Competing with the best

Microsoft’s sales plummeted, so in an aim to recovers its revenue they made a deal with Yahoo to try and compete with the Google search engine.

Microsoft and Yahoo created their own “decision” search engine called Bing unveiled in May 2009.

Yahoo and Microsoft make a deal.

Yahoo and Microsoft make a deal.

According to the Financial Times, Microsoft would take on the costs whilst Yahoo would work on attracting consumers.

Another big partnership came when Nokia’s market had declined by 47 percent in 2009, so Nokia decided to partner with Microsoft. This amalgamation would create the Nokia E series which will incorporate Microsoft’s Office Mobile into its phones in order to compete with Google Chrome.

Although this does not tie directly into businesses, this alliance has been talked about and cannot be ignored. It also brings up the topic of competition and how a company, digital companies as well as other types of companies, should deal with competitive markets.

Although competition for Google is good, especially as a consumer it produces many questions.

Competition is important

Direct competition exists where organisations produce similar products that appeal to the same group of consumers. For example two corporations sell the same type of software.

Meanwhile indirect competition refers to when different companies make or sell items which although not in head to head competition still compete for the same customers and their money.

Both these types of competition are vital for businesses and consumers as it ensures that prices are not fixed. It ensures that companies are continually innovating and progressing in order to attract a wider market.

If one company reamins dominant, there would be no substitutes for any products and this would not enable the digital financial markets to flourish as a whole.

And while it is good that Google has the potential competition from two large corporations that do have the potential to compete with Google, how beneficial to consumers is this?

Larger risks
And as we have spoken about the benefits of Google or other monopoly corporations, there is a danger for big companies in trying to become bigger. Larger companies that employ more staff and have an extended reach across borders were affected more adversely by the recession.

For example, the Independent Media Corporation, although not only affected by the recession but other factors, they were left in debt. The Independent News Media owns 430 titles across the world, but lost most of it value and was immersed in 1.4 billion euro debt. They have more titles, more staff and other assets which they need to maintain.

In brief Big Company equals More Assets, resources and larger Markets equals more at Risk.

Risks such as that of stagnating instead of innovating, risks that another market or trade can be decline and directly effect the company.

International bank Barclays was also bad affected by the recession.
I came across an article by Larry Dignan, Sam Diaz, Andrew Nusca concerned with Microsoft search deal risks becoming AOL.

The article says
“Does Yahoo need to own the underlying search technology? Possibly. The biggest risk to Yahoo is that it becomes AOL, a company that’s a gateway to the Web yet a step behind. A company that owns vertical categories such as finance, news and sports, but little else. A company that doesn’t own any content. And a company too dependent on third party technology for a big chunk of revenue. AOL’s search fortunes are hitched to Google. Yahoo’s search bounty will be tied to Bing.”

Conglomerates risk losing their independence and previous structures that held them together. Convergences are important, but it does jeopardise other aspects of the company.

TIP: Think before you Ink.
Consider the negatives and positives aspects of making a deal or amalgamating with another company before making a fixed deal.

 

Look out for how to compete with other businesses that are similar to your own without overstepping the copyrights and other legal boundaries in business.

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One CommentLeave a comment

  1. […] which funded the Rhodes University and Journalism Careers Indaba, elaborates on my previous post, “Competing with the Best”, that competition gives rise to innovation, in the many […]


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