Baidu business model from a search-oriented model to one based on Artificial Intelligence (AI)
Co-founded by Li and his friend Eric Xu in 2000, Baidu was China’s first home-grown search engine and was created with the mission of providing the best way for people to find information. The company offered a broad range of products and services including search services, Online-to-Offline (O2O) services, and an online video platform. Baidu’s investments in technology along with its focus on local content helped it maintain a dominant position in the rapidly growing search engine market in China. In order to establish a global footprint, Baidu forayed into emerging markets such as Brazil, Indonesia, Japan, Egypt, India, and Thailand where Internet usage continued to climb. As of July 2016, Baidu commanded over 80% of the Chinese search market, and was among the world’s top five search engines in terms of market share.
In May 2016, Baidu planned to overhaul its business model from a search-oriented model to one based on Artificial Intelligence (AI) due to a slowing revenue growth in its core search business. The company planned to focus on developing products in areas such as automatic translation, voice search, and driverless vehicles. Li also planned to emphasize user experience over income and set up a department to root out any behavior that might hurt user experience.
Li had a tough task on his hands and analysts were waiting to see how he would navigate the challenges faced by Baidu.
The following points are to guide a review and discussion of some important concepts.
• Review Baidu’s general environment segments and elements and describe in detail all the elements associated with this segment. Include three to four perspectives of the general environment.
• What are the segments in the general environment that relate to Baidu’s situation? Be specific. Provide examples and details.
• Analyze Baidu’s intended international corporate-level strategy. How was it strategized and what led to these countries of interest?
• Identify Baidu’s current challenges. Based on your analysis, what additional recommendations would you make to help Baidu achieve its goals?
• Discuss the uncertainties and risks of doing business in different regions throughout the world.