Corporate strategy: a comparative study of google inc - Essay Example

? CORPORATE STRATEGY: A COMPARATIVE STUDY OF GOOGLE INC. of Acknowledgment This study acknowledges the researchers who investigated the corporate strategies of Google Inc. in comparison to Yahoo and Nokia, which has enabled it to be a top ranking computing internet and mobile services company. In addition, this paper acknowledges the management teams of Google Inc. for their hard work in providing a good strategy for the success of the company’s business. Abstract A corporate strategy is used by a business organization as a basic layout under which it runs its business activities to ensure that its goals and objectives are effectively and efficiently achieved. Therefore a corporate strategy must be drawn by a business before starting its operation which will act as a basis for success. Moreover, a company must review its corporate strategy and make frequent revisions so that it is able to overcome various challenges within the industry of its operation and thus gain a competitive advantage. This paper gives an investigative analysis of the corporate strategies of Google Inc. through which the company has been able to advance its computing services and products as compared to Yahoo and Nokia which are the company’s main competitors. Introduction Within the computing and mobile phone industry, the leading organizations such as Google, Yahoo and Nokia have used various corporate strategies, which have enabled them to climb into higher ranks in the industry. The strategies used by these companies enable then to surpass their major competitors and other companies within the industry. Since Google Inc. is categorized as one of the top companies in the computing and mobile industry, the strategies made by this company are investigated in this paper in relation to two of its major competitors: Yahoo and Nokia. Google is a leading company in online advertising, internet search and cloud computing. This has been through the application of various business strategies by the company which has enabled it to beat its competitors and thus become the leading internet portal. Yahoo has tried to emulate the business strategies of Google but it has not outdone it in provision of online services and products. Delaney (2007) says that Google Inc. is one of the largest employers across the world and its annual revenue is substantially high as compared to its competitors. Google has used mergers and acquisitions as a way of expanding its services and products. The merger of Motorola Mobility Inc. and Google in August 2011 demonstrates a corporate strategy of Google of expanding its services and products into the mobile phone technology. The acquisition of Motorola Mobility which cost Google 12.5 billion dollars is therefore considered as a suitable strategy of beating the company’s top competitors such as Nokia. This paper finally describes the major opportunity in the computing and mobile device industry which has been facilitated by the growth of mobile phone technology. Google Quarterly revenues The figure below gives details of Google’s quarterly revenue from 2009 to the third quarter of 2011. It is certain that Google is a dominant computing company because its online services through cloud computing are accessible to millions of its clients across the world. The management of the company’s various products such as Google Books and services such as online advertising, search facility and social networking has been effective as demonstrated by its enormous success. The competition the company receives from Yahoo is due to the common products and services these companies offer which include search engine facility, advertising and social networking as explained by Delaney (2007). The company has however concentrated its business strategies into advertising through which it derives ninety nine percent of its business revenue. Through innovation, the advertising business of the company has grown in technology which has enabled various companies to advertise their products via the internet. Mergers and acquisition strategy Google Inc has applied mergers acquisitions as a corporate strategy of expanding its business to help it to overcome its competitors. Cox (2011, p. 11) says that in august 2011 Google merged with Motorola so that it would expand its business into the mobile phone technology. This is a strategy which is aimed at enabling the company to beat its competitors in the mobile phone industry. Nokia which is a major competitor of Google has invested in smart phones to enable its clients to obtain PC like functionalities from their mobile phones. Google merged with Motorola in August 2011 and the company is now able to grow into the business of smart phones, wireless accessories, tablets and online data and video delivery. The high revenues enjoyed by Google Inc. motivated the management decision to merge with Motorola as explained by Womack & Tracer (2011). Nokia also applies the merger and acquisition corporate strategy. For example in March 2010 Nokia acquired a mobile internet browser company from Chicago called Novarra. Through this acquisition, Nokia is able to reach the online community through its own web browser via a platform of online services which has employed more than 100 workers. Nokia Company aims at enabling its clients to access its web applications though the company’s own browser instead of using internet browsers from the competitor companies. According to Yao (2011), through the merger with Motorola, Google is now able to provide extra services and products which its competitors in online advertising, search engines and cloud computing such as Yahoo have not ventured into. This strategy has made Google to be the preferred search engine in the online search for information by researchers, students and other internet users. The major competition which Google faces from Yahoo however is in the provision of online news. The yahoo news is more detailed, up to date and usable as compared to Google which should consider merging with news corporations so that it will attract more viewers into its websites. In accordance to Delaney (2007), the motivation behind Google’s venture into the smart phone business was also motivated by the changes in technology to which the company needs to be part of. Computing has now been made easier through technology with mobile phones which can use various computer applications such as e-book reader, e-mail and features such as VGA connector, in built keyboard and USB ports through which external keyboards can be appended to the device. The client demands for such special features including the need for high speeds of processing within mobile phones motivates mergers in computing industry. Moreover there are many companies which are coming up in the computing and mobile business which take advantage of the modern technology and various corporate strategies to enable them to grow in the industry. Therefore Google applies the merger and acquisition strategy to help it remain relevant in the market. The entry into the mobile phone industry by Google through its merger with Motorola will also pave way for future mergers and acquisition of mobile phone firms as shown by Cox (2011). This will make Google to be a leading company in both computing and mobile phone