With the current economic state in the United States, and worldwide, many companies have seen decreased revenues. Although, many technology companies, like Google, are quite untouchable. Search and Internet ads as a whole are becoming exponentially more prominent in the world economy. Potential New Entrants Because current search engines have developed and stored years of data about user habits and about searches, the capability for a new company to enter into the competition and gain or hold position would be extremely difficult. For a new entrant to
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