The paper "The Five Competitive Forces That Shape Strategy" is a perfect example of a Management Case Study. Porter was determined to provide organizations with a framework through which they could analyze the competition and also determine their strategies. Porter's five forces examine the power behind the five opposing competitive forces that usually determine the firm’ s long-term successes as well as competition. The efforts of Porter with regards to the five forces are vital as far as the search industry is concerned. The following are the five competitive forces that can shape the attractiveness of the search industry; conflicting firms, the threat of product substitutes, new market entrants, and the ability of buyers and suppliers to exercise their bargaining power in the market. Porter’ s Five Forces Source: 12manage. com Competitive rivalry Michael Porter argued that the rivalry among firms inhibits an organization from achieving its objectives.
According to him, rival firms normally allocate massive advertising budgets for their products and services, give a high priority to innovation programs, offer excellent services to their clients and give discounts in order to win the race for market share and profitability.
In the search industry, those firms that employ various competition weapons are more competitive, and this enables them to enjoy a greater market share. Currently, there are more than 20 firms, which compete for market share with Google. Google as one of the main search engine providers faces competition from five main companies that include Yahoo, Ask, AOL, Baidu, and MSN. These companies have continuously launched new strategies with a view of gaining a larger market share and creating more sales. Advertising is the main source of revenue for search engine providers.
In the face of global competition, search engine providers have been forced to improve as well as expand their search advertising services in order to realize their financial goals. Clients are, therefore, switching to rival brands, and this is a major threat for Google. Researchers predict that the search industry will be saturated in the near future due to new entrants. Some of the factors that heighten rivalry in the search engine include the following: The increasing growth with regards to online actions is a major aspect that is strengthening rivalry. Organizations such as Microsoft are providing customer-responsive services through innovation. Many new firms among them MSN have been issued with licenses and thereby heightening the rivalry significantly. Also, rivalry in the Search industry revolves around such aspects as quality of services provided, relationship with various stakeholders, and accessibility of information among others. Generally, the level of competitive rivalry in the search industry is high. The threat of Product Substitutes According to Michael Porter, the threat of product substitutes is dependent upon the availability of other products or services outside the realm of the common product or service boundaries (Porter, 1980, p.
48). The internet has recently become the main source of queries and information gathering driven by search engines that return the results or information needed. This commanding presence of the internet gives Google a guarantee for success. As Niu and Liu, (2010, p. 6) note, there is no foreseeable substitute for the internet at the moment. The closest substitute would be the search of information physically through publications, which would be more involving, time-consuming, and much more costly. Therefore, the threat of new substitutes in the search market is weak.
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