How has Google inc. maintained its long term sustainability within the past five years - Essay Example

Google Inc. is a leading international technology company which provides advertizing, search, operating systems and platforms, software and hardware products. Its search engine boasts of technology leadership, making the organization to acquire dominance over similar firms in the market. Be that as it may, the company is mired in antitrust investigations in Europe and America. Observers argue that the result of such an investigation may adversely affect the firm in the near future (Google Inc., 2013, p.3). To ensure that it retains its status as the leading online search company, Google has employed several competitive strategies. Background Google provides products that enhance internet advertizing. It has a variety of services and instruments for all kinds of advertisers, ranging from simple text ads, mobile display ads, to publishers. Moreover, the organization provides mobile and other similar devices. It also offers products and services in over 100 languages across the world (Google Inc., 2013, p.3). The firm has three entities under which it carries out its activities: Motorola. Google and Motorola Home*. The Google part of the organization comprises of advertizing and other non-advertizing investments. It mainly centers on search, operating systems and platforms, as well as enterprise products and services. The search investment is made up of a variety of index of websites and internet contents that the organization keeps and avails via the search engine to clients connected to the internet. The organization’s search system sorts the information to provide appropriate useful search output as a feedback to client queries (Google Inc., 2013, p3). Under the advertizing subsection, Google is made up of services provided under AdWords, Google Display, AdSense, Mobile and Google Local. AdWords is the organization’s auction-based advertizing business that provides ads considered important and relevant to searches. Advertizers utilize AdWords to make text-based advertisements that show up next to related search results or web contents on Google (Google Inc., 2013, p3). AdSense program allows websites which are part of Google Network to avail ads from the organization’s AdWords advertisers which are relevant to the search outputs on their websites. Google Display has text, videos, images and other forms of interactive ads that operate in the web on computers and mobile devices such as smartphones and tablets. The Display Network offers advertisers services relevant to the delivery of display advertising across publishers taking part in the firm’s Adsense program (Google Inc., 2013, pp. 4-13). Competitive Advantage The VRIO Framework The VRIO framework is a model used to assess an organization’s internal resources and capacity so as to know if it can be a foundation of sustained competitive advantage. The VRIO assessment does not focus on resources and capacity themselves, but attempts to answer the question of what unique features an organization ought to have for it to increase its competitiveness (Antonio and Cardeal, 2012, pp. 10159-10170). Value When it comes to value, the company’s search products add value to clients since they offer appropriate websites fast. The company has managed to attain the top market share in the search industry specifically because their product is scarce. The firm is also capable of providing links within the first few search results for not only famous subjects such as “Dallas”, but also rare terms like “prodigious”. Google prospers at directing large number of readers to sites using Adsense. Many businesses heavily rely on the traffic Adsense, since it generates revenue to their investments. Therefore, Google is of high value to advertisers since it increases their sales, hence profit (Antonio and Cardeal, 2012, pp.10159-10170). Rarity The search services and offers provided by Google are rare and incomparable to Microsoft and Yahoo. This is owed to the relevancy of search results. The links provided by Google’s competitors are not as appropriate as Google’s. In addition, the company’s websites has a minimalistic outlook, which is rare. In most search companies, advertisings are cluttered all over their websites, with numerous words, graphics and images (Antonio and Cardeal, 2012, pp. 10159-10170). Imitability A resource is expensive to imitate if other firms that lack it can’t create its imitation, purchase or have its replacement at an affordable price. The search results are hard to imitate due to the large facilities and infrastructures needed to serve the relevant web pages fast. Moreover, the organization has servers distributed all over the planet and operating on very big amount of RAM. Therefore, Google’s competitors find it hard to come up with such a system since it is expensive and technical (Antonio and Cardeal, 2012, pp. 10159-10170). Organized to grasp value An organization does not only need resources. The resources themselves must be structured and organized in a way that can acquire value. True to that, Google has managed to organize its resources such as the management systems, procedures and the overall structure towards that end. In so doing, Google has almost fully realized the potential of its resources. Google has a variety of ways of organizing search information. It also has organized its different applications so as to make it easy for clients for clients seeking different kinds of information, such as books, shopping and Music programs. As a result, the organization of such resources