Googles Android Operating System - Case Study Example

Media Company Analysis: A case Study of Google’s Android Operating System Student’s name: Instructor’s name: Course title: Date: Executive Summary Every organisation is unique in the way they formulate and pursue their strategic plans. Moreover, for an organisation to stay afloat it has to churn out product that creates value to consumer through various means at their disposal. This report analyses Google Company in terms of how it has been able to gain the largest worldwide market share in Smartphone operating system considering they are 14 years old company and the programme since they acquired it is 7 year old. The greatest findings that emerges is that value creation is attainable through exploitation of your strong points, innovation, marketing, strategic partnership, employee motivation and leadership among others. Contents Executive Summary ii Contents iii 1.0 Introduction 1 2.0 The Company 1 3.0 Environment: Industry/ Market Analysis of Phone Operating Systems 1 4.0 Product Characteristics 2 5.0 Company Response/ Strategies 3 6.0 Outcomes and Analysis 3 7.0 Conclusion 4 References 6 Laurie, D. 2001.From Battlefield to Boardroom: Winning Management Strategies for Today's Global Business. New York: Palgrave. 6 Bibliography 6 Appendix 1: Google Products and Services 7 Appendix 2: Google Company Analysis 7 Appendix 4: Google’s Competitive Strategies 10 The Company’s Culture 10 Innovation 10 Marketing Strategy 10 Appendix 5: Google's Financial Statement for 2002-2004 11 11 Appendix 6: Google's financial statement for 2005-2007 11 Appendix 7: Google’s performance in the industry 13 Appendix 9: SWOT analysis of Google 14 Appendix 10: Value Chain Analysis 16 Appendix 11: Market Environment’s Critical Success Factors 18 Media Company Analysis: A case Study of Google’s Android Operating System 1.0 Introduction Business organisations encounter numerous challenges in their operations. One of the major challenges that these companies encounter is competition especially in cases where they belong in the same industry. Consequently, it is upon the management to put in place an appropriate strategy that will ensure an organisation gains a competitive advantage over its rivals. Such a strategy will not only ensure that the company competes well but also manufactures products that meet the needs of consumers. In the current business environment, consumer needs are ever changing due to the advent of information technology. Here, it is the strategy put in place by the organisation’s management that differentiates the company from its rivals in the industry. This paper analyses Google as a media company by using Android operating system as the case study product. 2.0 The Company The emergence of Google is traceable from 1995 when Larry Page and Sergey Brin met at Stanford University. In 1996, they initiated a search engine operating on Stanford servers called BackRub. In 1997, the duo decided to rename the company Google.1 Presently, the company is about 14 years old and with more than 30, 000 employees worldwide. The firm has its headquarters in Mountain View, California. Moreover, it has 70 offices in more than 40 countries worldwide. The company is an information communication and technology based company focusing on different perspectives based on their operations goal of making it easy to find information. The company engages in computer systems design, online information services and web applications. Their business operations have different scopes with over 100 products and services (see appendix 1 for picture of Google products and services).2 In terms of market share in internet searches, Google accounts for 50% (for more details see appendix 2). 3.0 Environment: Industry/ Market Analysis of Phone Operating Systems In the industry niche of phone operating system, there are numerous players. They include Nokia, Apple, Microsoft, RIM and Google among others. The main target market is smart phone manufactures. This means it is a business to business marketing model with ultimate number of consumption determined by the total sales of the buying company. In terms of Smartphone and tablet operating system, Google through its android operating system is currently the leading player. This system is mostly used in smart phones. The market dominance of android operating system is attributed to the growth of Samsung smart phone market share in the world since they use android operating systems in their phone. It is actually Samsung who are the greatest business to business consumer of the product. Moreover, this is an open source meaning the cost of acquiring it is low. Currently android operating system has a market share of over 50 % (Google, 2012); (See appendix 3 of Porter’s Model). However with the ever