Porter’s 5 Forces Analysis of Google/Alphabet

Porter’s Five Forces Analysis examines the ongoing business environments of different Google industries and markets prevalent under Alphabet. These services include Google’s web search market, cloud services, and the digital advertising industry. This external analysis revealed the five forces that are acting externally and shaping the industry environment, which are summarized below:

1. Competitive rivalry or aggressive competition – Strong Force
2. Buyers’ bargaining strength – Weak Force
3. Suppliers’ bargaining strength – Weak Force
4. Substitutes or Substitution threat – Moderate Force
5. New entrants or novel entry threats – Moderate Force (Externally acting forces)

Recommendations

This analysis revealed strong, moderate, and weak forces acting along with the external environment. The external factor of competitive rivalry exerts a strong force of competition in the industry. The next external threats are crucial as they exert moderate force. These moderate forces include the threat of substitution and the threat of new entrants. Furthermore, the bargaining power of buyers and the bargaining power of suppliers exert negligible threats in the information technology and online service industry. It may be said that Google corporation must focus on the threats of strong forces of competition. Effective strategies are needed to strengthen Google’s advantages. As a global technological and digital giant, the corporation must focus on innovative strategies to pursue technological advancements. Online advertising and internet services provided by Google should undergo rigorous innovation to ensure an upper hand in the competitive market environment and to retain the company’s global position.

Competitive rivalry or aggressive competition (Strong External Force)

Aggressive competitional rivalry is faced by Google. This section of analysis exposes the corporation’s vulnerability against the rising competition. The expedient growth of rival technological and internet service providers can pose a significant threat to a corporate’s financial resources and global position. The subsequent external factors are explored in-depth, which contributes to the threat of competition.

• Availability of IT and other Online services in bulk quantity (Strong force)
• Diverse presence of Technological firms and their products (strong force)
• Customers’ low switching expenses (Strong force)

The firm faces a variety of competitors in the online business industry. The significant competitors that are involved in internet business and pose serious competitive rivalry include Yahoo, Comcast, Twitter, Amazon, Snap, Microsoft, and Apple. Many new services are being introduced by Google, including Chromecast and Pixel devices, to promote search besides advertising business. Therefore, the forces of competition shown by this Porter’s Analysis are exerted by the strong rival corporations in the technology industry. In addition, customers have the advantage of shifting from one platform to the other without suffering high costs. Hence, this situation further exasperated the prevalent competition in the technological business environment.

Buyers’ bargaining strength – Weak Force

Google has shown resistance to the bargaining power of buyers. The analysis has revealed that this external factor weakly influences the corporation’s business; therefore, the firm’s strategic management policy remained uninfluenced by this external factor. The subsequent factors contribute to the weak influence of this force.

• Minimal individual buyer’s quantity (weak force)
• Buyers’ rises in demand (weak force)
• Modest quality of information available to users (moderate force)

As the contribution of individual customers gives minimal revenue, the corporation is resistant to this external force. Due to the rising demand of customers and buyers from technological and digital corporations, the buyers, in their individual capacities, do not exert any massive influence on the corporation’s resources. Moreover, modest knowledge available to the customers is another weak force on the consumer’s end. For instance, the data available to the advertisers doesn’t include a complex and dynamic knowledge of the advertising industry environment. The successive marketing policy of 4Ps further reduces the threat involved in this external force.

Suppliers’ bargaining strength – Weak Force

The easy access and availability of supplies and supplies contribute to the weakness of this threat in the external working environment. The external factors below subsidize the weak influence of this force on the corporation:

• Supply in abundance (weak force)
• Extensive suppliers’ availability (weak force)
• The company’s individual suppliers range from low to moderate

The abundant availability of supplies and suppliers makes this supplier resistant to any monopolistic ambitions. Thereby, it helps to weaken the force exerted on the technological giant. Google faces no issue in switching from one supplier to the other due to the rich suppliers’ network at Google’s disposal. Moreover, this Five Forces Analysis has revealed that the company has varied suppliers due to the diverse product range of the global tech giant. To further weaken these external forces, the majority of these suppliers operate on a low level as compared to Google. Hence, it is easy for the organization to extract demands from the suppliers according to the firm’s needs. Above all, the social responsibility policy of corporations further mitigates the threat by aligning the suppliers.

Substitutes or Substitution threat (Moderate Force)

The substitutional threat to the corporation exerts a moderate threatening force. Other prevalent substitutes include channels like television, print media, or radio, along with other advertising mediums. These alternatives exert a moderate force, as exposed by Porter’s Five Forces Analysis. The below-mentioned factors mainly contribute to this prevalent moderate threat:

• Modest switching cost (moderate force)
• Availability of alternative substitutes (moderate force)
• The performance-to-price ratio of substitutes (weak force)

The modest switching costs contribute to an easy availability for customers to shift to the other products. Therefore, the customers can easily shift to the other options for advertising purposes. The analysis revealed that this factor shapes a moderate threat to the global technology giant. Moreover, the easy availability of other substitutes contributes to easy access to other channels available to the customers. In contrast, these alternatives provide a degraded ratio of performance-to-price as compared to the ratio yielded by Google’s products and services. For instance, televisions provide an effective platform for advertising, but it is higher in cost. This segment of Porter’s model exposed these external threats of substitution exerting a moderate force of threat to the corporation’s business environment.

New entrants or novel entry threats – Moderate Force (Externally acting forces)

This segment of the Five Forces analysis reveals the last exerting force, which is moderate in existence and poses a moderate threat to the company. It includes new entrants in the corporate technological sector. It also includes new ventures by large technological giants. Moreover, many new startups provide services and products like Google. The external factors which constitute the moderate force of threat by novel entrants are discussed below:

• Modest business doing cost (moderate force)
• Expensive Brand growth (weak force)
• Company’s capacity to undergo regulatory procedures (strong force)

The first factor, which is exposed by the Five Forces Analysis, shows that many new entrants are setting up businesses against Google to provide related services due to the modest cost requirement. Moreover, the capacity to pursue regulatory procedures results in the easy establishment of new firms to compete with each other in the technological sector. Google’s global position as the most valuable brand makes it convenient to sustain growth and development in the long run. This edge, unfortunately, is not present for newcomers as long-term business survival and brand recognition require a lot of resources. By and large, the threat of new entrants into a technological corporation is moderate in force for Google due to the above-stated factors and the company’s successive management besides strategic policies.