Artificial Intelligence Possible Benefits and Challenges of Artificial Intelligence in Baidu, Inc.

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In the recent years, artificial intelligence (AI) is no longer considered as a robot in the fiction of science, despite the rapid development of engineering technology and computer science. Although its definition is always changing with the revolution of comprehension, AI is currently defined as the recreation of human intelligence processes (Spector, 2006). It creates intelligent machines that can solve complex issues as people do. The AI has various potential applications, and many companies have started to apply it in managing businesses as well as improving their work processes. Additionally, the machine has been added in the business field to enhance the functionality of the system (Elam and Konsynski, 1987). Although some business firms depend on artificial intelligence in their enterprises, it is apparent that they may face various opportunities and challenges in their operations. This paper will take Baidu, Inc. as an example and explore possibilities as well as challenges that may occur due to the use of artificial intelligence.

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In China, Baidu, Inc. is the leading market in the search engine as it occupies a significant market share. The company headquarter is located in the Baidu Campus, Beijing. Even though Baidu, Inc. was first incorporated in 2000, it has currently become the biggest Chinese website covering almost all the users of the internet in the country (Seymour, Frantsvog and Kumar, 2011). Its primary business is to provide a search engine that allows people to have the best way of finding information on the web and connecting users with services. The principal source of income is an online marketing as the company offers a wide variety of products aside from search engine (Fuchs, 2015). For instance, Baidu Baike provides users with a translation service, cloud storage, Baidu Maps, Baidu Music, as it is the largest user generated encyclopaedia of Chinese language similar to what Wikipedia does. Baidu Tieba is also known as the baggiest accessible online platform of communication in the country due to its large collaborative web-based knowledge of sharing and learning (Seymour, Frantsvog and Kumar, 2011).

According to Pan (2016), Baidu is currently developing an AI system known as the Baidu Brain where the computer technology will replace the brain of a human. The system can process representations of users, recognize the voice, process natural language, and identify images. Additionally, Baidu Brain can compute artificial intelligence algorithms, power, and big data (Farzindar and Kešelj, 2010). The company is also planning to implement AI technology that will help create advertising services, translation, intelligent mapping, among other services (Yan, 2017). As indicated in the annual report of the Baidu Company in 2015, it is apparent that search engine advertising known as Pay for Performance is the primary source of income (Deans and Miles 2011). The firm also provides various vertical search services in addition to the conventional search engine. Some of these services include Baidu map, Baidu Post Bar, Baidu music, and other non-content services of information (Pan, 2016). However, these services improve the traffic sources of the company and enhance the faithfulness of its client. From the PC internet era to the time of mobile internet, it is evident that the advancement of the internet conveys a few challenges to the firm (Zhou, 2011).

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Although many new search tools concentrating on particular markets are being set up and the ready customer being dispersed excessively, the monopoly status of Baidu’s traffic entrance is debilitated comparatively (Xiao, 2011). Furthermore, the company has invested a lot of money on O2O, which its yield-to-return ration has been little as indicated on the Baidu annual report. Consequently, the new growth point of the firm is weakened by the disappearance of the statistic profit of the internet. However, applying the AI technology in the current situation of the company would provide new opportunities for changing the system and redesigning plan of action (Li and Du, 2007). By doing so, the firm will focus on creating and developing new growth points in the business model. To achieve the goals of the enterprise, the manager and executives of the company will need to consider the way to deal with challenges caused by AI such as cultural changes in the organization.


The existence of Baidu in the time of PC internet has made it become the largest internet company in China considering the environmental perspective. Consequently, the arrival of a mobile internet era has made the firm turn into a follower (Varis and Wang, 2011). From the other internet companies in China, which include Tencent and Alibaba, Baidu has become the most recent one to enter the O2O business despite the fact that it developed into a shareholder of Uber, acquired many wireless, and created Baidu Nuomi and Takeaway as well (Xiao, 2011). However, the company is gradually losing its initiative in the competitive market of internet due to a strategic hesitation thereby becoming a significant threat to the business. Even though Baidu is the largest search engine in China, it has managed to accumulate its asset due to a large user base. Owing to this reason, the firm can take such an opportunity to develop its business. Various studies suggest that a right way to change a strategy is to avoid having unnecessary modifications of existing categories (Kotter and Schlesinger, 1989). Alternatively, a firm should consider inventing new classifications since strategic changes ought to work beyond the current system and support the informal learning that can provide new combinations and perspectives as well. In spite the fact that the company has a chance to change from a technology-based operation to a serviced one by applying Baidu Brain; it is apparent that an opportunity to reach high profit has been lost in the mobile internet era (Varis and Wang, 2011). As such, artificial intelligence can precipitate new operations for the firm so that it can become the pioneer of the future. Furthermore, the company can change its business to one based on AI considering the strategic perspective. Various sectors of activity, such as O2O, content ecology, and finance, may be consolidated with Baidu Brain technology so that the current business system can be optimized to create new services. Although this technique reflects a different feature that is based on innovation, it is clear that competitors will have challenges to imitate and compete with the company.

