Steeple Approach Towards Google - Case Study Example

STEEP ANALYSIS OF GOOGLE Executive Summary In this paper, the will present the findings of a STEEPLE analysis on Google to determine whether the company is still a viable business option for investors and potential partners. The writer will provide a comprehensive background to the topic, justification for the analysis, the analysis itself and the findings, possible inferences, and relevant recommendations summarise the report. The main objective of this report is to determine how appealing Google remains as an investment option now and in the future. Table of Contents Introduction................................................. Findings and Analysis................................................. Conclusions............................................................ Recommendations ........................................................................... References.............................................................................. Appendix ....................................................................................................... INTRODUCTION Google is one of the most popular and sustainable companies in the world. It is also one of the few multinationals that combines innovation with sustainability to create a long-term blueprint to facilitate growth in all its divisions. The company has been regularly cited as one of the most admired corporations in the world, as well as one of the best companies to work for. In spite of these positives, the future of Google is not certain because it is unclear what the company’s future plans are. This creates an uncertain situation for potential investors and partners who would like to have some degree of assurance before they put their money or time in the company. A STEEPLE analysis is the best tool to provide a comprehensive outlook of the company so that potential investors and partners have a good idea of what they face and how they can manage their objectives to get the most from their plans. The analysis also provides a way for the company to self-appraise itself to determine where it stands socially, economically, politically, ethically, technologically, environmentally and legally. Between 2004 and 2010, Google experienced steady and rapid growth as it embarked on an expansion campaign and improved its products and services. The company launched various innovative products, expanded its advertising platform, and targeted more young and middle-aged customers to drive its growth forward. Products such as Gmail and Google Chat increased the company’s popularity and appeal as an investment option. However, the period between 2010 and 2014 saw a slowdown in growth as the company stabilized its operations in foreign countries, especially in emerging markets. The company also launched more operations and used a significant amount of resources to make its expansion a success. From this outlook, it is clear why a STEEPLE analysis is ideal at this time. It will provide a detailed report on Google’s future and the dynamics that will shape that future. FINDINGS AND ANALYSIS Political Political stability is a core component of Google’s entire strategy. Google is aware that stable political environments are favorable for businesses. When businesses flourish they advertise more on Google and contribute towards its growth and success. In all the countries where it has operations, the company took time to analyze their political stability before launching operations. In all the countries Google has identified as viable for business, the company has taken time to analyze their political environments to determine whether they support business growth and, consequently, Google’s biggest revenue stream, which is advertising. Google has been particularly interested in political environments which do not have what the company considers to be draconian internet laws. Unlike in the United States and other developed countries, which have strict laws governing internet usage, least developed countries have lax internet and information sharing laws, therefore making them ideal for Google. In developed countries such as the US, the company has been fighting regulatory battles against the government, customers and rivals. These regulatory battles are inspired by the strict laws imposed by the government, therefore the political environment is critical for the company. Few developing countries like China have political environments which do not favor Google’s operations, making it hard for the company to conduct business there. From a positive perspective, most of the political issues affecting the company are negligible. Apart from taxation policies, information sharing (internet) laws, environment protection laws and labor laws, there are few reasons for the company to be extremely worried about global political environments. In addition, apart from China, which is a unique case, Google has not faced political antagonism to that level anywhere else across the world. Government agencies have not had a major impact on the company’s operations, although it has faced increasing pressure from the US Department of Justice to hand over archived search data, and from the Chinese government to intensify censoring of search results or it should pack up and leave the country. The company’s “don’t be evil” slogan has been severely tested as customers ask whether working with governments compromises their freedoms and privacy. For instance, in 2008, the company responded to client concerns by installing a privacy link on its home page. The link directed customers to a Privacy Portal where they had the opportunity to learn about the firm’s