Baidu SWOT and PESTLE Analysis
ID : 52574653| Feb 2023| 20 pages
COMPANY PROFILE -Baidu
Business Sector :Internet
Operating Geography :China, Asia
About Baidu :
Baidu is a Chinese internet company founded by Robin Li. The company’s search engine strives to provide relevant search results for billions of daily queries by focusing on technology optimized for local tastes and preferences. Apart from its primary product, its search engine, the company also has several other products like its Baidu PostBar (the first ever Chinese query-based searchable online community platform in the world, Baidu Encyclopedia (the largest user generated Chinese encyclopedia in the world) and Baidu Knows (largest Chinese language interactive knowledge sharing platform in the world). The company also has other vertical search-based products like maps, video search, image search, etc. Using the Baidu websites and affiliated partners, Baidu offers ad displays and performance based online marketing services to businesses. Performance based online marketing services generate majority of the revenues for the company, wherein customers are charged based on cost per click.With its exceptional skills and technological breakthroughs in AI, Baidu is on its way to set a benchmark in the automotive industry as well. In mid-2019, Baidu proclaimed that it's been working on propelling the largest driverless taxi fleet in China. Later, the company also announced it has subscribed to a strategic partnership with China’s leading automaker Geely. This consolidation demonstrates an ingenious transmutation of the automotive industry and the popularization of smart vehicles.
Another remarkable achievement of Baidu in 2019 has been in outranking Microsoft and Google in the General Language Understanding Evaluation(GLUE) competition. GLUE is an internationally affirmed benchmark for 'how well an AI system comprehends human language.
Baidu’s mission statement reads “As a technology-based media company, Baidu aims to provide the best and most equitable way for people to find what they’re looking for.” Baidu's vision is 'to serve the needs of our users and customers with products and solutions that prioritize the user experience and reflect our corporate culture – simple and reliable.'
Baidu's USP or Unique Selling Proposition sprawls in being the second largest search engine in the world and the largest search engine in China by possessing 76.05% of China's market share. It is also one of the world's biggest AI and internet organizations. As of 2019, Baidu ranks number 4 on the list of most popular websites worldwide, by Alexa Internet.
Baidu Revenue :
RMB 107,413 million - FY ended 31st December, 2019
RMB 102,277 million - FY ended 31st December, 2018
RMB 84,809 million - FY ended 31st December, 2017
Competitive Analysis of Baidu
SWOT
PESTLE
The original name of Baidu was inspired by an 800-year-old poem during China's song dynasty. Baidu's literal meaning is "hundreds of times" which portrays a persistent quest for an ideal result. Since then, the company has been rendering intelligent and relevant results for billions of queries made every day on their search platform. Baidu's core competencies are focus on technology, optimized to meet changing preferences, profound knowledge of Chinese language and culture. These factors have helped Baidu achieve the largest market share in China and presented the company with a competitive edge over its peers. The SWOT analysis of Baidu shows that the company has some outstanding strengths that contribute to achieving sustainable growth in the information and technology sector and some great opportunities that can be harnessed for further growth and expansion. The SWOT report further confers intelligence on the weaknesses and threats that the company confronts being in such a highly competitive environment.
Baidu's most prominent strength is to occupy 76.05% of market share in China, which has the world’s highest internet user population of around 748 million users. Technological breakthroughs in AI, ongoing R&D in automation service, a first Chinese company to be incorporated in the NASDAQ-100 index, millions of mobile users, strong brand reputation and image, robust business and revenue model, etc. are some of the other notable strengths of Baidu. Despite all the internal strengths, there are weaknesses that curtail Baidu’s growth. Limited market share outside China, limited market share in the mobile industry, separation of its e-commerce subsidiary, low advertising activity outside China, etc. are affecting the brand and its operations.
Baidu's rival Google dominates the paid search and advertising section due to its exceptional AdWords and AdSense plans. Thus, with better marketing plans and brand awareness, Baidu endeavors to overhaul its paid search and advertising business. On its trail to transforming the automotive industry via groundbreaking technological innovations, Baidu seeks a huge opportunity to become a leading player in China's autonomous driving industry. In its home country, Baidu is shining due to substantially no competition. However, outside China mammoths like Google, Facebook, Bing, Wikipedia, etc. are a huge competitive threat to Baidu.
