Google Inc. Analysis - Case Study Example

Google Inc. Case Analysis of Table of Contents Introduction 3 Situational Analysis: Industry trends 3 Corporate strategy 4 Business level strategy 4 Functional strategies 4 Porter’s five forces 4 Internal Analysis 6 SWOT (strengths, weaknesses, opportunities and threats) analysis 6 Strengths 6 Weaknesses 7 Opportunities 7 Threats 7 Competitive Analysis/ Industry Group/Perceptual map 8 Ethical issues 8 Finance 9 Alternative Actions Considered 9 Recommendations 10 Conclusion 10 Appendices 11 SWOT analysis 13 Perceptual map 14 REFERENCES 15 GOOGLE INC. CASE ANALYSIS Introduction Google Corporation was founded by Brin and Page in 1999 to organize the world’s information and make it universally accessible and useful. The company has attained high growth due to its ability to develop superior search solutions and monetize the content them through advertising. The organization has extended its item offerings to acquisitions since it IPO, and some of the recent products include the Android operating system, YouTube, DoubleClick and Google Checkout. The company is headquartered in Mountain View, California and commands about 65.6 percent of all the US searches. The company has diversified and integrated product and service portfolio that include web search: Google Chrome, Google News, Google Scholar, Google Docs, Google Analytics, Google Apps, Google AdSense, Google Ad words, YouTube, Google Maps, and Google Earth (Tapscott & D. 2015).  Situational Analysis: Industry trends The factors that determine the paid listings provider’s revenues include the coverage rate, the average cost per click, the click-through-rate and revenue split. Google has an extensive coverage rate and has improved the click-through rates through the innovation of the keywords. The revenue split is the percentage of profits paid to network affiliates, and ordinary partners receive about 60 percent of revenue share. (Tapscott & D. 2015). Google now controls approximately 90 percent of the internet searches and has diversified its operations to other products such as mobile and cloud computing, music, and video distribution. Corporate strategy The corporate strategy of Google is aimed at organizing world’s information in a manner that makes it more accessible and useful. The company is committed to informing, educating and entertaining the users through diversified products and services. (Tapscott & D. 2015). The company is currently attaining growth through vertical integration with suppliers and diversification strategy that has led to the addition to new, different products to its mix. Business level strategy The business strategy of Google is aimed at ensuring consistent technological innovation and sustained acquisitions that will lead to revenue growth and satisfy emerging customer needs. The business strategy is geared at developing distinctive competencies and identifying new market niches such as the Google Checkout and Google TV. Functional strategies Google has deployed several practical strategies such as innovation and use of superior search engine technology, implementing effective human resource policies and extending the distribution channels across all markets in the world. The company is committed to an efficient utilization of its research capabilities and integrating activities in the functional areas such as advertisements and promotion to control operating costs. Porter’s five forces Porter’s five forces analysis is useful in determining the competitiveness and attractive of an industry. The marketing tool consists of five forces that include the threat of new entrants in the industry. The coming to terms with of business in the request, the deal talent of suppliers in the bearing, the danger of substitutes, the breadth of contention in the relevance. The threat of new entrants in the internet and telecommunications industry is small due to the high capital required to establish operations and absolute cost advantages of the established companies. The established companies have many proprietary products, substantial economies of scale and wide brand recognition. The danger of substitutes is high because of the accessibility of comparable and undifferentiated items that are offered by contenders and small exchanging expenses. The bargaining power of suppliers such as content providers, software providers, and partners is high, but Google has responded to this threat by creating long-term partnerships with equipment vendors and content providers. The company has also continued to deal with substitute threat through acquiring small players in the market. (Tapscott & D. 2015). The selling force of purchasers is high since sponsor’s whine of uncalled for charges on advertisements showing up on improper destinations. The publishers and video content providers have alternative platforms where they can sell their content while the threat of backward integration is high. The degree of rivalry in the industry is high due to high exit barriers, fixed costs of the industry, industry concentration and diversity of rivals. Large competitors such as Yahoo and Microsoft present high competition due to their established brand identity and ability to offer similar products. According to the five forces analysis, the