Google Assessment - Case Study Example

University of Southern Queensland MKT3002 business strategy in a global environment Case study 1 – industry analysis Student Name: Student ID: Due Date: Word Count: 1962 Table of Contents 1.0 Background 2.0 PESTEL Analysis 2.1 Political influences 2.2 Economic influences 2.3 Socio-cultural influences 2.4 Technological influences 2.5 Natural environment 2.6 Legal influences 3.0 Five Forces Analysis 3.1 Potential entrants 3.2 Substitutes 3.3 Buyers 3.4 Suppliers 3.5 Rivalry of competitors 4.0 Key Success Factors 4.1 KSF 1 4.2 KSF 2 4.3 KSF 3 4.4 KSF 4 4.5 KSF 5 List of references Appendix (should be included only when necessary) 1.0 Background Google is a multinational company that has its headquarters in California, the USA, and has several offices in around forty countries. Google provides numerous products, including hardware, web products, mobile products, and desktop products. According to Khemani (2014), Google is arguably one of the most popular companies in the internet information search industry. Since its inception in 1996, the company has expanded to become a major brand in the contemporary internet information search industry. This has been as a result of growing business through creativity and innovation, which has seen it become one of the most popular and exciting companies in the search industry. Google believes in an open web that benefits all publishers and users. However, this does not mean that its products and services offered on the web are free (Nieman, n.d.).The purpose of this paper is to analyse Google Inc. The paper begins by giving a PESTLE Analysis of the organization. The paper then proceeds to analyze competition in the internet information search industry using the Porter’s Five Forces. Finally, Key success factors for Google are provided. 2.0 PESTEL Analysis 2.1 Political influences In the 21st century, most people are using internet to search for information about political leaders during national campaigns. Google Inc. plays a critical role in shaping the political environment of various nations through the search results, as well as video sharing. For instance, in the United Kingdom and the US, politicians are using Google to communicate effectively with their followers via YouTube. Researchers predict that the number of people searching for information online will increase in the future, and therefore, Google’s political influence will also increase. 2.2 Economic influences Major organizations throughout the globe are advertising their products online in order to enhance their demand. In the face of a receding global economy, organizations are using Google ads to create greater awareness of their products. Thus, Google is likely to continue reaping higher profits as more businesses advertise their products online. 2.3 Socio-cultural influences As a multinational company with global influence, Google Inc provides services to thousands of people throughout the globe. Therefore, Google owned products and services plays a critical role of influencing peoples’ behaviours. 2.4 Technological influences Technology is advancing at a rapid rate, and therefore, Google Inc is forced to innovate in order to stay ahead of competition. Competition in the search engine industry is intense, and thus, firms must continuously create new products in order to meet the diverse needs of their clients. Being a global leader in the search engine industry, Google faces strong competition from other firms, including Baidu and Bing. In addition, Apple and Facebook are continuously launching new products in an effort to increase their market share. On its part, Google is forced to come up with various innovations in order to stay ahead of competition. 2.5 Natural environment The internet information search industry is likely to continue changing within the next three to five years. One of the forces that are likely to drive this change is increased competition among internet information search companies. Leading internet information search companies throughout the globe, including Google, Yahoo, Bing, and Microsoft, are expected to continue innovating in terms of new styles of search and to continue forming partnerships among themselves and with companies outside the internet information search industry (Khemani, 2014). As Khemani (2014) explains, internet information search companies are innovating in terms of new ways that enhance a smooth and fast transmission of the content. They have been increasingly trying to maintain strong relationships with internet users, websites, and advertisers. They have also been creating partnerships with companies from other industries in order to reach more customers. As Khemani (2014) explains, many search companies are expanding their range of services in order to earn revenue from numerous sources. Google is, therefore, expected to continue creating new products in order to meet the diverse needs of internet users. 