The SWOT analysis for Baidu is presented below in a SWOT Matrix followed by the detailed analysis:
Baidu's most prominent strength is to occupy 76.05% of market share in China, which has the world’s highest internet user population of around 748 million users. Technological breakthroughs in AI, ongoing R&D in automation service, a first Chinese company to be incorporated in the NASDAQ-100 index, millions of mobile users, strong brand reputation and image, robust business and revenue model, etc. are some of the other notable strengths of Baidu. Despite all the internal strengths, there are weaknesses that curtail Baidu’s growth. Limited market share outside China, limited market share in the mobile industry, separation of its e-commerce subsidiary, low advertising activity outside China, etc. are affecting the brand and its operations.
Baidu's rival Google dominates the paid search and advertising section due to its exceptional AdWords and AdSense plans. Thus, with better marketing plans and brand awareness, Baidu endeavors to overhaul its paid search and advertising business. On its trail to transforming the automotive industry via groundbreaking technological innovations, Baidu seeks a huge opportunity to become a leading player in China's autonomous driving industry. In its home country, Baidu is shining due to substantially no competition. However, outside China mammoths like Google, Facebook, Bing, Wikipedia, etc. are a huge competitive threat to Baidu.
The SWOT analysis for Baidu is presented below in a SWOT Matrix followed by the detailed analysis:
| 1. Dominant share of the Chinese online search market 2. Expansion of ecosystem beyond search 3. Investment in new technologies 4. Strong capabilities in Autonomous Vehicle (AV) technologies | 1. Controversies over search results displayed by Baidu 2. Low global market-share 3. High dependency on online marketing services for revenue generation 4. Slowdown in advertising revenue compared to peers |
| 1. Growing internet usage in Africa presents a great international expansion opportunity 2. Growing fintech industry provides diversification opportunities | 1. Execution, compliance and competitive risks of cloud-based services 2. Third party apps or practices interfering with user experience 3. Fluctuations in market values of investments |
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Detailed SWOT Analysis of Baidu
Strength
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Weakness
1. Controversies over search results displayed by Baidu: The company has been caught in multiple controversies regarding the search results displayed in its search engine. In January 2019, an article accusing the company of promoting its own sites, especially a platform named Baijiahao, through the search engine went viral on social media. The company denied the allegation and claimed less than 10% of the results are about Baijiahao. In 2016, a cancer patient’s death led to investigation by the Chinese authorities over allegations that the patient died from a questionable cancer treatment procedure that he had seen in Baidu’s search engine. The company was accused of showing dubious treatments in search results in exchange for money. These controversies cropped up at a time when the Chinese have few options for internet search, with Google having left in 2010, and with Bing also blocked in China for a day in January 2019. Baidu is the runaway leader in the Chinese search engine market with 64.5% share across all platforms, but these controversies might give an advantage to other Chinese search engines like Sogou and Shenma to gain market share by claiming objectivity in their search results. There are also murmurs in the public asking for Google to be back in China. Google is contemplating re-entering China with a censored version of its browser which, if successful, could spell the end of Baidu’s dominance.
2. Low global market share: Despite being the runaway leader in the Chinese search market, Baidu has negligible market share in the worldwide market that is dominated by Google. Baidu is hardly present outside China, unlike Google that dominates local search engine markets in many countries. As of April 2019, Google has a global market share of 88.47%. Baidu’s share is just 0.66%, which is considerably lesser than even Bing, which has the second highest share of 4.81%. Though Baidu is targeting global expansion and has made a beginning with forays into Japan, Brazil, Thailand and Egypt, it faces an uphill task to gain a significant foothold worldwide when even Bing and Yahoo could not compete effectively with Google.
3. High dependency on online marketing services for revenue generation: A large portion of Baidu’s revenue comes from online marketing services. In 2016, 91.5% of revenue was from online marketing services. In 2017 and 2018, the figures were 86.2% and 80% respectively. Despite the decrease in the share of revenue from online marketing services in the last few years, the company has a long way to go to generate other significant sources of income. If the advertisers on Baidu feel that lead generation would be better from other advertising platforms, then there will be a loss of customers for Baidu, which will significantly impact revenues due to this dependency.