industry is highly competitive, and Google should differentiate its product offering to attain the competitive edge in the industry. The company should acquire related businesses and diversify its product portfolio to maintain growth. The company should target niche markets such as e-commerce transactions through use of Checkout product and Google TV that provides premium TV channels. Internal Analysis The company has more than 20,000 employees that are spread in numerous markets of operations and recorded $ 21.2 billion in gross revenues in 2008. Google launched Nexus One Mobile device and Android operating system to diversify its operations. The organization has an adaptable authoritative structure that encourages choice making and development. SWOT (strengths, weaknesses, opportunities and threats) analysis Strengths Google has attained global brand recognition and customer loyalty due to its innovative offering to its clients. The marketing strategy has differentiated the company from competitors such as Yahoo due to ability to concentrate on the customer’s perceived value and integration of the various products. The company has an effective and efficient search engine that has made the company attain leadership position in global internet searches due to the modern web page indexing technologies that enhance the accuracy of the search results. Google can generate revenues from third-party partners since the company has dominated the internet ecosystem with various products. (Tapscott & D. 2015). The Android operating system can run on different hardware platforms while the open source software has increased the usage across different platforms. Google society is another quality that has been discriminating in enrolling and holding capable staff that are focused on the mission and vision of the organization. The company provides excellent training and opportunities for self-actualization through enabling each employee to undertake their creative project thus facilitating innovation in the enterprise. The company is focused on strengthening partnerships with hardware and software manufacturers and has partnered with NASA Ames Research Center to develop capabilities in distributed computing and nanotechnology. Weaknesses The company experiences weaknesses in its business model since advertisers have on various occasions complained about charges that they deem improper especially the click fraud. The company mainly depends on its Ad words and AdSense for revenues rather than mobile commerce and e-commerce that are the emerging earnings streams. Opportunities There are various opportunities that Google should exploit to remain competitive and sustain its business revenues. For instance, Google TV offers high growth potential due to the current changing dynamics that favor Pay TV services, movies, and premium channels. The TV customers are moving from the conventional cable and satellite platforms to digital platforms that include pay-per-view and Internet TV programming (Tapscott & D. 2015).  The high penetration of Smartphone and internet provider’s high growth prospects since many users will be able to attain convenience in enjoying Google services such as e-books, Google Maps. For instance, more than 1 billion people use android operating in their mobile devices. Another opportunity for is the improvement in computing technology that will enable Google to address customer concerns on ads pricing. For instance, Google Analytics and Estimated Total Conversion technology will allow the company to ensure efficiency and create transparent billing system. Threats Google faces the threat of costly lawsuits on content such as infringement of copyrights of the e-books and trademarks of advertisers. Google has faced book scanning litigation in various countries including France. (Tapscott & D. 2015). The company faces a failure in its information communication infrastructure due to increasing in global terrorism attacks and threats. The company is facing a threat of counterproductive legislation due to concerns about e-commerce security, online pornography and privacy breaches. Google is facing competition from emerging technologies such as social media platforms like Twitter and Facebook that offer advertisement services and enable users to connect to their friends. Advertisers find social media sites more attractive due to the ability to engage the target audience and receive instant feedback. Competitive Analysis/ Industry Group/Perceptual map Google dominates the internet online advertising market, but their other competitors such as Yahoo, Microsoft, eBay, and Amazon. Yahoo offers products that match Google’s Gmail, Maps, Picasa applications, Local search and Google Finance. Microsoft offers Bing search engine while eBay offers Pay Pal Service that competes with Google Checkout. Hulu offers online videos while Facebook provides services such as ads, app platform and picture hosting. Ethical issues The company has implemented strict ethical guidelines that ensure that ads are displayed when they are relevant and ensures that advertising does not compromise the search results. The company has banned pop-up advertising while security and privacy tools ensure that customer confidentiality is not compromised. (Tapscott & D. 