analysis of Baidu Inc. on different grounds

 analysis of Baidu Inc. on different grounds

Baidu Inc. is a giant Chinese search engine company that first operated locally, but with time it started to work internationally. Currently, Baidu is the fourth most used search engine for the desktop in the world after Google, Bing, and Yahoo, respectively. In China, Baidu is the most used search engine despite its drop with almost 88 percent. Baidu Inc. earns most of its income through advertisement. The purpose of this paper is to analyze Baidu Inc. on different grounds.

Situation Analysis

General environmental analysis

The name Baidu is derived from the Chinese history Song dynasty, which forms an essential part of Chinese history. The search engine also promotes nationalism in China, and this gives the company a competitive advantage over foreign Search Engines like Google. Baidu also works hand in hand with the Chinese government to block unwanted content. Internationally, Baidu can penetrate different markets through different strategies. The only region that was challenging for Baidu to enter was Middle East countries due to the unstable politicals in the areas.

Industry Analysis

Porter’s five forces is a useful tool to analyze industrial analysis of Baidu company. The forces include the threat of new entrants, bargaining power of buyers, bargaining power of suppliers, threat of substitute of product, and rivalry among existing competitors.

The rivalry between existing competitors

Though Baidu is a dominant search engine in China, Google and Yahoo offer stiff competition when it comes to the international market. Despite investing a lot in the O2O business and opening of Baidu Waimai, the e-Commerce field was already dominated by other sites like Alibaba and Tensent Inc.

Supplier power

Technology is an essential tool for all Baidu business activities. The company needs to incorporate different techniques to come up with competitive services. For instance, after the company decided to invest in artificial intelligence in 2016, it gave developers of artificial intelligence software and inventors to increase their prices and also wages for their services due to increase in demand.

Buyer power

This refers to the ability of buyers to switch from one supplier to another. As the most used search engine in China, Baidu lowers the bargaining power of the customers, especially those who want to advertise. For mobile phone products like DU battery saver, ES file explorer, Baidu antivirus, there are many google phone products and other companies which give customers more bargaining power.

Threat of substitution

Baidu is currently under the threat of change in the Chinese market. Local search engine companies like the Qihoo, Shenma, and Sogou have been gaining popularity in China while Baidu is loosing the same. The rate of growth of the local competitors may see a substitution in the future.

The threat of new entry

The field of technology is gaining popularity among many investors. Also, the business has proved to be more profit-making, considering the success of Google, Yahoo, and Baidu itself. This has seen new entrants into the market both for desktop and phones. For instance, Qihoo and Shenma search engine market in 2012 and 2014, respectively.

Competitor analysis

As indicated above, Baidu faces competition in every sector that engages. In the Chinese search engine market, both Qihoo, Shenma, and Sogou give Baidu competition. In the e-Commerce field, Alibaba and Tensent Inc. have more experience and customer base due to their long existence in the business. At the international level, Google has products that, by far, are preferable by customers. For instance, Google Android phones give them a competitive advantage.

Internal analysis

Like any other business, Baidu company has strengths and weaknesses. First, Baidu is well established in the Chinese market, and this has made the company successful in the land. Second, Baidu is a different company and its involvement in different businesses. As a result, it is capable of satisfying its customers in various fields. This is unlike companies like Alibaba, which concentrate on e-Commerce only. Baidu is involved in the invention of technology such as Baidu Brain, e-Commerce through O2O, and development of phone software including DU battery, DU Antivirus, ES File Manager, among others. The main challenge of Baidu is investing more in already dominated fields. In 2016, the company spent on e-Commerce through O2O, which was previously dominated by Alibaba and Tencent in China. Also, the company plans to invest in the US and Europe, but the market is already filled with Google products

SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats)

Strengths

First, Baidu is capable of investing in different fields. Initially, Baidu was focused on the search engine business; however, with time, the company ventured into a mobile search engine, e-Commerce, and phone software, Artificial Intelligence, among others. These have enabled the company to penetrate and become competitive in many countries. Second, Baidu perseveres in the market even when there is stiff competition. Baidu entered into the search engine business when Google was dominant in the market. Despite the challenges, when Google seized its operations in China, Baidu gained popularity rapidly, topping the list of best used mobile and desktop search engine in China as well as increasing its market share in the world. Third, the company can adapt to changes in the market quickly. As the use of mobile phones for browsing increased, Baidu was able to switch its focus to inventing mobile search engines, software, and O2O to satisfy its customers.

Weaknesses

First, the company invests more in the already dominated field. Mostly, Baidu is engaged in offering services and products that are already in the market. For instance, the company intended to introduce Baidu maps in the US and Europe. However, Google maps have previously dominated the markets. As a result, the company may suffer or go on losses.

Opportunities

Technology is always advancing, and thus Baidu should focus on developing new products or services (which has never existed in the world of technology). This will enable the company to be well known as it introduces new products. Also, the company has gone global, and thus, it should consider developing products that suit different cultures of the world, instead of venturing more into the Chinese culture to attract many customers.

Threats

The main threat of Baidu Company is competition. Baidu faces stiff competition in every business it ventures in. Most of the fields, like mobile software, e-Commerce, and search engine, are dominated by giant competitors. Also, the area of technology is prone to the entrance of new companies into the field due to its demand.

Strategy Formulation

Strategy alternatives

Baidu has different market penetration strategies depending on the preferences of customers. First, Baidu used the strategy of incorporating Chinese culture and nationalism to penetrate the home market. The company used different approaches to penetrate foreign markets. The company invests more in product development, and this has seen it penetrate different markets.

Alternative evaluation

Customers evaluate similar products in the market against specific criteria to make preferences. As a result, Baidu ensures that it places the best products in the market so that it can give customers reasons to prefer their products. For instance, DU battery saver has more advantages over other related mobile applications, and thus it is popular in many areas.

Alternative choice

In alternative choices, strategies are correct, but the company has to choose the best fitting company. In Baidu, before a strategy a project is invested in, the stakeholders usually have different considerations on it that will be beneficial to them. For instance, investing in Artificial Intelligence (AI) would transform into increased sales of the company.

Strategic Alternative Implementation

Action Items

Baidu engages in many projects, and thus it becomes its duty to ensure that they are complete. In the technology field, an uncompleted task translates to total losses in terms of finance and time.

Action plan

Baidu has a good action plan within its structure. It does not only rush to facilitate or sponsor projects. The company plans how it penetrates the market, when and where to do it. In its globalization strategy, the company targeted emerging markets like Brazil, Indonesia, and India because it could quickly peak than its presence in other countries.