This document provides an analysis of Baidu, the largest Chinese search engine. It discusses Baidu's position in the Chinese search market, competitors, resources and capabilities, sources of competitive advantage, financial performance, and sustainability of its advantage. Key points include Baidu having the highest expected revenue growth and investor confidence in the industry, with strengths in software, technology, and brand reputation providing sustained competitive advantages. Ensuring continued innovation and understanding shifting user demands are important for maintaining its leadership position over time.

1. baidu
Market
Analysis
Competitive
Advantage
Company
Analysis

2. baidu
“众里寻他千百度，蓦然回首，那人却在灯火阑珊处”

3. market segmentation
Chinese Search Market Overview
(% of total searches in millions, June 2009)

4. market segmentation
Positioning Map: Age vs. Education
YOUNGER, HIGHER
EDUCATED
Older
% <34 years old
Lower Educated
% college and graduate students

5. competitors’ products
✔
✔
✔
✔
✔
✔

6. porter’s 6 forces
• B2C (final users)
• B2B (advertisers)
• Internet access • Diversification
infrastructures • Innovation
• Hardware • Distribution accessibility &
• Software low fixed cost
• R&D investment
• Traditional media

7. key success factors
Relevant
Info for
End-user
Efficient
Advertising
System
Understanding
of Chinese Network
Market Effects

8. value network
Content
Providers
$
CONTENT SELECTIVE HUMAN
ATTENTION
SUBSIDIZING SIDE PREMIUM SIDES
SELECTIVE HUMAN
$$$ ATTENTION
SELECTIVE HUMAN CONTENT
Advertisers ATTENTION Users
Direct Indirect Network Effects Direct
Network Effects Network Effects

9. resources and capabilities
STRATEGIC RELATIVE
IMPORTANCE STRENGTH
TANGIBLE - SERVER 8 7
- FINANCE 7 8
- SOFTWARE 9 9
INTANGIBLE - BRAND
8 9
- REPUTATION 6 7
- CULTURE 6 8
- FOCUS ON
6 9
HUMAN SALES & MARKETING
RESOURCES - TECHNOLOGICAL SKILL 8 6
- MOTIVATION 7 7

10. resources and capabilities
STRATEGIC RELATIVE
IMPORTANCE STRENGTH
PRODUCT DEVELOPMENT 9 7
TECHNOLOGY (ALGORITHM) 9 8
- WEB SEARCH
- ADVERTISING TECHNOLOGY
FINANCIAL MANAGEMENT 6 8
R&D 8 5
MARKETING & SALES 7 9
- SEO SERVICES
- ABILITY TO RETAIN CUSTOMERS
- PRODUCT RANGE
GOVERNMENT RELATIONS 9 7

11. VRIO framework
Sources of Competitive Advantage
Costly Competitive
Resources Valuable Rare Organized Dynamics
to Imitate
✔ ✔ ✔ ✔ Sustained
Software
CA
✔ ✔ ✔ ✔ Sustained
Brand
CA
✔ Missed
Reputation
Opportunity
Superior
✔ ✔ ✔ Competitive
Technological
Skills Parity

12. financial analysis
%
exp.
rev, 65.83 22.37 32.72 16.44
growth
-10.4 24.07
ROI 48.43 19.79 27.11 5.64 25.37 50.94
P/E 88.66 23.71 22.40 20.97 18.62 53.81
One of the highest ROI in the industry
Strongest competitor is Tencent
Highest expected revenue growth
Considerable investor confidence

13. sources of competitive advan
Porter’s Generic Strategies
and Baidu’s Competitive Advantage

14. sources of competitive advan
Chinese
Nationalism
EXTERNAL MP3 Effect
Stability
Issues
Sources of
Competitive Baidu
Advantage Postbar
Superior
Understanding
of Chinese Mkt
INTERNAL
Software &
Technology
Brand Name

15. sustainability
Shifts in
Exploiter vs
User
Explorer
Demand
Sustainability
of Competive
Advantage
Competition Lack of R&D
(Tencent) Innovation

16. any questions?
您要找的是不是: any questions?
Giacomo Costantini
Giulia Devietti Goggia
Gabriele Falcone
Giulia Ricciuti
Giulia Tognini
Liu Wei
Li Ying
Mei Lei