expanding technology, this market is not yet saturated since the uptake of smart phones are increasing while other frontiers for application like smart TVs, notebooks and portable media players are emerging. There is a chance for shift since most of android usage is accounted for by Samsung and LG smart phones. Moreover, there are new entrants who are coming into play and their marketing strategy can lead to shift in trends. Apart from that, already existing competitors like Research in Motion, Motorola, Nokia, apple and Microsoft are really working hard to regain their market share. This is a really critical moment for players like apple who have dominated in smart phone, but are losing out in the application areas. Other critical players are Nokia and RIM. Technological factors affect this market and industry as seen when Google decided to develop open source software (Signals and Systems Telecom, 2012); (See appendix 3 of Porter’s Model). 4.0 Product Characteristics With the growth of Smartphone, various companies manufacture operating systems to support the same. Android was developed 2003. Google bought the product in 2005. This programme is a Linux based operating system and can be used in Smartphone and tablets. This software is an open source and is released under apache license. This product can be downloaded by third parties, moreover, it has over 600, 000 applications. The product has undergone improvement and has approximately 8 versions. This system is designed to support many features like connectivity, messaging, multiple language support, web browser, streaming media support, tethering and screen capture among many. This product has standard security and guarantee’s privacy (Google, 2012). 5.0 Company Response/ Strategies Ireland & Hitt (2005, p.68) posits that the anchor of any successful business organization relies on the ability of its top management to formulate and boldly execute strategies. According to Henry (2008, p. 141) firms should strategise in relation to their mission, industry, resources and competitive position. These considerations are crucial as they aide in crafting executable strategies aimed at giving an organization a competitive advantage against business rivals. Google’s mission is to “organise the world’s information and make it universally accessible and useful” (Google, 2012). For them to achieve their mission, the firm has adopted corporate strategy of responding to market needs and managing change so as to meet customer requirements and improve brand value by being innovative, creative, engaging in total quality management, embracing strategic partnership, collaboration & acquisition, adopting management based on leadership & performance, standardising their operations and involving in corporate social responsibility (Google, 2012); (see appendix 4). As noted earlier, this sector has numerous players with the past leaders being up to 2011 being Nokia’s Symbian system followed by Research in Motion. To achieve their mission in the sector of phone operating system, Google bought Android Inc. in august 2005 (Signals and Systems Telecom, 2012). The next stop was to develop open handset alliance. This was a grouping of several firms like Google, Samsung, LG, Motorola, T-Mobile and Intel among others. Their aim was to manufacture open standards for mobile devices. This engagement was the turning point for Google Android (Olga, 2008). The last affront of revolution was development of android open source project which was free of charge.3 The approach currently adopted is serving them well (see appendix 11). 6.0 Outcomes and Analysis The single outcome is that financial resources and market share. Google’s income for the last three years has been steady and on incremental path. The firm is experiencing phenomenal growth with only 14 years of existence. The net income of the firm has constantly risen from $ 100 million in 2002 to $ 106 million in 2003. The record breakthrough came in 2005 when the company raked in & 1, 465 billion. By 2007 the firm had over 5 billion net profit. This shows how the firm has tremendously grown thus conquering large market share with different products. In 2006, the soaring growth translated to $ 3, 077 billion net incomes (see appendix 5 & 6).4 Apart from the specific niche like web based services and search engine, in an overall view of the information technology industry, Google ranked second in 2011 behind Apple (see appendix 7). Google’s valuation is determined by their projected free cash flows, which are expected to be positive for the next 20 years.  These free cash flows were $2.373 billion in 2007, and will be $50.264 billion in 20 years (Decuirs, 2008). For phone operating system alone, by 2011 android had dominated the market share globally. In 2011 Q1 it had 36% of global market share followed by Nokia’s Symbian at 27.4%, Apple’s iOS at 16.8%, RIM at 12.9% and Microsoft at 3.6% respectively. In Q3 of 2011 the firm was controlling 52. 