There are five competitive forces of the external environment that influence the internal environment, in the case of Zagat:
A. Traditional Competitors: Zagat's expertise was providing surveys, reviews, rating, written accounts, information et cetra on places to go like restaurant, hotels, nightlife. In a relatively new corner of the consumer-rating industry, its competitors did not exist per se, because products like the yellow pages directory, Consumer report, Julia Childs recipe books, celebrity chefs, food section of New York times did not exactly do what Zagat did. Though the Michelin Red Guide exists, which covered a subset of Zagat's work, it was in Europe.
New Market Entrants: Zagat was not only new but started a niche, though other companies joined the baby-industry Zagat and gave it a run for its money for example CityGuide (now CityGrid), Yelp,
this reflected the growing power of consumers and creation of organizations to aid this growth.
Substitute products: The specific services Zagat offered was offered in a broad sense by consumer reports, difference was while consumer reports focused on testing new machinery before it hits market, Zagat reviewed current offerings by market players. It had no direct substitute upon entry till Yelp came later.
Customers - an organisations profitability is determined how it keeps hold of existing customers and how it attracts new customers. :Zagat was successful and profitable" (Laudon, 2005), then the establishment of internet changed the game, it was not a loss of customers as much as being unable to snag new customers like companies that offered similar services until they increased their competitive edge and went online in 1999.
Suppliers - the supplier has a big impact on how the end product is marketed as the organisation is able to offer its product to the end customer at a competitive price compared to its rivals (UKEssays, 2015). Zagat started with 200 consumers in NewYork, has grown to worldwide while Yelp has close 200million visitors and way over 100million contributors.
Value Chain: The Value Chain Model highlights specific activities within the business where competitive strategies can be applied and where information systems are likely to have a strategic impact. This model comes in Primary and Support activities. Zagat started as a paper-based review booklets to published best-seller books, it competitively upped its game by
A. Becoming an e-commerce market while keeping their brand standards of differentiation focus.
B. Further increased its profitability by using internet and technology to get more contributors, grow its customer base and general reach.
So even though it goes through up to seven updates as editions sell out through the year, the New York restaurant guide is invariably out-of-date before it even hits the shops".
D. With google on board as parent company, Zagat has access to higher funding, tech and research and development.
2.
Business models are "a design for the successful operation of a business, identifying revenue sources, customer base, products, and details of financing". Zagat business model: started as a personally-funded hobby of reviewing of services by two people with an initial customer base of friends and family. Now it is the local-grid search of a tech giant with exponentially increased purse strings with its revenue stream being paid-advertisers and some paying customers. Products are much more moderated and analyzed to ensure quality which lends to the "brand".
Yelp business model: created in response to a perceived need, with investors on board from the earliest days. its revenue stream is from paid-advertisers and consumers use the service free, hence a much larger data-pool source albeit with less moderated contributors.
3.
Zagat's content was suitable for web and mobile digital platform, because:
A. In a world of plenty consumer-generated data dumped online, Zagat sorted all and delivered relevant moderated and analyzed information which it made available on the go. According to "Mr Zagat explains why their website is different from others out there in cyberspace. "We have a very disciplined surveying process."
B. In the same interview with BBC's Finn, Mr Zagat also said, "we don't want just anybody going in, and throwing their comments on the wall." This is a testament to Zagat's continued hold on to quality content on its site.
C. This made it suited for this modern-day fast-paced environment of the IT age with desktop, mobile even app versions.
D. Zagat caters to high-end and low budget customers alike.
E. It was not only 30 point ratings (which Google later changed to 5 stars), Zagat loaded paragraphs that shared experiences and justified ratings.
F. Zagat's online page is not as cumbersome as most, with less number of searches. A chance to publish restaurant reviews while it is still relevant, because Restaurant businesses close shop/pack up very often, at which point the information is useless.
4.
It was a good idea by Zagat to use the pay wall, at least at first in 1999 when it was a market giant and no real competitors. But with the entrance of Yelp (a major competitor) in 2004, Groupon in 2009, CityGrid in 2010, Zagat had the option of taking the paywall down or reducing entry fee to the barest minimum to remain competitive. This access/entry fee was an idea touted by its founders Mr and Mrs Zagat and an investor Mr Myhrvold, the thought behind it must have been a view on quality and continued tradition of selling reviews for example the sales of paper-back and hard copy print of Zagat compiled reviews. Also the previous lack of access by search engines like Google to Zagat's content, unlike Yelp, further reduced Zagat's reach.
5.
Yes, the Google acquisition did make Zagat more competitive for awhile, Jason Clampet at Skift writes, "Whether or not Zagat’s brand voice will continue to rise to the top remains to be seen," and while "the Zagat brand may not seem as strong post-Google the content’s influence on diners and drinkers is arguably stronger than ever, thanks to its deep integration into the world’s most popular mapping service. Google on the other hand, its aim is to beef up its local-search-results-content to include results from an established rating system like Zagat. There have been internal issues with Google changing contract and laying off of Zagat's old employees, change in Zagat business model to accommodate the Google-way et cetra. Though as at 3rd of January 2018, Google had started to discuss the sale of Zagat, despite only having it for six years. Hence zagat being competitive in the future and under what management remains unknown.
Reference
Finn, M. () Discriminating Taste: How Class Anxiety Created the American Food Revolution. Pp 52
Wells, M. (2007) Zagat Eyes Go Global. Accessed http://news.bbc.co.uk/2/hi/business/6412507.stm
Hiebert, P. (2016, April 13), Consumer Reports in the Age of the Amazon Review https://www.theatlantic.com/business/archive/2016/04/consumer-reports-in-the-age-of-the-amazon-review/477108/
Owens J.C. (2018, January 3rd) Google looking to sell Zagat: Report Accessed https://www.marketwatch.com/story/google-looking-to-sell-zagat-report-2018-01-03
Threat of new entrants: Zagat faces a moderate threat of new entrants as the restaurant rating industry. Godaddy Promo Code It requires significant expertise and reputation, which can serve as barriers to entry.
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