Analysis of Competitive Advantage of Google Corporation Inc - Case Study Example

Analyses of Competitive Advantage of Google Corporation Inc. Name Professor’s Name Date Introduction Strategic analysis is among the most effective strategies used companies in order to evaluate a company’s risks, revenue income and competitive advantage. Chandler et al (2000) states that strategic analysis is a systematic approach used by organizations to prepare its business activities for future market trends. Companies engage in Strategic analysis so as to monitor the internal and external factors affecting its objectives and implement strategies to enable an organization to gain a competitive advantage over its rivals. External environments present new opportunities which when effectively explored by companies, act as an effective strategy to sustain competitive advantage for firms. In an internal environment of an organization its resources, core competencies and capabilities are among the tools that offer a company the ability to gain a competitive advantage over its rivals (Hanson et al 2011). This essay will evaluate what strategies Google Corporation Inc. has implemented so as to achieve a competitive advantage over its rivals in the Internet Search Engine industry. This essay will identify and discuss the sources of competitive advantage for Google. Consequently, the essay will further analyze the impact that the strategies discussed will have on Google in its future performance. Google Competitive Advantage and Strategy The Search Engine Google has grown to be a worldwide brand used by millions of people globally to access information. Google has maintained a strong competitive advantage by growing its brand to various services and products other than just being a search engine. The search engine industry is very competitive due to the improved technological advancements. For Google Corporation, it faces competition from industries other than those in the search engine environment due to the diverse products and services it offers to customers. Google has adopted the differentiation strategy by offering consumers products and services at a lower cost. Cost differentiation is achieved by Google Corporation since it serves millions of consumers at a go at reduced costs but increase the revenue income through the numerous ads aired by Google sites. Organizational growth through increased revenue income is facilitated by the ability of a company to explore new opportunities. In order to effectively exploit new opportunities extensive research work is required as a means to improve company’s competitive strategy and increase profitability through the introduction of new products that reduce costs in terms of production and advertising (Barney & Hesterly, 2006). The company has introduced complementary goods and services to its consumers as a strategy to increase brand awareness and market share (Google Corporation, 2008)). Examples of these products include; its Docs and Spreadsheets productivity suite, YouTube the video sharing site, Picasa the image organizing and editing program, Earth and Maps. Additionally, the diversification of Google products facilitates consumer loyalty. The increased number of complementary products and services by Google increases the market base by allowing customers to constantly use their extensive products branded as Google. A publication by Google (2008) explains that Google’s main agenda through its extensive brand portfolio is to increase viewership and sell more ads. Evidently these products and services increase the ratings on Google’s advertising activities as well as increase the popularity of the brand. For instance, YouTube serves at least 800million viewers every month with a 40% market share in online video streaming industry. Schmidt & Rosenberg (2014) argue that these figures contrast with its main rival Youko in China by being 20 time higher than Youko. Hanson et al. (2011) state that Resource Based View (RBV) can equip a company to gain a sustainable competitive advantage in any industry. Resource Based View is a technique that exploits an organization’s ability to successful follow the VRIN criteria. Therefore a company is able to sustain a competitive advantage if its resources attain the standards of being valuable, rare, imperfectly imitable and non-substitutable (VRIN). Arguably, innovation and the human resource of an organization are two of the main competencies for an organization to acquire a competitive advantage (Hanson et al 2011). Google’s culture advocates for creativity among employees and nurture its staffs’ talents. By investing in its employees, it is evident that the employees at Google are among its valuable resources. The diversification of Google products is attributed to the employee support offered to the staff at Google. All employees at Google are encouraged to take part in exercising their creativity and innovative attributes by committing 20% of their working hours in improving new ideas. This way Google is able to maximize on its core competencies and capabilities by motivating its employees to exploit potential and emerging markets. Gmail and Google news are examples of Google brands that started off as innovative projects and have grown to become Google’s top brands (Google Corporation Inc. 2008). A publication by Fortune Magazine in 2008 ranked Google as one of the top companies to work for in 2007 and 2008 consecutively because of how the HRM treats staff members (Schmidt & Rosenberg, 2014). Google’s search engine and its improved infrastructure are identified as the company’s valuable resource due to its popularity. Google’s Search engine has supported the company in increasing its market share, retain consumer loyalty and the company’s revenue income. For instance, this particular resource has contributed to the effective and reliability nature of Google services by improving advertisements on Google platforms. Advertisements contribute up to 96% of the revenue income acquired from Google brands. Additionally, Google attends to approximately 3 billion searches daily from all across the world. With this attribute the company had acquired a market share of 67% by the year 2012 with its main competitors Bing and Yahoo 16% and 13% market share respectively. Google’s Search engine is an effective asset of the company and as result the company is dedicates its resources and money in constantly improving and redefining. These improvements have enabled it to become peoples’ favorite since it provides dynamic and refined results within a short period of time due to its newest feature the Instant Search (Schmidt & Rosenberg, 2014). Its improved infrastructure has facilitated the company to sustain a rather competitive advantage because of its superior nature. Research has revealed that by the year 2008 Google Corporation had ownership of approximately 36 data centers with 900, 000 servers globally. From its financial reports in 2013, Google revealed that it had spent $ 2.3 billion on improving its infrastructure to meet consumer and industry demands. This is assumed to be 50% more as compared to what the company had previously spent on its infrastructure. Google gains a competitive advantage over its rivals because of its distinctive infrastructure that deems it to be reliable, effective and competent for customers. The constant improvements on its equipment gives Google an additional technological advantage since it uses high performance structures. This advantage enables