Strategic Interview Flashcards
If you were Google’s CEO, would you be concerned about Microsoft?
Aside from competitive strengths and resources, Microsoft is a threat because they control two of Google’s distribution on-ramps. Internet Explorer is one of the biggest on-ramps to the web, where Google makes money from advertising. Microsoft also controls Windows, which is one of the biggest operating system on-ramps to multiple browsers.
Google must protect itself from being locked out of distribution on-ramps. A number of things it should and has done:
- Protect default search settings on any browser platform.
- Create its own browser alternative.
- Create its own operating system – both on PCs, smartphones and other devices that display Google advertising.
Google must protect itself from being locked out of these distribution on-ramps that Microsoft controls. Microsoft could do something really devious and prevent other browsers from running on Windows or it can prevent the browsers from accessing Google sites.
Google has taken the alternative browser step with Chrome, and they’ve done quite well, I believe Chrome has been around just under 12 years now and they own 43 percent of the market share.
What are Porter’s 5 Forces?
Porter recognized that organizations likely keep a close watch on their rivals, but he encouraged them to look beyond the actions of their competitors and examine what other factors could impact the business environment. He identified five forces that make up the competitive environment, and which can erode your profitability. These are:
1.Competitive Rivalry.
This looks at the number and strength of your competitors. How many rivals do you have? Who are they, and how does the quality of their products and services compare with yours?
Where rivalry is intense, companies can attract customers with aggressive price cuts and high-impact marketing campaigns. Also, in markets with lots of rivals, your suppliers and buyers can go elsewhere if they feel that they’re not getting a good deal from you.
On the other hand, where competitive rivalry is minimal, and no one else is doing what you do, then you’ll likely have tremendous strength and healthy profits.
2.Supplier Power.
This is determined by how easy it is for your suppliers to increase their prices. How many potential suppliers do you have? How unique is the product or service that they provide, and how expensive would it be to switch from one supplier to another?
The more you have to choose from, the easier it will be to switch to a cheaper alternative. But the fewer suppliers there are, and the more you need their help, the stronger their position and their ability to charge you more. That can impact your profit.
3.Buyer Power.
Here, you ask yourself how easy it is for buyers to drive your prices down. How many buyers are there, and how big are their orders? How much would it cost them to switch from your products and services to those of a rival? Are your buyers strong enough to dictate terms to you?
When you deal with only a few savvy customers, they have more power, but your power increases if you have many customers.
4.Threat of Substitution.
This refers to the likelihood of your customers finding a different way of doing what you do. For example, if you supply a unique software product that automates an important process, people may substitute it by doing the process manually or by outsourcing it. A substitution that is easy and cheap to make can weaken your position and threaten your profitability.
5.Threat of New Entry.
Your position can be affected by people’s ability to enter your market. So, think about how easily this could be done. How easy is it to get a foothold in your industry or market? How much would it cost, and how tightly is your sector regulated?
If it takes little money and effort to enter your market and compete effectively, or if you have little protection for your key technologies, then rivals can quickly enter your market and weaken your position. If you have strong and durable barriers to entry, then you can preserve a favorable position and take fair advantage of it.
Is Google a threat to Microsoft?
While Google Apps is a threat to Microsoft Office, the cost of switching from Microsoft Office to Google Apps is quite High. There’s not a lot of compatibility. So the threat of the Google Apps entrant is not as great as it could be, but they are definitely taking a chunk out of Microsoft’s business.
Should Google offer a StubHub competitor? That is, sell sports, concert, and theater tickets?
tbd