technologies. The interdependence between mobile phones and the internet justifies the application of the merger and acquisition strategies by computing and mobile phone companies. This is because technology has enabled access to the internet through hand sets. Google needs to provide its clients with devices through which they would access its websites such as Google search and Google Buzz social networking sites. Through these sites, the company also has the advantage of online promotion of its mobile phone products to a global audience. Delaney (2006) adds that the merger of Google with Motorola and acquisition of the mobile phone’s assets will enable it to invest in innovation of the mobile phone technologies so that better phones are manufactured by the company. This will enable Google to compete with large companies such as Nokia and Samsung in creation and manufacture of mobile phone products and applications. The need for sharing knowledge and expertise among countries drives them to apply the merger and acquisition strategies in enhancing their businesses. According to Womack & Tracer (2011), the Google -Motorola merger will lead to the sharing of the expertise and talents among the employees of both companies which will lead to promotion of innovative technologies in the mobile and computing industry. This will lead to efficiency and effectiveness in provision of products and services by the company through high quality hardware and software applications. The fact that Google will acquire the patents of Motorola as a result of the merger agreement between the company means that Google will be enabled to make improvements to the Motorola inventions through investment in the technology expertise and resources. Haseeb (2011, p. 1) says that Yahoo inc. announced the acquisition of Interclick Inc. in early November 2011 as a corporate strategy which is aimed at improving its capabilities in marketing and advertising. This is due to the stiff competition from Google Inc. which is a giant in online marketing which billions of revenue being raised from this form of business. Therefore the need for mergers and alliances is attributed to the need to gain competitive advantage over other companies within the industry. Joint Ventures and Strategic alliances Collan & Kinnunen (2009) say that joint ventures are corporate strategies which guarantee total control of businesses. The control is usually in terms of management and ownership. It should be noted however that takeover of a business involves a high level of managerial involvement in terms of personnel, equipment transfers and financial resources so that underlying deficits are bridged. As illustrated by Delaney (2006), the joint venture between Google and eBay of August 2006 was a business strategy employed by Google to enable it to venture into advertising business outside the United States. Joint ventures are therefore a way of expanding a business into a wider market which would include entering international markets. Moreover, there was the need to compete with Yahoo which had earlier joined eBay to prevent the dominance of Google in the advertising business. This is an e-alliance form of joint venture where companies are enabled to work together in expanding their business into a large scale of operation. Joint ventures cause companies to be intertwined in their business functions. For example Google and eBay provide services such as product listing and their online payment which makes it difficult for these companies to compete because of their converging interests in providing their clients with these services. The Google joint venture with eBay has enabled these companies to share resources so that they are made to effectively gain access to their customers. The joint venture therefore enabled the corporations to share various applications in provision of web services and products to their clients. The sharing of application includes the viewing of both companies’ products within their websites. The strategic alliance between Google and e-Bay is a business strategy which aimed at accelerating the growth in revenue between these two companies. Due to the sharing of resources the annual revenue of these two companies was increased because more clients were reached through the alliance and thus more profits made. Curran (2006, p. 29) asserts that the Nokia-Siemens joint venture which was announced in June 18 2006 led to the creation of the Nokia Siemens network which enables the two companies from different countries to share telecommunication equipment for global networking. The joint venture business strategy is aimed at enabling companies to share costs and risks which are involved in business operations. The Nokia Siemens network for example has enabled the two companies to share the costs of installing telecommunication equipment which is highly expensive especially in these companies which have a global reach. Additionally, the risks involved in global networking have been shared between the companies so that the losses incurred in case of failure of some aspects of business are not experienced by only one company. Through the joint venture between Nokia and Siemens the companies are also enabled to have rapid access to financial resources as explained by Curran (2006, p. 30). This is through the profits which the companies acquire from the provision of global networking and telecommunication services to their clients from al over the world. Additionally the sharing of resources is made possible through the sharing of risks leading to increase in profits. The joint alliance between Nokia and Siemens is a business strategy which enables the companies to enjoy a greater influence in the evolution of the global networking industry through sharing expertise, talents and knowledge to enable innovation of the telecommunication technologies. Collan & Kinnunen (2009) emphasize that joint ventures are ways of enabling companies to collaborate in the development of new products. In 2006, Yahoo and Claria announced a joint venture which was aimed at providing a personalized experience for the Japanese who used the yahoo website. The Yahoo Japan was aimed at enabling the clients of both companies within the country to enjoy new online products which were customized to meet local users. In the delivery of the companies’ products such as news, video, music and advertising, yahoo Japan was aimed at providing personalized content specific for the Japanese. In addition, product recommendations were made possible through the joint venture where the clients were directed to new products which were developed to meet their unique interests. Delaney (2006) says that the major motivation behind strategic alliances in the companies within the computing and mobile phone industry is the growth in technology. Recent developments in technology are made possible through enormous financial investment into the innovation of the current hardware and software so that better application is produced. Through strategic alliance form of corporate strategy, companies are thus able to be influential in technology by being he pioneers of new technology. Moreover, the need for efficient and effective acquisition of services by clients through modern technology has motivated companies to enter into strategic alliances. The need for diversification