2%. This is a clear contrast of 2010 results when the leader was Nokia at 44.2% followed by RIM and iOS at at 19.7 % and 15.3% respectively. At this time Google a distant fourth at 9,6% (Gartner, 2011); (see appendix 8). In Q1 of 2012 Android had 59% global market share with 331 million global devices and by June 2012 they had 400 million global devices (Signals and Systems Telecom, 2012). The winning strategy enables the company to provide its clients with extensive internet solution services on mobile devices. Organization’s management is tasked to create an organization that has the capacity to produce goods and services that consumers need but have not imagined (Laurie, 2001, p.38). Google Corporation achieves core competencies from the way their business strategies and value chains are configured. Google’s strategic assets include the brand and design of its mobile devices, consumer engagement and fulfilment, as well as technology and architecture (Henry, 2008, p.117).Google’s technology leadership strategy is a collection of initiatives that are undertaken by the company’s management at various levels in the organizational hierarchy and thus makes it harder to be imitated by competitors, despite operating in a standard industry technology (Olson, 2009). This strategy is one of Google’s competencies that enable the organization to compete rivals such as Apple Inc and RIM Blackberry (See appendix 9 & 10 for SWOT & value chain analysis). 7.0 Conclusion The market trends in the telecommunications industry determine of how business organizations craft strategies. Google Corporation as a leading telecommunications service provider must constantly adapt to the ever changing needs of the industry’s customers. In a nutshell it means Google through its brand of Android operating system has utilised appropriate corporate strategies like innovation, leadership, strategic partnership & acquisition, marketing research, strategic human resource management, total quality management so as to create value to immediate consumer and the ultimate consumer. References Bacal, R. 2012. Performance management. New York: McGraw-Hill. Denning, S. L. 2000. Practice of workplace participation: management-employee relations at three participatory firms. West port, CT: Greenwood publishing group. Duthel, H. 2008. Google Inc. Services – Google Tools – What is Google? Lulu. ISBN: 978-1- 4092-1810-4 Henry, A. 2008. Understanding Strategic Management. Oxford: Oxford University Press. Hill, C. & Jones, G., 2009. Strategic Management Theory: An Integrated Approach. Ohio: Cengage Learning. Ireland, R. D. & Hitt, M. A. 2005. Achieving and maintaining strategic competitiveness in the 21st century: The role of strategic leadership. Academy of Management Executive, 19 (4): 63-77. Laurie, D. 2001.From Battlefield to Boardroom: Winning Management Strategies for Today's Global Business. New York: Palgrave. Olson, E.G. 2009. Better Green Business: Handbook for Environmentally Responsible and Profitable Business Practices, New Jersey: Wharton School Publishing. Bibliography Decuir, M. 2008. Google company analysis. Retrieved on May 17, 2012 from: http://www.mattdecuir.com/Google/exhibit13.aspx Digital Marketing, 2011. Apple’s 2011 competitors. Retrieved on May 17, 2012 from: https://www.efolio.soton.ac.uk/blog/pd7g10_mang6184/2011/10/12/apples-2011- competitors/ Gartner, 2011. Gartner Says 428 Million Mobile Communication Devices Sold Worldwide in First Quarter 2011, a 19 Percent Increase Year-on-Year. Retrieved on May 17, 2012 from: http://www.gartner.com/it/page.jsp?id=1689814 Google, 2012. Company overview. Retrieved on May 17, 2012 from: http://www.google.com/about/company/ Google, 2012. Our products and services. Retrieved on May 17, 2012 from: http://www.google.com/about/company/products/ Olga, K. 2008. Google's Android Gains More Powerful Followers. Business Week. Signals and Systems Telecom, 2012. Android Smartphone Activations Reached 331 Million in Q1'2012. Retrieved on May 17, 2012 from: http://www.prweb.com/releases/2012/5/prweb9514037.htm Appendix 1: Google Products and Services Figure 1: Photos of Google products and services Source: Google 2012 Appendix 2: Google Company Analysis Figure 2: Google Company Analysis Source: Decuir, 2008 Appendix 3: Porter’s Model of Industry Analysis Figure 3: Porter’s Model of Industry Analysis Source: Hill & Jones, 2007 Table 1: Porter’s Five Forces Threat of New Entrants Technology has meant that other companies can also enter a market dominated by Google. An example, there are upcoming Chinese companies and small vendors all over the world. This is true because even Google only entered