Part A Question 1 The firm’s external environment is challenging and complex.
Because of the external environment’s effect on performance, the firm must develop the skills required to identify opportunities and threats existing in that environment.The general environment is composed of dimensions in broader society that influence an industry and the firms within it. We group these dimensions into seven environmental segments that they are demographic, economic, political/legal, social cultural, technological, global, and physical.1. The Demographic Segment included population size, age structure, geographic distribution, ethnic mix, and income distribution.2.
The Economic Segment included inflation rates, interest rates, trade deficits or surpluses, budget deficits or surpluses, personal savings rate, business savings rates and gross domestic product.3. The Political/Legal Segment included antitrust laws, taxation laws, deregulation philosophies, labor training laws, educational philosophies and policies.4.
The social cultural Segment included women in the workplace, workforce diversity, attitudes about quality of work life, concerns about environment, shifts in work and career preferences, as we;; as shifts in product and service preferences.5. The Technological Segment included product innovations, applications of knowledge, focus of private and government-supported R&D expenditures, as well as new communication technologies.6. The Global Segment included important political events, critical global markets, newly industrialized countries, as well as different cultural and institutional attributes.
7. The Physical Segment included energy consumption, practices used to develop energy sources, renewable energy efforts, minimizing a firm's environmental footprint, availability of water as a resource, and producing environmentally friendly products.For each segment, the firm wants to determine the strategic relevance of environmental changes and trends. Many firms cannot directly control the general environment’s segments. The recent bankruptcy filings by HMV Corporation highlight this fact.
Nowadays, in the world many people like through the Internet to buying products or download mp3 music and software, hence many retailers are affected. Opened in 1921, the famous British audio chain HMV, lost to online shopping competition (e.g. Amazon), HMV brink of bankruptcy.HMV could not directly control various parts of their external environment, including the economic, social cultural, technological and global segments, so lost their competitiveness.
However, these segments are influencing the actions that HMV Hong Kong and Singapore businesses, obtain private equity funds for AID Partners Acquisition. Now, HMV become diversification firm that it not only sell CD and DVD, but also provide audio-visual appliances for their customer.Since firms cannot directly control the segments of their external environment, successful ones learn how to gather the information needed to understand all segments and their implications for selecting and implementing the firm's strategies.Question 2 Value chain analysis is used to identify and evaluate the competitive potential of resources and capabilities. By studying their skill relative to those associated with primary and support activities, firms can understand their cost structure and identify the activities through which they can create value.The value chain is segmented into primary and support activities.
The primary activities involved with product’s physical creation, sales and distribution to buyers, and service after the sale, such as service, marketing/sales, outbound/inbound logistics and operations. The support activities provide assistance necessary for the primary activities to take place that they are included firm infrastructure, HRM, technologies development and procurement.How company achieving competitive advantage. The answer very clear, the business which wishes to outperform its competitors through differentiating itself through higher quality will have to perform its value chain activities better than the opposition. By contrast, a strategy based on seeking cost leadership will require a reduction in the costs associated with the value chain activities, or a reduction in the total amount of resources used.
For instance, the Ford Flex, which the company launched in fall 2008, was designed to turn heads and excite their consumers interested in crossover vehicles.According to the Ford Flex marketing strategy, we can more understand that only when a capability is valuable, rare, costly to imitate, and non substitutable is it a core competence and a source of competitive advantage. Over time, core competencies must be supported, but they cannot be allowed to become core rigidities. Core competencies are a source of competitive advantage only when they allow the firm to create value by exploiting opportunities in its external environment. When it can no longer do so, the company shifts its attention to selecting or forming other capabilities that satisfy the four criteria of a sustainable competitive advantage.
If a firm can pay attention these ways and successfully uses this tool, it will gain more benefit as well as can increase company image and loyalty.Part B Question 3 SWOT is used for organizing the findings of strategic analysis. By summarizing findings of strategic analysis in terms of strengths, weaknesses, opportunities and threats, strategists can better focus on how to deploy strengths or ameliorate weaknesses in order to exploit opportunities or neutralize threats.Strength Google not only has a good reputation and strong brand value, but also provided speed and user friendliness.