political and legal challenges. Economic In the United States, GDP (gross domestic product) has been increasing for a long time. The trend is also observable in almost all the countries in the world, indicating that the global economy is growing. Globally, GDP is increasing yearly at a mean rate of 3.2%, reaching a peak of 17.2% in some cases. Countries such as the UK, China, South Africa and India have experienced increases in GDP every year since the 1970s. The BRICS (Brazil, Russia, India, China, and South Africa) are leading the way in GDP growth, and this is and has been good news for Google. With the stable and consistent growth of these countries, the firm’s internal and external business interests will always stay high. Economic growth means more users have access to technologies and the internet, meaning more people conduct internet searches, and advertising revenue increases. The number of customers in those countries can drive Google’s growth and allow them to create better products and services for their customers. The result has a positive net effect on Google’s growth. Interest rates can have positive or negative effects on any business. The gravity of these effects depends on a company’s operations. Google is a firm that depends on investments, meaning higher interest rates are beneficial to the company. In the UK, the mean interest rate is just over 8%, while in the US it is just over 6%. In South Africa, India and China, the rates are currently 13.3%, 6.6% and 6.4% respectively. These figures mean that firms in those parts of the world can take out loans and invest them to grow. The more fluidity companies have, the more willing they will be to spend on advertisements, which is Google’s forte. This increases advertisement opportunities for the company in those and other emerging markets. Inflation rates are also an influential factor across the world. Despite often being perceived as a negative factor, inflation rates can benefit companies by increasing their gross income. In the past few years, the UK, United States and BRICS have all posted a mean growth in inflation rates of between 2.5 and 9.5% yearly. What this means is that raw materials in those regions are becoming more costly annually, leading firms to raise the costs of their products and services and increase their revenues. The result is that Google’s revenues to also increase, and profits also increases in those regions. The US is currently still grappling with the effects of the 2008 economic crisis and shares are trading at some worrying lows at times. However, technology firms like Google are pretty buffered because search and, consequently, online-based advertisements have become a vital aspect of the global economy and society. As a matter of fact, experts argue that Google looks especially well-positioned to survive current and future slowdowns. The company’s specialization in highly desirable, measurable marketing and advertising has made it more crisis-proof than most other technological firms. The important need to stay updated and always connected makes such services thrive despite tough conditions. Technological Factors The critical factors to take into account when analyzing the technological issues affecting Google are new innovations and development, access to latest technology, the level of primary infrastructure, technology rules, government investment in research, technology incentives, and the rate of technological development. Google is a technological firm that drives innovation and development across the world by developing its own innovations. Technological issues play a major role in firms like Google and it forms part of its competitive strategy. The firm is not just a search engine; it offers many products, services and tools as well, and for free. Its IT framework is a well-guarded secret since it is one of its competitive advantages. The firm has more than 450,000 servers scattered across at least 25 locations worldwide and it employs a tailored edition of Linux operating systems to allow it flexibility and control in making new discoveries. Google’s success is largely due to its innovative products and technologies like adsense, adwords, pagerank, Gmail, Google Earth, Google Froogle, Google Groups, Google Desktop, Picasa, Google Maps, Google Talk, Google page creator, Google Spreadsheets & Docs, and Google Analytics. All these products, services and tools are free and are designed to make customers’ lives practical, vibrant, entertaining, convenient and efficient. To stay ahead of competition, the company has acquired many startup firms (131 at this moment) that enable it to benefit from the creativity, energy and dynamism that the firms bring. The companies are in various fields like advertising, retailing, security, file sharing, mobile technology, video, etc. Technology is clearly constantly improving and the company has taken precise steps to ensure it does not lag behind. It can use cheap computer components knowing they will fail by making sure that every part always has a copy. The parts are fixed to computers using Velcro instead of screws, which facilities quick exchange and upgrading. Sociocultural Issues Knowledge and information are vital aspects of human development. Google is a global leader in a society that is becoming increasingly globalized because its objective is to structure the world’s data and make it universally available and useful to everybody. Sociocultural issues the company faces include societal trends, customs and traditions, and societal expectations for businesses. Societal expectations can be classified into degree of education, income distribution, changes in lifestyle, and population