The Baidu Brain technology can also help the firm upgrade its primary line of enterprise that includes finance business, search engine, and emerging service activity. The company’s principal weakness is suffering a reputation crisis, considering the environmental perspective (Thompson, 2006). Such a defect may occur since the Pay for Performance pattern leads to numbers of frauds made by advertisers in the sort of search results. For the firm to advertise more precisely and solve the trust issue of users, it ought to consider using Baidu Brain technology. The latter has big data innovation and machine learning capacity that can provide a financial partner of the company with professional financial services in making decisions (Jiang et al., 2014). The exploration of Baidu changes related to money can also equip investors with more viable venture instruments that can assist in advancing the return of wealth management starting point. Baidu can also offer solutions in the financial segment, sell its technology, and participate in the entire process of its accomplices related to money.

Moreover, the company can coordinate with other industry firms regarding the developing services segment so that it can produce and create new products. At the same time, the company can penetrate the field of smart home devices if it cooperates with organizations dealing with household electrical appliances. It can also offer logistics improvement solutions by shortening the transit time using Baidu Brain and coordinating with companies dealing with such matters. Therefore, Baidu can be changed into an intelligent solution and a company based on innovation if there is the use of artificial intelligence. Although a business strategy is less generic than a business model, it is crucial to combine their analyses to protect the advantage of a competitor that can result from the design and execution of new plans of action (Drejer, 2006). However, the company can upgrade its business model, expand the scope of products, optimize the existing items, and complete the transformation of strategy by using Baidu Brain.

Business model not only alludes to the firm’s rationale but also depicts the way made by the business enterprise to deliver value to clients. It also reflects the needs of a customer and outlines the structure of expenses and profits through the operation and design of the different components of the chain value (Chesbrough and Rosenbloom, 2002). Baidu is the biggest Chinese search engine company across the globe that has managed to develop for a long period under the business model platform. The latter allows the creation of value by encouraging the exchange between producers and consumers (Chesbrough and Rosenbloom, 2002). Furthermore, Baidu is different from the operation of linear organizations, as it does not use a supply chain to create and control inventory. Instead, the company uses effects of the network to make methods of connection between markets and communities thereby enabling the interaction and transaction between the users. Despite the fact that Pay for Performance is the core business model of the firm, it is clear that the current plan of action focuses on O2O, search engine, and mobile customer. Its core business model is known as keywords bid, meaning that the firm charges the side of the browser rather than that of the client (Fuchs, 2015). As such, the profit model can be divided into various promotions depending on different platforms and types. Some of them include PC-side search, mobile search, network, and brand.

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Notably, great business models can produce prudent cycles and input circles that are robust and self-reinforcing. Through the business of O2O and search engine, the firm has managed to accumulate a larger base of users than before. An advanced technology and a large user base seen in the company have played a significant role in increasing the assets. However, the latter can be fully utilized by applying Baidu Brain that will develop and maintain more users under the environment full of competitors. By doing so, virtuous cycles will be created and enable the company to make the right decisions concerning the range of products, royalties, among others. On the other hand, Pay for Performance has various adverse effects on the reputation of the firm despite the fact that it brings considerable profits (Deans and Miles 2011). Due to such consequences, there is a high chance of losing clients of the company. As compared to Google that makes profits by using Google Adwords, it is evident that the level of the price provided by advertisers determines the search results of Baidu. Recently, the firm has experienced a crisis of trust because recommendable advertisements from Baidu have misled many clients (Thompson, 2006).

Therefore, applying Baidu Brain technology may help combine the prevalence of advertising, Pay for Performance, and the click-through rates that choose the kind of search results similar to the business model of Google Company. The search engine of Baidu can also keep track on the needs of users with the use of Baidu Brain. Additionally, the use of Baidu Brain helps in seizing the purpose of users and classifying their expectation thereby assisting the company in establishing a human intent database that can help promoters recognize the needs and interest of various target groups (Pan, 2016). Owing to this effect, the firm can use this innovative approach to upgrade its current business model. Its revenue may also increase with more focused advertisements since most of the promoters would be willing to invest advertising costs in the platform of the firm. On the other hand, the satisfactions and loyalties of users will increase by having an accurate search result. Such users will also be willing to utilize the search engine of the company severally, and this will attract more advertisers and increase the income indirectly. In this way, a virtuous cycle would be created by upgrading business model and in turn making a dynamic similar to the effects of the network.