2015). The company focuses on the user needs and believes that time is valuable. The company welcomes democracy on its web works while avoiding doing any evil. Finance Google records high gross revenues and high operating income growth due to sustained growth in new revenues streams. The company recorded $ 21.2 billion in total revenues in 2008 and an operating income of $ 5.5 billion in the same year. The company share price was more than $ 600 in January 2010, and the market capitalization of the company was more than $ 189 billion the same year. Alternative Actions Considered There are three options that Google Inc. should consider that include cost leadership, differentiation and focus strategy to remain competitive and sustain superior performance. The first alternative is to increase profits by becoming the low-cost provider in the market. The aim is to sell the products below the industry average to benefit from growth in market share. (Tapscott & D. 2015). The alternative can be fulfilled through accessing required capital to benefit from economies of scale in the production of the mobile devices and implementing low-cost and efficient distribution channels. The second alternative is differentiation strategy that entails utilizing research and development capabilities to provide innovative products that offer additional value to the customers. Google has high skilled, and creative teams that have sustained the corporate reputation for innovation and thus should pursue this strategy. The third alternative is focus strategy that will entail concentrating on a narrow segment where it can ensure cost advantage or differentiation. In this case, Google will enjoy customer loyalty in this niche segment. Google should focus on serving the emerging Smartphone market, the online transactions market and Pay TV market. Google should pursue a differentiation focus strategy that will enable the company to pass high costs to the consumers and minimize the threats of substitutes. Recommendations According to the above analysis, Google enjoys global brand recognition due to its innovative and integrated products and services to its customers. The company should utilize its innovative technologies to develop thematic channels that focus on Pay TV and video content services. The company relies mainly on online advertisements for its revenues, and thus diversification efforts should concentrate on growing revenues in online commercial transactions and Google TV services. The company should use its open source software to target growth in the expanding Smartphone and Internet market segment that offers high growth opportunity. The Smartphone will expand the use of Google products and create customer convenience. The company has modern web indexing technologies and thus should partner with hardware manufacturers such as Sony and Motorola to deliver Google products and services on their platforms and create switching costs for the customers (Tapscott & D. 2015).  Conclusion Google is a multinational corporation that is geared at organizing the world’s information is order to make it more useful. At the same time accessible through offering Internet-related products, advertising technologies, cloud computing and various operating software. Google has accomplished business authority and high budgetary development because of its steady advancement and capacity to adapt new items. The organization has an enhanced item portfolio and strong brand acknowledgment over the world. The company should deal with the privacy and security issues and abide by the copyright regulations to avoid costly lawsuits. The company has the competencies and capabilities to exploit new opportunities such as diversify revenue streams to online commercial transactions and pay TV services. Appendices Evaluation Guide Criteria N/A Poor Satisfactory Good Very Good Excellent Writing Introduction (purpose and key issues) Statements supported (i.e. examples, data) Clarity Concepts integrated Grammar Formatting, headings Information is cited References Questions (if provided) answered Overall Coherence Analysis and description Introduction Org Defined Situational analysis (Industry/Trends) Corporate strategy Business level strategy Functional strategies Porter’s 5 forces Internal analysis SWOT Competitive Analysis (Industry group/perceptual map) Ethical issues Finance Other Frameworks Other Concepts Other Frameworks Alternatives actions considered Recommendations Recommendations consistent with analysis Recommendations are specific and actionable Measurement (possible/described) Additional Material SWOT analysis Strengths Weaknesses Opportunities Threats Global brand recognition Frequent customer complaints Possible lawsuits for copyright infringement Modern webpage indexing technology Overdependence on advertisements for revenues Google Pay TV services offer high growth potential global terrorism threats Open source software High penetration of Smartphone and internet high competition from emerging social media platforms like Facebook Talented staff Advancements in computing technology that will ensure accurate customer billing Perceptual map REFERENCES Tapscott, D. (2015). The digital economy: Rethinking promise and peril in the age of networked intelligence. Read More