Users gained the ability to find information quickly and easily on the Internet. Google’s mission was to organize the world’s information and make it universally accessible and useful. Google have several Strengths. In 2004-2010, despite overall stock market weakness, Google remained strong.
According to the data, although the stock moved with the market in general, the company returned significantly higher returns to its shareholders than did the S&P 500. Moreover, Google was provided in 15 languages for their users and gaining international acclaim for its web search services.In 2008, Double Click was acquired by Google. In 2009, Google Docs was introduced, it allowed a user to upload all file types, including ZIP files, in order to work with those files online, and this policy is very convenient and innovative.
In addition, Google also have offering many extra services, in 2010, Google was seen as a global leader in technology that was focused on the ways people obtained information. In corporate-level strategy, Google achieving diversification that it provide over 30 products an services such as Google News, Google Finance, Google Map, Google Blog, Google Chrome, Google Music and Video, YouTube and Google Mobile Application, etc. Furthermore, most of the products and services offered to users were free, so Google did not compete on price.Weakness Google lack competitiveness of these area that relevance and usefulness of search results and the features, availability, and ease of use of Google’s products and services. Google search engine using heterogeneousness of the material and some content is arbitrary.
Moreover, Google no expert search as well as it has risk of content dead-ends that sometimes users find the citation, but can't access the full text. Furthermore, since 97% of Google’s revenues were generated from advertising, this placed the company in a tight position, if any advertising contracts were to dissolve or diminish in growth, Google might appear net loss.Google provided a number of online products and services, including Gmail, YouTube, and Google Docs, that it competed directly with new and established companies that offered communication, information, and entertainment services integrated into their products or media properties. Moreover, as Google spread its operations across the globe, more and more of its receivables were being denominated in foreign currencies. If currency exchange rates become unfavorable, the company could lose some revenues in U.S.
dollar terms. Google had limited experience with many of these financial strategies. Hedging strategies also had high costs, reducing the company’s overall profitability.In addition, Google was susceptible to threats from false or invalid visits to the ads it displayed, and has had to refund fees charged for advertising due to fraudulent clicks.
If Google failed to detect click fraud or other invalid clicks, it could lose the confidence of its advertisers, which would harm the company’s image and viability. Above of these reasons are Google's competitive disadvantage or inadequacy in their resources and capabilities that can lead Google to lost many competitive advantages.Opportunities Google had three primary service groups that they are users, advertisers, as well as Google network members and Other Content Providers. In case showed that the management of Google believed that the most effective, and ultimately the most profitable, way to accomplish the company’s mission was to put the needs of the users first, hence they can through that offering a high-quality user experience led to increased traffic and strong word-of-mouth promotion. Furthermore, Google can also try to dare more and more innovate and new content as well as improve their service quality to reach more new user groups.Threats Issues and Risk Factors Facing Google are the traditional search engines, such as Yahoo! Inc.
and Microsoft Corporation’s Bing. Although Yahoo! was the first search engine to gain widespread acceptance, it lost its dominant position when Google introduced its superior search engine technology, therefore Microsoft’s marketing power could make Bing a serious competitor to GoogleGoogle also facing some threats of other vertical search engines and e-commerce sites, for example, Web MD (for health queries), Kayak (travel queries), Monster.com (job queries), and Amazon and eBay (commerce and auction). Google competed with these sites due to they were trying to attract users to visit their websites and search product or service information in their websites.
Moreover, some users even navigate directly to those sites rather than go through Google. Furthermore, some users were beginning to rely more on social networks for product or service referrals, rather than seeking information through traditional search engines, such as Facebook, Yelp, or Twitter. At the same time, Google also competed against traditional forms of advertising, such as television, radio, newspapers, magazines, and billboards for ad dollars.In addition, Google also need to consider some challenges of international operations which included limited of geographic, language, and cultural differences among countries, as well as exchange rate risk, potential negative tax consequences so on. For example, some government pressure led Google to censor its web content in numerous locations.