4. Slowdown in advertising revenue compared to peers: The media advertising market in China is expected to grow 15% in 2019 despite the economic slowdown. Digital advertising is predicted to rise 22% and reach $79.8 billion in 2019, and become $134.3 billion by 2023. Baidu, despite being one of the top digital advertising companies in the country, is struggling to take advantage of the market growth and is being overtaken by competitors. The company’s advertising revenue growth in Q1 2019 was the slowest in more than a year at 3% YoY. This was less than the 10% growth in Q4 2018 and 23% in Q3 2018. Baidu’s peers Google and Yandex saw growth of 15.4% YoY and 18% YoY respectively. It is expected that the tax cuts by the Chinese government for small businesses would enable small companies to use the tax savings in spending on PPC advertising campaigns in search engines, which might boost Baidu’s advertising business.
Opportunity
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Threat
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Major Competitors :
- Alibaba
- Shenma
- Microsoft Corporation
- Bing
- Yahoo
- Tencent
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WHY BUY THIS REPORT?
TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
• The SWOT and PESTLE analysis report of Baidu presents a precise analysis of all the micro and macro factors that govern and influence the brand and its operations.
• The SWOT analysis presents comprehensive, internal analysis highlighting Baidu's strengths and weakness, whereas the external analysis helps to identify the opportunities for progress and threats that can hinder the internet mammoth’s growth.
• The PESTLE analysis is an insightful discussion on the current trends in the information technology sector with a precise depiction of the external factors and its impact on the industry and particularly on Baidu.
• A thorough explanation of how influencers like political, economic, social, technological, legal and environmental factors have developed Baidu's innovative business model. • Eliciting Baidu's key business segments by scrutinizing its business diversification and highlighting its major competitors.
• Review of the acquisitions, mergers, capital raising, equity transactions, alliances or partnership ventures that Baidu complied with deal valuations and the business objectives or goals that were achieved by them.
• Comprehensive company analysis to collect information about company profile, business model, business plans and marketing strategy, including abstract information of Baidu's share price, value proposition, and revenue jumps.
• Overall Company review of Baidu to understand its USP or unique selling proposition along with Baidu’s mission and vision statement.
• Insights into Baidu's business model, along with further breakdown and analysis of key business segments and business case study.
• Crisp synopsis of Baidu's core competencies that added competitive advantage to the company over its major competitors.
• Evaluate key performance indicators, core values and success factors for Baidu.
• The SWOT analysis presents comprehensive, internal analysis highlighting Baidu's strengths and weakness, whereas the external analysis helps to identify the opportunities for progress and threats that can hinder the internet mammoth’s growth.
• The PESTLE analysis is an insightful discussion on the current trends in the information technology sector with a precise depiction of the external factors and its impact on the industry and particularly on Baidu.
• A thorough explanation of how influencers like political, economic, social, technological, legal and environmental factors have developed Baidu's innovative business model. • Eliciting Baidu's key business segments by scrutinizing its business diversification and highlighting its major competitors.
• Review of the acquisitions, mergers, capital raising, equity transactions, alliances or partnership ventures that Baidu complied with deal valuations and the business objectives or goals that were achieved by them.
• Comprehensive company analysis to collect information about company profile, business model, business plans and marketing strategy, including abstract information of Baidu's share price, value proposition, and revenue jumps.
• Overall Company review of Baidu to understand its USP or unique selling proposition along with Baidu’s mission and vision statement.
• Insights into Baidu's business model, along with further breakdown and analysis of key business segments and business case study.
• Crisp synopsis of Baidu's core competencies that added competitive advantage to the company over its major competitors.
• Evaluate key performance indicators, core values and success factors for Baidu.
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References used in Baidu SWOT & PESTLE Analysis Report
1. Annual Report 2018 https://ir.baidu.com/static-files/4ce88b07-60fe-4561-9cc9-2b0e0ec9dfd6
2. Company overview https://ir.baidu.com/company-overview
3. Chinese tech giant Baidu to require real-name registration from users https://news.cgtn.com/news/3d6b444e30677a4d/share_p.html
4. How Baidu is Stacking the Deck Against the Competition https://www.fool.com/investing/2018/01/12/how-baidu-is-stacking-the-deck-against-the-competi.aspx 5. Bing, Baidu and a Big Mess for Chinese Search Engines https://www.wsj.com/articles/bing-baidu-and-a-big-mess-for-chinese-search-engines-11548328142
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Baidu SWOT and PESTLE analysis has been conducted by Nipunn V and reviewed by senior analysts from Barakaat Consulting.
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Baidu SWOT and PESTLE Analysis
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