Google Porter’s Five Forces Analysis

Porter’s Five Forces analytical framework developed by Michael Porter (1979)[1] represents five individual forces that shape the overall extent of competition in the industry. Google Porter’s Five Forces are represented in Figure 1 below:

Google Porter’s Five Forces

Figure 1 Google Porter’s Five Forces

Threat of substitute products or services for Google is low. Search remains as Google’s and Alphabet’s core business and it is used by more than a billion people around the globe every day. The threat of substitute for Google’s search can be assessed as low because it remains to be the most convenient and time-efficient way of finding needed information.

The threat of substitute products and services for Google’s other services is moderate. For example, people can use mobile text messages or mobile messengers such as What’s Up instead of using Gmail and traditional paper maps can be used instead of Google maps.

At the same time, it is important to note that although, there are some direct and indirect substitutes for all Google services, these substitutes do not offer the same level of user convenience, functionality and speed. Accordingly, the threat of substitute products and services for products and services offered by Google can be generally assessed as low.

Rivalry among existing firms is fierce. General purpose search engines and information services, such as Microsoft’s Bing, Yahoo, Yandex, Baidu, Naver, and Seznam represent competition for Google search. There are also vertical search engines and e-commerce websites, such as Amazon and eBay (e-commerce), Kayak (travel queries), LinkedIn (job queries), and WebMD (health queries). Some users will navigate directly to such content, websites, and apps rather than go through Google.

Social networks, such as Facebook and Twitter also belong to the list of Google competitors. Some users are increasingly relying on social networks for product or service referrals, rather than seeking information through traditional search engines. Providers of digital video services, such as Facebook, Netflix, Amazon, and Hulu also compete with Google’s YouTube. As illustrated in Figure 2 below, despite the fierce competition in Google’s core search business, the company has a market share of over 85% and maintains a clear leadership in the global scale.

Google Porter’s Five Forces Analysis

Figure 2 Global desktop market share of leading search engines[2]

Bargaining power of Google suppliers is low. Google is substantially larger in size than any of its suppliers, the company is the main buyer for many of its suppliers, and accordingly, supplier bargaining power is insignificant. Google is able to change its suppliers and in most cases, supplier switching costs for the internet giant is insubstantial. These factors have downward impact on the bargaining power of suppliers.

Google embraces diversity among their suppliers. Small Business Supplier Diversity Program initiated by the company offers a range of benefits for US-based small businesses employing 50 or less people with annual revenues of USD15 million or less. These benefits include enrolment in 12-week program to Google Academy, 25% discount on Google Apps for productivity and payment within 15 days after the approval of invoice.[3] Accordingly, Google is focused on partnership with greater number of smaller-sized suppliers with negative effects on supplier bargaining power…

Alphabet Inc. (Google) Report contains a full analysis of Google Porter’s Five Forces Analysis. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Value Chain analysis and McKinsey 7S Model on Google. Moreover, the report contains analyses of Alphabet leadership, business strategy, organizational structure and organizational culture. The report also comprises discussions of Alphabet marketing strategy and addresses issues of corporate social responsibility.

Alphabet Inc. (Google) Report

[1] Porter, M. (1979) “How Competitive Forces Shape Strategy” Harvard Business Review

[2] Statista (2017) Available at: https://www.statista.com/statistics/216573/worldwide-market-share-of-search-engines/

[3] Small Business Supplier Diversity Program (2015) Google, Available at: http://www.google.com/diversity/suppliers/index.html