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Google is the market leader (leading with double digits) among search engine firms followed by Yahoo and Baidu and given the low switching costs, low and better services from Baidu is all that matters to shift market dominance. Google intends to pull out of China and this is an opportunity for Baidu to increase its market share in the region.
Google’s substantial supplier force is curtailed by forward integration if Baidu, Apple, and Microsoft introduce newly invented software. Baidu and other search engines have their services improved, which is easy to pass on through other product and services on offer. Since there is no perfection in the search engine business, any firm can challenge Google market dominance.
Google is the market best, and leading by double digits means a wide resource base that increases through internet advertising that Baidu has not seriously challenged. Baidu on the other hand has increasing revenue growth resulting from extended internet marketing that is a threat to Google’s dominance, “Baidu’s TAC would constitute upward trend and close and close the gap with Google worldwide,”.
Google should design phone search engines and a software distribution framework that also runs advertisements. Another possible strategy for industry players would be merger, for instance, Google-Yahoo, and Baidu-Microsoft to pull resources together and eliminate market competition.
The firms should carry out market diversification programs with focus on customer satisfaction. Improving technical capability is also another area of future success.
Baidu and Google are in an oligopolistic market structure with few rivals; however in future, there could be emergence of individual firms under the UN charter to push for restriction on cross border trade. In addition, the industry does not have specified rules and regulations and this makes the industry liable to manipulation and exploitation.
A successful firm should have a skilled staff in the field of technology due to high-level competition and customer demand for sophisticated products. Invention of highly technical search engines will also drive the success of firms in this industry.
The external environment presents threat from Yahoo and Microsoft, but this can be turned into an opportunity in the future if either firm can merge to avert market competition. Internal environment involve strengths and weaknesses, which the firms can use to their respective advantage.
Baidu is also involved in diversification programs and it now offers phone services where clients can search for maps and financial. Baidu is offering services in Chinese language and according to Hitt et al. (2011), “CEO Robin Yanhong Li believed that Baidu’s understanding of the Chinese language and culture gave it an advantage in that market over Google,” (p. 23).
Outsourcing for the best and cheapest labor in running operations would be an area to explore to enhance better results since all the firms require high-level technology in running operations. Merger and acquisition will also be crucial in their strategic plans to avert immense market completion.
Case Study 3
Barclays: Matt Barrett’s Journey Winning Hearts and Minds
Barclays Bank views sustainability as the most important business parameter in determining its success. As a result, the firm identified and recognized PESTLE analysis as an effective model to manage the sustainability of the firm. Political/legal/governmental analysis depends on legal framework of the global market where stakeholders’ interests are increasing competitiveness of international trade. Global population is becoming weary of changing climatic patterns, levels of poverty, limited resources, and shifting trends in demography. As such, political and legislative measures continually evolve to avert potential crises. Barclays considers these issues and in response, the firm works with interested industry players to meet these regulations in order to sustain its operations in challenging business environment.
Another approach to sustainability is through economic analysis. This useful tool encourages the corporate world to address issues of development by engaging in dialogue with administrations, business entities, and other stakeholders. One way through which Barclays engages in economic initiatives is research and development, (R&D) to initiate economic advantages in countries where it runs its operations. The firm needs to invest in R&D, which may prove costly, especially in technology, given the level of competition in the industry.
Barclay’s social analysis is to focus on ways of increasing value to its customers and key stakeholders through analysis of social demographic trends. This measure achieves its objectives by weighing satisfaction levels of clients and product innovativeness to boost performance. Barclays also seek avenues through which the firm can remain competent by recruiting, training, and developing a crop of talented workforce. In addition, the firm ensures that their workforce is retained to avoid increasing overheads. There is increasing awareness among customers and if Barclays is left out in addressing social issues, it is bound to lose a substantial market.
Finally, given the technological advancement in ICT and internet marketing, Barclays is taking advantage of available opportunities to enhance its service and product delivery. The growth of e-commerce has necessitated provision of quick and efficient services to the satisfaction of a wide clientele. Through inventions in paperless banking, Barclays is able to address, empower, and fund global projects and this pulls a vast and loyal customer base. Further, the firm pioneers into skills and operations development as a strategy towards achieving excellence. Technology on the other hand can work against the firm if Barclays engages in disruptive technologies. Moreover, technology flattens business opportunities for small and medium sized companies that may challenge their market dominance.
Case Study 27
Tesco vs. Sainsbury’s: Growth Strategies and Corporate Competitiveness
Five key forces determine the business environment of the retail industry, which is market-oriented. These include expectations of key stakeholders (suppliers and customers), external environment, internal environment, and level of competition.
One major financial problem that may curtail Sainsbury and Tesco’s growth is continued rivalry in the industry that may push profit margins to zero if remedial measures are not put in place. This threat arises from high degree of substitutability of products on offer and high demand for supplies.
Both the supermarket chains can engage in product diversification as a means of curbing challenges facing the firms. Investment in private labels and other acquisitions are vital and as Hitt et al., (2011) note, “A large Sainsbury’s store typically stocks 50,000 lines, of which about half are private labels,” .
Industry players should consider imposition of implicit and explicit barriers to entry to the industry; for instance, by cornering suppliers and restricting supplies to new entrants. Incumbent also have substantial advantages emanating from economies of scale that they can use against new entrants through price cuts.
Strategic challenges that face the retail industry are lack of adequate mechanisms to control customers and suppliers. Customers’ power pushes down retails prices whereas suppliers impose strict prices for the firms to but their products.
Measuring company success in retail industry takes many dimensions, for example, positive book values (profits) and measuring the level of services and product delivery to satisfy customer needs. Increase in client base and expansion needs are the other parameters to measure success.
The external environment factors are threats and opportunities. Threats come from Tesco, Sainsbury, and ASDA, which can all expand to other regions to source for opportunities. Internal environment involve price cuts they can impose to prevent new entrants while weaknesses include their inability to control suppliers and customers.
Tesco’s wide extension strategy seem to work against Sainsbury and as Hitt et al., note, “Tesco’s sales increases occurred through increases in total square footage with the opening of new stores, including new formats such as Metro and Express,” (p. 379). This strategy is vital in developing a completely new experience to customers.
Recommendations to boost a wide service and product range for both the companies would be investment in change management and supply chain management. Tesco’s initiative towards introducing new brands is significant but major proposal is for the firms to merge as market leaders and avoid unhealthy competition.