the market in 2005 Buyer power With changing economic times, buyers are likely to resort to those who are cheap yet with high quality operating system If consumers reduce their spending on smart phone, then Google suffers Consumers may choose to use previous versions of products rather than upgrade to new releases Since most buyers are also business organisations, they have bargain power and can’t be threatened by Google and thus, can easily switch or contract second agent. Threat of Substitutes There are various means through which immediate consumers can acquire phone operating system meaning Google product sales will reduce. There are various operating systems with different designs. Thus buyers can engage in developing or contract other suppliers. Supply power Suppliers/ developers can easily switch since there are many buyers/ companies and even the same business buyers who manufacture smart phones can decide to develop their own. Competitive Rivalry There are competitors to Google in its industry. For instance Microsoft in operating systems, RIM and Nokia Source: Author, 2012. Source: Author, 2012 Appendix 5: Google's Financial Statement for 2002-2004 Figure 5: Google's financial statement for 2002-2004 Source: Google, 2012 Appendix 6: Google's financial statement for 2005-2007 Figure 6: Google's financial statement for 2005-2007 Source: Google, 2012 Appendix 7: Google’s performance in the industry Table 2: Google’s performance in the industry Direct Competitors Market Cap: $US Employees Revenue Apple 371.10B 46,600 100.32B Google 175.3B 28,768 33.33B Hewlett-Packard 51.50B 324,600 128.40B RIM 12.7B 17,500 20.13B Source: Digital Marketing, 2011 Appendix 8: Worldwide Smartphone Sales to End Users by Operating System in 1Q11 (Thousands of Units) Table 3: Worldwide Smartphone sales to end users by operating system in 1Q 2011 Company 1Q11  Units 1Q11 Market Share (%) 1Q10  Units 1Q10 Market Share (%) Android 36,267.8 36.0 5,226.6 9.6 Symbian 27,598.5 27.4 24,067.7 44.2 iOS 16,883.2 16.8 8,359.7 15.3 Research In Motion 13,004.0 12.9 10,752.5 19.7 Microsoft 3,658.7 3.6 3,696.2 6.8 Other OS 3,357.2 3.3 2,402.9 4.4 Total 100,769.3 100.0 54,505.5 100.0 Source: Gartner (May 2011) Appendix 9: SWOT analysis of Google Table 4: SWOT analysis of Google Strengths Weaknesses Winning strategy where the employee are willing to contribute to innovation and business processes. Moreover, there is visionary leadership in place. Acquisition power where the firm has capacity to acquire other firms for strategic purposes Knowledge of market where they understand what immediate and ultimate consumer wants through marketing research and innovation. In last 14 years they have grown to be a Strong brand that consumers and other business associates can trust Outstanding market presence Skilled workforce where emphasis is placed on ability and talent rather than work experience. Moreover, they engage in reward management and Strong in-house research and development as exemplified by various product range they churn out that have revolusionised market. Over reliance in outsourcing for raw material. They don’t have huge internal brand to create demand for their Android operating system as for case of Apple, Blackberry and Nokia. Instead, they rely on others like LG and Samsung and thus, if they switch suppliers their profitability can reduce significantly Slow pace in entering into other business segments while competitors like Nokia, Microsoft and Samsung are highly diversified. Google has focused more on web based services alone while not investing heavily on the hardware side/ electronics Opportunities Threats Emerging markets apart from the traditional USA, Europe, Australia and other developed nations. These include Brazil, India, China and other developing economies where uptake of smart mobile telephony is picking up. Opportunity to acquire or partner with other major player as was in the case of Open Handset Alliance With their open source platform, they can rope in more developers located in different parts of the world High competition from rivals such as Nokia, Apple and RIM who also want to control smart phone technology Ever changing technology which implies they have to constantly engage in research With the high rate of product launch there can be chance of product cannibalisation Source: Author, 2012 Appendix 10: Value Chain Analysis Table 5: Value Chain Analysis Factor Issue Human Resource Management Google has put an emphasis on ensuring that it has enough staff to carry out its activities efficiently. They create an environment where employees are encouraged to be innovate and creative thus leading to an organisational culture of teamwork. As such, there is a culture of rewarding employees who engage in experimentation, risk taking and creativity. Consequently, employees