For example, it was illegal to publish material in Germany, France, and Poland that denied the Holocaust .Question 4 Barriers to entry Identifying new entrants is important because they can threaten the market share of existing competitors, they bring additional production capacity. Moreover, new en trants have a keen interest in gaining a large market share, they may force existing firms to be more efficient and learn how to compete on new dimensions, such as using an Internet-based distribution.For Internet industry, Internet applications are difficult to keep proprietary from new entrants, so appear a phenomenon that flood of new entrants has come into many industries. Furthermore, reduces barriers to entry common such as the need for a sales force, access to channels, and physical assets that Internet technology eliminates or makes easier to do reduces barriers to entry.
Bargaining Power of Suppliers Increasing prices and reducing the quality of the products are potential means suppliers’ common ways to exert power over firms competing within an industry.Using Internet to conduct procurement is tends to raise bargaining power over suppliers, though it can also give suppliers access to more customers. Moreover, the Internet industry not only provided a channel for suppliers to reach end users, reducing the leverage of intervening companies, but also sometime can reduced barriers to entry and the proliferation of competitors’ downstream shifts power to suppliers.According to the Google's case, the future of the business depended upon continued and unimpeded access to the Internet for both the company and its users. Internet access providers may be able to block, degrade, or charge for access to certain Google products and services, which could lead to additional expenses and the loss of users and advertisers.Besides these, the Internet procurement and digital markets also tend to give all companies equal access to suppliers, and trend procurement to standardized products that reduce differentiation.
Threat of substitute products or services For the Internet industry, the substitute products can be making the overall industry more efficient, the Internet can expand the size of the market. However, the proliferation of Internet approaches creates new substitution threats.Substitute products are goods or services from outside a given industry that perform similar or the same functions as a product that industry produces. For instance, as Yahoo and Bing are the substitute of Google and they perform the same function.
Substitute products can make the overall industry more efficient, the Internet can expand the size of the market, but the disadvantage is the proliferation of Internet approaches creates new substitution threats.Bargaining Power of Buyer Buyers want to buy products at the lowest possible price, they will bargain for higher quality, greater levels of service, and lower prices. Hence, if the Internet industry's products are undifferentiated or standardized, as well as the buyers pose a credible threat if they were to integrate backward into the sellers' industry.For Internet industry, eliminates powerful channels or improves bargaining power over traditional channels, and shifts bargaining power to end consumers. The reason for this shift is that individual buyers or users incur virtually zero switching costs when they decide to purchase from one manufacturer rather than another or from one dealer as opposed to a second or third one.Rivalry among existing competitors Since an industry's firms are mutually dependent, actions taken by one company usually invite competitive responses.
Moreover, other firms generally are aware of competitors' actions, often choosing to respond to them, like the Google, Yahoo and Bing.For Internet industry, firms will try to reduces differences among competitors as offerings are difficult to keep proprietary or migrates competition to price or try to increasing pressures for price discounting that through reduce the variable cost relative to fixed cost,.Question 5 Google should analysis and understand their company’s external and internal environment. For external environment, Google need to analysis the general environment (elements in broader society that affect their firm), industry environment (factors that influence Google, its competitive actions and responses, and Google’s profit potential) and the competitor environment (Google need to analysis each major competitor’s future objectives, capabilities and strategies, such as Yahoo and Bing)For internal environment, Google should know its strength and weakness then try to maintain and improve their service quality. I support Google maintain their commitments that Google will do its best to provide the most relevant and useful search results possible, independent of financial incentives.
Its search results would be objective, and the company did not accept payment for search result ranking or inclusion. Moreover, Google also need to provide the most relevant and useful advertising as well as the advertisements cannot be an annoying interruption.In addition, Google should never stop working to improve their search technology and increase their security of website for each user. Nowadays, skilled hackers from around the world and they were able to enter supposedly “secure” websites to obtain user records and credit card information. Identity theft was becoming a major problem for the general population. Security/privacy issues were likely to become even more important as the amount of data and applications available on the Internet increased, therefore, Google should increase and improve their security protect system.
Google should also promise that they will continue dare to innovate, delight the eye without distracting the mind, and be worthy of people’s trust, and add a human touch. If Google can achieve above commitments, understand external threat, improve their weakness as well as enhance their strength, I believe they will not only gain more benefit but also will increase more user loyalty and brand value.
