A case study
Table of Contents
1 / 7
The internet industry is growing at a high rate. Currently the internet industry is among the industries which have experienced high rate of growth. This has been attributed to development of technology which has enhanced globalization. Despite the fall of the financial status of other industries internet industry has experienced growth due to the demand of advertising which is relatively stable and also websites are becoming simpler to be used by anybody and also increased their quality.
The industry still has more potential to grow due to the increase of the use of internet services in many sectors in the country. The sectors which have really contributed to the growth of the industry include the education sector, industrial sector, business sector etc.The increased use of the internet is due to its efficient services provisions in a very short time and also due to the vast information that it contains in all fields. The internet industry is making a lot of profits due to the increased use especially by advertisers. Two of the companies have a strong base in this industry are Yahoo and Google. These two companies are very lucrative which hinders the entry of other companies in the industry. (Plunket 2008).
Competitions in these companies involve the formation of strategies for attracting users to their websites. It also involves attracting advertisers in their marketing services that they provide. The competition is predicted to increase due to the increase in online marketing globally. Besides the two companies being competitors to each other, there are other two companies that are giving them competition in the internet information providers market. They are AOL and MSN.AOL is a limited liability corporatrtion while on the other hand MSN is part of the Microsoft.
2 / 7
The biggest difference which exists is that all the companies have different primary beliefs. Yahoo usually have a belief that it is portal where it is supposed to make a connection of people and their passion, their own communities and also connect the people with all knowledge in the world. On the other hand Google has the most inclusive web site index and has many other contents. This makes it possible for one to get information freely with internet connection. Google has an automated technology search which makes it possible for people to have access to all the relevant information required from the online index that is vast.MSN which is offered by Microsoft have the provisions of communication services which includes email. It also provides messaging services that are instant and online information offering such as MSN, MapPoint, MSN portals and also provides many channels all over the world.AOL is an internet servive provider which offers a combination of internet and all its branded services.
All these competitors offer their services in the same sector and also have the same targets in the market. The difference comes up as they have different definition of their services. Google has an advertiser network which has to services i.e. the Adwords and the Adsense.This is where Google gets almost 99% of its income.Adwords is a service which makes it possible for many businesses to put their ads in the various websites provided by Google.Adsense on the other hand usually offer the destination to web publishers and also for the web owners who offer space for adverts in the webs. The masters of the websites usually get money whenever there is clicking of the ads in the Google. In this case Google plays the middleman role. On the other hand Yahoo provides another alternative in the system. It takes the advantage of being the most visited site in the globe. It operates its services by selling ads for its sites which it owns. Its network has proved to be the most effective in the intelligent serving of ads. Its algorithm is designed in such a way that it makes it possible to find out where a visitor is going online in the yahoo network. Those are the tendencies by which it serves the ads. (Plunket 2008).
Its just recently that yahoo has launched Adwords and Adsense as a way of putting more pleasure in the competition. The difference which exists is that its service is called Yahoo Publisher Network but it still offers that same services as the Google network. The only area that Google has advantage offer yahoo is that yahoo has not been able to have a strong market in its advertising software. Yahoo uses the following factors in attracting advertisers: reach, effectiveness and efficiency in their marketing services. It also offers creative marketing solutions. Yahoo plays concentrates in the attraction and the retention of the customers’ while Google concentrates more on search. (Plunket 2008).
3 / 7
In their practices the two companies uses almost the same concepts in undertaking their business. They rely to a great extent on the accurate information which is related in our economy. They do not concentrate so much on how much the consumer is spending as they do to the economic performance as a whole.
The expenditures by advertisers in yahoo are usually cyclical as they show the conditions of the economy and also expose the buying and budgeting patterns. Due to their reliance on advertising it means that if there is a delay or decrease in advertising as a result of economic conditions it will result to decrease in its income. Yahoo mostly relies on the quality of their brands so in most of their practices they concentrate on maintaining the value of their brands as failure to do this would mean that their competitors would take that advantage hence harm their operating results. Maintenance of quality brand also makes them be in a position to attract more advertisers and expand their base of advertisers. The company has been spending much money and resources in the brand building efforts and also in awareness creation of their products/brands. The fear that yahoo and Google have is in the increase if the Consumer Price Index (CPI) and also any chance of inflation hitting the economy. The CPI is the tool used by the two companies in gauging the economy so that they are in a position to make any decision. This index is used to measure any change of basic goods and also services in relation to a certain fixed period of time. (Plunket 2008).
In the Competitive profile matrix yahoo scores higher than Google and MSN in branding. This shows that the company has competitive advantage over the other companies in the internet market in the aspect of branding. The maintenance of a strong brand by yahoo is rated highly in the internet industry by all the three companies. Google on the other hand is rated highly in customer loyalty, followed yahoo and then MSN comes third. Google also has high rating in the aspect of advertisements while Yahoo and MSN have almost the same rating in the advertisement factor. On employees talent Google still has the highest rating as compared to the other companies. In the accountability, culture and innovations yahoo is rated lowly behind Google and MSN.Finally in the overall market share weight Google is the highest rated internet service company,followd by Yahoo and the MSN.In the financial strengths margin of the gross profit for yahoo is 3,75 billion compared to Google which has a gross profit margin of 6.38 bilion.The equity return for yahoo is 8.5% while that of Google is 23.26% and that for the industry is 12.1%.The current ratio stands as at 2.54 for yahoo while that of Google stands as at 10. (Plunket 2008).
4 / 7
As can be seen from the above metrics Google is far much ahead of Yahoo in many aspects. The search products of Yahoo have suffered a lot in the market due to the company expansive process to other areas. The company has neglected the area of search products which was the area which made many people to visit their site. Google has taken that advantage due to its easiness to use and also has features that are not laden. The search feature in Google is usually straight forward and also simpler to use. Google has a higher rate also due to its expansion of its network in advertising. Another advantage that Google has taken over Yahoo is the fact that it has made the advertising network to be available even to outside publishers e.g. the webmasters who usually have smaller sites. Despite the fact that yahoo has started similar ad networks it will have a difficult time to take customers and the publishers from Google.
What Yahoo needs to do is to invest more money in making its algorithm more efficient.
As can be seen from the case study between the two internet company providers, Yahoo is being challenged by Google. It being challenged mostly in four areas. These challenges
includes :dominance of Google in search and space in advertisement, low revenues as a result of competition, lack of enough search results and also change of portals face.
What the company should do is concentrate more on search and also incorporate advertising in between. By this they will be in a better position to compete well with Google. The other issue that arises is the fact that it seems its difficult for other companies ton engage in this industry
5 / 7
due to the control that Yahoo and Google have. If this is not checked they may form a monopoly in the market which where they may exploit the customers. So it good that other companies should invent some strategies to venture well in the market so that the internet industry becomes filled with many service providers. This will also assist in the improvement of the quality of the services that they will be offering.
Another aspect that the companies should address is how to make transactions in the internet to be secure because the industry has been filled with agents who offer con people their money and also who give false information especially in the business sector.
6 / 7
Plunket, J. (2008).Plunket’s E-Commerce and internet industry, Plunket research limited
- Academic Writing
- Case Study
- Critical Thinking
- Education Questions
- Essay Tips
- Essay Writing
- Free Essay Samples
- Free Essay Templates
- Free Essay Topics
- Human Resources
- Problem Solving
- Research Paper
- Review Writing
- Social Issues
- Speech Writing
- Term Paper
- Thesis Writing
- Writing Styles