demographics. The company is not limited to specific demographic populations, it is a global firm that provides global customers with global products and services for free with just one condition: internet connection. Consequently, there are no limitations on any particular culture, demographic or income class. This feature gives the company a very strong competitive advantage in the industry. Its tools are available to everyone and therefore anyone with access to the internet can advertise with Google, increasing its profits. Most third world countries with low development levels and living standards have IT infrastructure that supports internet connectivity for most of its citizens. This means that most of their citizens can access Google’s products and services using mobile apps. The company’s organizational objective is to provide customers with access to the world via simple click of the mouse or tap of the finger and this information does not have standards, cultures or traditions that must be adhered to when accessing it. The information can be productive and useful to one person and useless or unproductive to another. This has had a negative impact on the company. Google always works to stay up to date with social patterns and lifestyle changes among its customers so that it can capture their attention and entertain them with its products, tools and services while encouraging customized marketing and advertisement. The firm’s infrastructure is designed to identify its customers’ habits in addition to the use of data to tailor their search experiences with associated outcomes based on their history and habits. The company’s tools memorize all the information entered when performing searches and saves personal data for up to two years. In reality, the company sells some data to marketing companies. Legal and Ethical Issues Globalization of data has negative effect on societies that are anxious about securing their private information. To be truthful, the company sells some data to advertising firms and this has generated controversy and debate about privacy. The company has received heavy criticism for violating its users’ privacy. Organizations like the Privacy International Association have accused Google of harmful behavior towards users’ privacy, and for using the popularity of its products and services to conceal its ulterior motives when it comes to accessing and sharing users’ information. In the past, the company has been involved in legal and ethical controversies and cases that have highlighted its weak management of its legal and ethical environment. From a political perspective, Google’s storage of data could allow it to build better relationships with nations that do not like their privacy violated. Consequently, the company will enjoy more opportunities and profits. The company’s tendency to sell users’ information could cause harm to some of its customers. Although it is thriving currently, developments are constant and people might not tolerate the privacy violations in the future – even if they seem to be comfortable with it at the moment. This is a potential threat and weakness that the company must address urgently. The company has been fighting copyright infringement battles since its founding as result of its decision to save third party pictures and web pages on its servers. It has responded to this weakness by designing a copyright information page which provides the appropriate information on digital information as well as links to inform the company and the US Copyright Office of possible copyright infringement. CONCLUSIONS From the STEEPLE analysis and discussion, it is clear that Google is and will remain an attractive proposition for investors and potential partners. Although the company faces some challenges in its operations, the future looks bright overall. The company has been able to thrive – not survive – in the conditions, so it should not be difficult to maintain or increase the momentum going forward. It is clear that the legal and ethical environments are the company’s biggest weakness. The world is becoming increasingly interconnected through the internet and for many people, search companies like Google make the web easy and convenient to use. As internet use spreads across all cultures and age groups, the world will become more reliant on internet searches. Further, most new mobile phones are internet-enabled. People will use these gadgets to guide driving, download content, locate places, stay up to date with sports and political news, as well as perform searches. The company stands to benefit from such developments with more search queries, more traffic, and more advertising. To allow more people to access its services from mobile gadgets, Google launched its Android mobile operating system and platform, as well as the Google Mobile App that users can download on other platforms such as the iPhone. Recommendations The company should develop a more holistic and aggressive legal and ethical policy to reduce the negative effects of legal and ethical cases involving issues like copyright infringement. Google should also hire more legal and ethical experts to steer the company’s legal and ethical strategy because evidence shows that the current policy is ineffective. Google should also actively develop closer relationships with governments, and even closer relationships with its customers. These are the two entities that will determine its future success and longevity. Finally, the company should develop a long-term blueprint for success that includes all the STEEPLE factors and use its weaknesses, strengths and experience to improve the blueprint going forward. References Appendix Read More