2.6 Legal influences Google has faced numerous law suits in the recent past due to privacy and copyright violations of the search results as well as videos hosted on the YouTube. Thus, as Google increase its online presence, the company is likely to face more legal disputes in the future. 3.0 Five Forces Analysis Figure 1. Porter's Five Forces: An analysis of the search Industry 3.1 Potential Entrants Google has a great share of the market in the search engine market. The internet is the main source of queries and information gathering driven by search engines that return results or information needed. This commanding presence of the internet gives Google a guarantee for success. As Niu and Liu (2010) note, there is no foreseeable substitute for the internet at the moment. The closest substitute would be searching of information physically through publications, which would be more involving, time-consuming, and costly. Therefore, the threat of new substitutes in the internet information search industry is weak. 3.2 Substitutes Google has a great share of the market in the search engine market. The internet is the main source of queries and information gathering driven by search engines that return results or information needed. This commanding presence of the internet gives Google a guarantee for success. As Niu and Liu (2010) note, there is no foreseeable substitute for the internet at the moment. The closest substitute would be searching of information physically through publications, which would be more involving, time-consuming, and costly. Therefore, the threat of new substitutes in the internet information search industry is weak. 3.3 Buyers The bargaining power of buyers in the internet information search industry is high. As Niu and Liu (2010) explain, this industry is relatively new and there is potential for expansion for Google and its numerous competitors. Most services offered by Google and its competitors are free and, therefore, it is easier for Google’s consumers to switch to other internet information search companies. Thus, consumers can easily control pricing if they believe that prices of Google products are too high. 3.4 Suppliers The bargaining power of suppliers refers to the ability of suppliers of inputs, including raw materials, services (such as expertise), labour, and components, to refuse to work with a company for one reason or another (Porter & Kramer, 2002). The bargaining power of suppliers in the internet information search industry is moderate. Search engines rely on skilled people as suppliers. As Niu and Liu (2010) explain, it is not easy to find talented, knowledgeable, and skilled persons. However, Google tries to provide a flexible working schedule and various benefits in order to attract and retain them. Suppliers of the Android phone system have achieved success mainly due to the dominance of Google. Thus, they want to associate themselves with this company. The dominance of Google is high in the market and, therefore, the bargaining power of suppliers will remain moderate. 3.5 Rivalry of Competitors Currently, there are more than 20 firms, which compete for market share with Google. Google Inc., being one of the main search engine providers, faces competition from five main companies that include Yahoo, Ask, AOL, Bing, and MSN (Zhou & Wu, 2010). These companies have continuously launched new strategies with a view of gaining a larger market share and generating more sales. Advertising is the main source of revenue for search engine providers (Staudinger, 2008). In the face of global competition, search engine providers have been forced to improve and expand their search advertising services in order to realize their financial goals. Clients are, therefore, switching to rival brands easily, which is a major threat for Google. Researchers predict that the internet information search industry will be saturated in the near future due to new entrants. Some of the factors that heighten rivalry in the internet information search industry include the following: Organizations such as Microsoft provide customer responsive services through innovation; Many new firms, including MSN, have been issued with licenses and, thus, the rivalry has increased significantly; Rivalry in the internet information search industry revolves around such aspects as quality of services provided, relationship with various stakeholders, and accessibility of information. Based on the above, the level of competitive rivalry in the internet information search industry is high. 4.0 Key Success Factors Table 1. Key success factors for the selected organisation External Forces/Needs Industry responses Key Success Factors Subtle marketing Tangible and intangible resources Coordinated leadership group Wise expansion Innovation 4.1 KSF 1: Innovation Google has successfully institutionalized an innovation culture, and this strategy enables the company to achieve a competitive edge over in the search engine industry. Research shows that those organizations that are slow to innovate do not attain their full potential. These failing organizations