tend to treat their work as a calling rather than something just to earn them revenue. Employees believe in making it in whatever they do. Furthermore, the company employs the best people in order to ensure the company remains the best in innovation and manufacture of best products. This can be seen from their human resource management objective of hiring ability and talent Firm infrastructure Google depends on the manufacturing capabilities found in its external vendors. These vendors are located in a different part of the world in countries like Taiwan, the United States, the Netherlands, China and Korea. However, Google only uses its manufacturing facilities in doing the final assembly of its various products. Additionally, the company orders a number of its components from suppliers in order to use in case future demand increases. The only issue that the company has experienced with location of its major facilities in other countries is that whenever there is demand, these facilities cannot cope. The company also has both physical stores, as well as online ones where customers can get their products. Technology Google has been in the fore front in offering users with a unique platform where electronic activities such as spreadsheet can be done. The company has also provided users with digital hub . The company has always strived to be the best in the industry. Its operating systems have been rated the best, stable and reliable (Google.com, 2012). Additionally, technology has hence increased availability and quality of information to Google. This has gone a long way in improving the efficiency of different operations hence reducing costs Procurement It is said that most components used by Google in its business activities are procured from various sources. However, the key determining factor here in terms of where to obtain the components is constraints and pricing pressures within the software and hardware development industry. Source: Author’s own work Appendix 11: Market Environment’s Critical Success Factors Table 6: Market Environment’s Critical Success Factors Factor Issue Extensive research and development Google has invested heavily in research and development activities in order to have the best products on the market. The company has innovation as its driving strategy enabling it to make unique products (Tyndall, 2008) Creativity and Innovation Google employs some of the highly talented and knowledgeable personnel in the industry. These people have brought in a lot of creativity and innovation when it comes to the products and services offered by the company. Additionally, CEO, has helped the company by cultivating a culture that promotes creativity and innovation Differentiation and Advertising The company engages in personalised advertising to market its products and reach its target market. Over years, there have been various advertising campaigns by the company. More so, there are new advertising strategies undertaken by Google and they include advertising in seminars and conferences (Google.com, 2012) Brand Loyalty The company has engaged in production of high quality and unique products. These help in maintaining customer loyalty. More so, through advertising, Google has been made a household name world over. There is brand and customer satisfaction that comes with using Google products. To people, it is prestigious to use unique Google products Distribution channels Google uses different distribution channels in selling its products. There are the physical retail stores located in different countries worldwide. Customers can access Google products from these stores. Moreover, there are online stores offering products from the company. Additionally, the company has direct sales force, as well as third party resellers to help in distributing Google products. The presence of wholesalers and value added resellers assist in marketing Google products Capturing new markets By use of the e-business initiative, Google has been able to capture new markets. Here, the company has taken advantage of the fact that people have become technology savvy. As a result, it has opened online stores where people access its products. This means in countries with no physical stores, people can do their purchasing online. This increases sales Customer centred marketing Google has initiated customer centred policies. These policies ensure that products are geared towards meeting the unmet needs of the consumers. To ensure good service provision to the customers, there is a database that shows the customer preferences, as well as their buying patterns and behaviours. From this database, the company understands how well to meet the needs of these customers. This is through production of a wide range of products Source: Author’s own work Read More