Baidu is one of the biggest Chinese internet company has had a complex product line as well as an organizational structure. Considering its different departments, it is clear that applying one business model might not be a good decision since its services ought to meet distinct needs of the market by being involved in various parts of people’s daily lives (Chesbrough and Rosenbloom, 2002). Furthermore, there is a need to apply Baidu Brain technology because focused models of business are effective when they appeal to particular market portions with clearly separated requirements. For this reason, Baidu should subdivide its business model into centre units instead of using a single model since it has multiple sections and different lines of business. With the help of Baidu Brain technology, the firm can apply coordinated solutions on its segment of internet finance so that the scope of services can be expanded and find a new point of development as well.

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An integrated business model solution can be viewed as a procedure perspective with a high level of cross-functionality and a need for new administration practices and capabilities. Aside from that, the firm needs to change its logic of earning from a business model based on a platform to an integrated solution business model. It also needs to utilize and create capabilities in a different way and move the current position in the value network. However, Baidu Brain can play a major part in the company by providing a progression of business solutions and allow them to sell its innovation to financial corporates (Rauch-Hindin, 1986). Besides, various studies have found this strategy as an effective approach to transforming technology into a unique service capacity. For instance, the firm may learn from IBM that has a department known as Global Business Service to establish its administration concentrating on services related to the financial solution using Baidu Brain technology.

During the time of changing the business model of the company, managers need to consider various areas. To begin with, resources of provider and customer insight should be combined so that they can create a solution portfolio. Moreover, managers need to recognize sales opportunities by communicating about the solutions available for various departments. Lastly, they would need to deliver solutions and provide security for long-term value capture for suppliers and value creation for clients (Ali, 2013). By doing so, the company can form capabilities of financial services. With the help of artificial intelligence technology, Baidu can also provide a coordinating platform of business management to corporate. The firm can profoundly participate in the financial market by turning technology into services, thus expanding lines of business as well as making more profits.

As the process of management needs a sufficient influence from people, the organizational culture of Baidu also requires a transformation so that the modifications of the strategy and business model can be met. Besides, corporate culture is crucial in the strategic processes of the firm (Kotter and Schlesinger, 1989). A positive influence on strategic change can occur by managing cultural variations in an organization. Aside from that, it can be challenging to managers to alter the culture in an organization since its attributes are historically determined. Owing to this effect, the administration of Baidu may have trouble when changing its organizational culture when using artificial culture that would become its core in the business processes. In the course of developing the innovation-based culture, top managers need to consider mission, adaptability, consistency, and involvement in the firm (Ali and Dapoigny, 2006). By doing so, the company will significantly benefit in the market and become the most competitive one.

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Even though the mission of the company is developing into an intelligent solution and a platform based on technology in the future, it is apparent that some changes ought to be applied in other cultural aspects of the organization. To achieve this, top managers need to promote the AI innovation training to help product administrators and engineers understand it and come up with ways of developing products based on the new technology. Having a real culture in a company allows people to be involved in all the work and make a right decision that will lead to the achievement of organizational goals. However, to build a new culture in a company, it is crucial to organize a group that is specifically responsible for communicating and comprehending with every department that needs to upgrade its products with the assistance of AI technology. To get everyone involved in the new strategy, Baidu ought to consider practicing this method.


From the above information, it is clear that artificial intelligence can advance the current business system in Baidu Company. Although the firm is gradually losing its position among the largest Chinese internet companies such as Alibaba and Tencent, focusing on Baidu Brain technology will give the company an opportunity to change its system as well as a business model. As such, this strategy will enable the company to become a pioneer in the future. In spite the fact that the becoming an intelligent solution and a platform based on technology is the new mission of the company, various aspects should be considered. It is also important for top managers consider creating focused business models and generating virtuous cycles when designing new strategies based on the technology of Baidu Brain. Even though the transformation of the business model and its strategy may impose a challenge on the culture of the company, top managers ought to consider various activities such as involvement, consistency, mission, and adaptability. However, when dealing with opportunities and challenges that may occur due to use of AI in the firm, it is crucial to consider business model, strategy, and organizational culture as a whole since they are integral and each one of them can influence the operation of the company in one way or another.

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