of businesses is also a factor which drives companies to enter into strategic alliances and joint ventures as explained by Delaney (2006). Through alliances, companies are able to provide their clients with diverse products and services. In addition, the diversity of markets for a company’s products and services is made possible through strategic alliances. Therefore the alliances between companies help them to provide various products to their clients without necessarily investing in the production of those products. This reduces the risks associated with investing in various products. Advertising is one of the major functions of business success. The need for increased effectiveness of the marketing and advertising budgets by companies therefore drives them into entering into joint ventures and strategic alliances. For example the joint venture between Google and eBay in 2006 enables Google into effective advertisement which targeted a larger audience within international markets. In addition, the companies share the advertising costs leading to effective advertising which was less costly and high in revenue. Because business staff is the most important drivers of the success of a company, businesses have entered joint ventures and strategic alliances to enable them to gain a bigger number of skilled and experiences employees who work in various projects. This will increase the quality of work and productivity in addition to improved products through the innovativeness of the employees. As a result the companies are helped to expand their enterprises more rapidly through increased number of products and services which is made possible by a larger workforce as explained by Collan & Kinnunen (2009). Key opportunity in the computing and mobile device industry The major opportunity within the computing and mobile device industry is the transition of the industry from being voice centered to data centered. Mobile phones have been used widely for voice communications but the current trend in this industry is the increased exchange of data through mobile devises which are able to use computer applications. The wireless industry therefore is going through an exciting transition into the use of mobile phones to perform tasks which previously were only possible through the use of personal computers. This has been made possible through the innovations in technology and design of various applications for mobile devices such as browsers through which people can exchange e-mails or messages via social networking sites without necessarily exchanging voice messages. Delaney (2006) says that it is notable that the revenues of mobile phone companies from data exchanges through these devises are increasing. This had led to the interest of many investors in the improvement of computing technology to meet the needs of users for potable computers. For there this assertion is demonstrated by the development of web enabled mobile devices such as iPads through which users can access online content and other electronic information materials and data. Consumers of computing and mobile technologies are now spending more of their time accessing and exchanging data through these devices as opposed to the traditional use of mobile devices for voice centered communication. This is a major opportunity in the computing and mobile device industry which has been made possible to the increased mobility of people. In business industries and companies, there is increased movement which is a result of the globalization of the economy. Because of the increased mobility, there is need for exchange and access of business information through electronic media. His is achieved through access of business e-mails through portable devices. The data centered exchange of information is an opportunity in the computing industry which has reduced the cost of access to information by users through the use of mobile devises to obtain all forms of information from the internet. This has acted as an advantage for the computing and online advertising companies such as Google which have been enabled to reach millions of viewers of their websites. As a result advertisement of various products and services has reached a larger audience enabling companies in the computing industry to make large profits through online advertising of products from various companies. The transition of mobile computing industry into a data based application has led to investment of companies in various applications such as eReaders, tablets, notebooks, automobiles and cameras. As a result there is device convergence of electronic media where one device is able to perform many functions such as exchange of images, video and access to the internet, radio and other electronic media such as online television programming. As a major opportunity in the mobile computing industry, the data centered information exchange will enable companies involved in cloud computing such as Google to enable their customers to access and share information through any device. This opportunity is likely to eliminate the limitation of mobile devices such as the small screen size through compatibility of these devices to computers through USB cables. It is therefore recommended that companies harness the opportunity posed by the use of mobile devises to compute data so that they would invest in various hardware and software applications which will facilitate data exchange through the internet by the use of mobile devices. Google Inc. for example has applied the merger and acquisition strategy with Motorola to enter the smart phone business because of the opportunity in the market resulting by the need for data exchange via mobile devices as demonstrated by Yao (2011, p. 1). The revenue of mobile operators is likely to increase because mobile computing needs in the market will definitely lead to the acquisition of more web enabled mobile phones by users. The mobile phone network providers therefore should invest in enhancing the network infrastructure so that the needs for efficient and effective data access via mobile devices can be met. Conclusion The corporate strategies used by various companies determine their success. Mergers and acquisition strategies have been used by companies in the computing and mobile device industry to enable them expand their business, provide a greater variety of products and services to their clients and to enjoy the expertise and experience of employees in its projects. The joint venture between Google and eBay in 2006 was an appropriate business strategy for sharing risks of investment in online application and expansion of online advertising between these two companies. Risks associates with business functions can be shared between companies which jointly venture in business activities such as the Nokia-Siemens joint venture in the telecommunication business. The merger and acquisition of Motorola Mobility by Google Inc. is a corporate strategy used by Google to enter the mobile device industry through devices such as smart phones and mobile web application. Google entered into a merger with Motorola because of the major opportunity in mobile computing where mobile devises are increasingly being used for online data centered exchange as opposed to the traditional voice communication. 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