are not bothered by the high priority their competitors give to innovation programs. Recently, the company has created Google Glass, which has captured the hearts and wallets of tech enthusiasts through its head-up display capabilities. There are other powerful and popular brands in the search industry including Yahoo, MSN, AOL and Bing. However, according to Alexa (2015), an online ranking website, Google is the most popular brand among online consumers. Google allows online users to search for any information through a simple search. Unlike other search engines, Google provides its users with uniqueness since its inbuilt search engines are fast and up to date. In addition, Google’s search engine interface has around 90 languages, thereby enabling people to search for information using their local language. Recently, the company created various unique products such as Gmail, Google Maps, Chrome Web Browser, and Google Books among others and this has enabled Google to take the first position in the search industry (Google Inc. 2015). 4.2 KSF 2: Wise Expansion In the last few years, the company has been making ventures and acquisitions in order to enhance its core competencies. In 2002, the company created Google news which was aimed at offering online users up-to-date news from various sources. By 2010, Google had entered into a strategic partnership with numerous phone operators from different parts of the world. Google formed a relationship with Yahoo in 2000 and has recently formed partnerships with many other online search companies. 4.3 KSF 3 : Coordinated Leadership Group Sergey Brin and Larry Page business understanding and smart management have made the company achieve the rank of one of the most profitable firms in the United States. The two leaders institutionalized an informal culture at Google. The highly informal organizational structure of Google is one of the factors that have contributed to the company’s success (Daft, 2007). The company has been lauded for treating its employees in a special way that increases their productivity and innovativeness (Latham, 2007). Recently, the company has introduced the 70/20/10 rule, which allows employees to spend 70% of their time to handle core business, 20% on related projects, and the remaining 10% on unrelated businesses. The 70/20/10 rule implemented by Google offers employees a chance to be innovative and flexible (Girard, 2009). 4.4 KSF 4: Subtle Marketing Google has created a strong brand by using marketing strategies, including positioning and branding for creating a niche in the internet information search market (Greb, 2009). 4.5 KSF 5: Resources Google has a broad set of tangible and intangible assets. According to Google Inc (2015), the company carried goodwill of $20,206 as well as other intangibles on its balance sheet in the last quarter of 2014. The company’s goodwill-to-assets ratio is 12%. In addition, the company’s tangible book value is around $46.4 billion (Google Inc, 2015). Therefore, the company is in a good shape as far as the tangible book value and intangible assets ratio are concerned (Pittampalli & Lenney, 2015). Both tangible and intangible resources provide Google with sustainable competitive advantages. List of references Alexa. 2015. The top 500 sites on the Web. Retrieved from http://www.alexa.com/topsites Daft, R. 2007. The leadership experience. Stamford, CT: Cengage Learning. Girard, B. 2009. The Google way: How one company is revolutionising management as we know it. San Francisco, CA: No Starch Press. Google Inc. 2015. Retrieved from http://www.google.com/finance?fstype=ii&q=NASDAQ:GOOG Greb, G. (2009). Google brain: making your memoir a time machine on the Internet. Bloomington, IN: iUniverse. Khemani, R. S. 2014. Competition, innovation, and dynamic change in the Internet information search industry. Retrieved from https://www.competitionpolicyinternational.com/competition-innovation-and-dynamic-change-in-the-internet-information-search-industry Latham, G. 2007. Work motivation: History, theory, research, and practice. London: SAGE. Nieman. N.d. Google’s vision statement. Retrieved from http://www.niemanlab.org/pdfs/Google.pdf Niu, Z., & Liu, Y. 2010. Google Inc. Retrieved from http://tippie.uiowa.edu/krause/spring2010/goog_sp12.pdf Pittampalli, E., & Lenney, M. 2015. Unlocking the value of intangible assets – Raising top line revenue with new business models. Retrieved from http://www3.alcatel-lucent.com/enrich/v2i32008/article_c3a4.html Porter, M. E., & Kramer, M. R. 2002. The competitive advantage of corporate philanthropy. Harvard Business Review, 80(12), 57-68. Staudinger, U. 2008. Google's strategy in 2008. Retrieved from http://ulrich.activequant.com/mba/2010/02/googles-strategy-in-2008.html Zhou, K. Z., & Wu, F. 2010. Technological capability, strategic flexibility, and product innovation. Strategic Management Journal, 31(9), p. 547-561. Appendix (should be included only when necessary) Appendix 1: Google’s Competitors Appendix 2: Search Engine Market Share Read More