Google to directly connect with diverse internet users, site owners and advertise thus distinguishing it other key players in the industry (Schmidt and Rosenberg, 2014). The acquisition of a patented technology for its wide range of technologies and brands speaks volumes of the rare resources owned by Google Corporation. In recent times the company has acquired an additional 24,000 patents that is attributed to its recent acquisition of Motorola. Each of Google’s products and services despite of the industry they occupy is branded with the company’s unique logo “Google”. This technique uniquely separates the organization from its competitors in an industry as customers are quick to recognize Google’s products and services at a glance, hence maintaining consumer loyalty. Google’s acquired resources are in-imitable and hard to substitute. The unique nature of Google’s brand makes it rather difficult for competitors to imitate their products. The existence of the company from the 1990s when the industry was less saturated, has enabled the company to hold a strong position in the industry which makes it impossible for its competitors to copy Google’s wide range of products. Additionally, Google Corporation operates on a very confidential scale (Schmidt & Rosenberg, 2014). The company rarely discloses any information on current strategies to improve its performance, this makes it difficult for its rivals to learn of its strategic management. Features of Google Instant Search Engine offers users with an effective and quick way of retrieving information. Its minimal user interface makes the engine effective, quick and reliable thus making it difficult to substitute Google with other products in the industry. The growth and success of Google Corporation can be seen in its ability to effectively maintain a sustainable competitive advantage over its rivals. According to Harvey et al (2009) globalization makes its rather challenging for Multinational Enterprises to sustain a competitive advantage. This is because these MNEs are in most instances are forced to compete with localized institutions in some nations in the face of internalizations (Zahra & George, 2002). Therefore the HRM of MNEs are faced with challenges in conforming to the diverse cultural and business ethics in a global context. As a result most of the MNE managers tend to implement organizational policies that only exploit short term opportunities as opposed to the long term demands (Adler, 1997). With the globalization of many industries in the world today, Google has implemented a corporate and international level strategy that seeks to see the company thrive now and in the future. According to Baron (1997) corporate and international level strategy enable an organization in evaluating which markets it can exploit and the opportunities presented. Therefore these strategies are effective in assisting an organization in entering new markets, innovating new products for a market or strategies to implement in order to introduce their product in an emerging market (Porter, 2004). In analyzing Google’s competitive advantage around the globe, it is evident that the company has established an effective corporate and international level strategy which will enable it to sustain its competitive advantage in the future. For example in 2006 Google Corporation explored new opportunities in Asia and identified China as an emerging market that it could invest in. In this case Google adopted an internalization strategy and partnered up with Baidu, China’s leading search engine as a developmental strategy to improve its market share in Asia. In 2006 the company had 105 million users approximately in China alone, which accounted for only 8% of Chinese users. This example shows that Google’s strategy in sustaining a competitive advantage in foreign markets is effective and can work in the near future (Google Corporation Inc, 2008). To maintain an increased market share and customer loyalty, Google will be able to succeed in the future due to the cost leadership strategy it has implemented. As discussed earlier in sustaining a competitive advantage over its rivals, Google focuses on providing quality and affordable brands to its users and increase revenue through advertising and consumer loyalty. The constant innovations on its brands, will enable Google maintain a competitive advantage when it comes to improved infrastructure and technology. These two resources will likely act as effective tools in enabling the company to penetrate new markets and meet consumer demands. Hansen et al (2011) argue that a company can sustain a competitive advantage over its rivals through innovations that contribute in leveraging its resources, capabilities and core competencies. Google exploits these three elements as part of their competitive advantage and created value for its firm. These organizational attributes as displayed by Google will enhance Google’s performance as it drives it to exploit both long and short term opportunities in a highly globalized and competitive business environment. Conclusion To sustain a competitive advantage effectively, a company should maximize on its resources. Maximizing on the values and resources of an organization, a company is likely to retain its market share, consumer loyalty and increase profitability, which are three factors that will ensure a company is ahead of its rivals (Porter, 1990). The value placed on an organizations brand is evident on the commitment customers’ show towards a company’s products. Additionally pricing is important in sustaining a competitive advantage in an industry as the value of a brand will be substitute to the competition in the industry. Nonetheless the brand of a company is not profitable unless it is effectively used in innovating new products and services. If a company does not aim at maximizing on improving and growing its brand, it will not succeed in creating value for its products or sustain a competitive advantage (Hill et al. 2014). From this study it is clear that engaging in value creation activities is the most effective strategy for a company to gain a competitive advantage. Sustaining a competitive advantage heavily relies on constant improvements on products and services. Aguillar (1967) affirms that it is vital for a company to integrate its resources and align them towards achieving its objectives by investing in activities that will empower the company in satisfying current and future consumer needs. The implementation of a long term strategies will ensure that external business environments positively influence the growth and performance of an organization (Mathews and Zanders, 2007). Tangible and intangible resources are Google Corporation’s sources of core competencies that enable it to achieve a sustainable a competitive advantage. The Corporation has maximized its efforts and financial gains in improving on its human resources, equipment and brand innovation. Integrating the core competencies, resources and capabilities at Google corporation, has proved to be an effective strategy that continues to facilitate the growth and performance of Google Company. References Adler, N.J. (1997). International Dimensions of Organizational Behaviour, (3rd edition). Cincinnati: South-Western College Publishing. Aguillar, F.J. (1967). Scanning the Business Environment. Macmillan. Barney, J. & Hesterly, W. (2006). Strategic management and competitive advantage, New Jersey: Pearson. 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