has improved the perceived value that comes with it, thereby locking in customers from switching to competitors. Ultimately, it acquires competitive advantage (Antonio and Cardeal, 2012, pp. 10159-10170). SWOT Analysis Strengths Search engine supremacy Being the world’s leading search engine company, Google enjoys a large market segment since its search engine has state of the art technology. This has allowed it to gain market dominance. Its PageRank process makes the company follow up the relevance of a given webpage. The organization has in recent times been diversifying its search architectures in an effort to top its competitors in search results accuracy (Google Inc., 2013, p. 21). The introduction of the Google toolbar enabling the company’s query software to be installed on PCs is a case in point. Rising cash from operations Google has seen a tremendous growth in its operating cash flows in the last five years. Operations cash rose at a compounded annual growth rate of 22% in 2010/2012 financial year. In 2011 financial year, the organization realized an operating cash flow of $16, 619 million, which is considered a progressive increase by 14.1% (Google Inc., 2013). Furthermore the high operating cash flow to sales ratio reveals its improved efficiency in converting sales to cash. This is an indication of the company’s earnings quality. An increase in Cash flow generated from its operations aids stability, thereby enabling subsequent growth (Google Inc., 2013, p.21). Acquisition of Android is a success Android has a variety of unique features which has made it gain an advantage over other mobile operating systems in the market. By acquiring Android, Google invaded the mobile operating system market segment. Consequently, the market has provided an opportunity for the firm’s tremendous growth in recent times, catapulted by the swelling demand for smartphones (Google Inc., 2013, p.21). On top of that, the continued thirst for smartphones in the market offers Android rare and advantageous growth opportunity, leading to the entire growth for Google. Indeed, Android has made use of such an opportunity to gain an edge over its competitors such as BlackBerry, Apple and Microsoft, to become the ultimate leader with regard to the number of gadgets using its operating system. Weaknesses Weak social media advertizing strategy Compared to rival firms like Yahoo and MSN and Facebook, Google has a relatively weaker strategy in social media advertizing space. It has focused more on search engine related advertizing, and less on social media advertizing. In as much as it has launched social websites like Google+, such social platforms have not met the threshold of competing with Facebook, which is its archrival (Google Inc., 2013, p.22). The reason behind Facebook’s success is that it has high user engagement and loyalty. Additionally, the costs associated with switching from Facebook to rival social networks in terms of carrying the entire content is inconceivable. Cost of Operating Services Google offers many services. Such services range from Android, e-mail, to video sharing YouTube and Google maps. These services, some free, cost the company millions of dollars to maintain and run. For that reason, the company incurs heavy costs in terms of running their operations with little or no returns. Some of the expenditures that burdens Google is the labor costs needed to keep the company operational. Moreover, playing rivalry games with world’s most powerful multinational companies such as Microsoft and Apple can prove expensive and heart shaking (Google Inc., 2013, p.22). Excessive Reliability on Solely One Source of Income Google generates almost 90% of its revenue from online advertising. Advertizing is projected to grow by double digits in 2015. In the short-run, the company’s income is predicted to shoot. However, Google may witness a stagnating growth in income generation in the long-term (Google Inc., 2013). This is owed to the fact that there is a sluggish growth in the market of PCs thus it may experience an overall decrease in its desktop search engine market. Also, the online advertizing market is dictated by surfacing economies where the average advertisement cost is relatively cheaper than in the developed economies (Google Inc., 2013, p.22). Opportunities Google set to Reap from the blossoming Tablet and Smartphone Market In the last five years, the international mobile phone market has witnessed a widespread growth in terms of value and bulk. This phenomenon is projected to continue and is being fueled by rise in demand for smartphones. International smartphone shipments and exports are projected to increase from the current 655 million units to a billion in 2015. This is an opportunity for Google to enjoy gains from the market opportunity presented by smartphones in terms of display and mobile advertisements (Google Inc., 2013, p.22). Securing Patents through Acquisitions Google has to secure additional patents if it is to successfully grow. This can be achieved by acquiring firms with powerful patent portfolios. In 2012, the company acquired Motorola. This made it secure over 17,000 patents from the Motorola investment (Google Inc., 2013, p.22). Fiber Cables The company is undertaking an examination and testing of their new fiber cables. If successful, the cables will disseminate content at a speed considered 100 times faster than the traditional channels. This is an opportunity Google should harness and put in place supportive infrastructures that will vertically integrate the company (Google Inc., 2013, p23). Threats European Commission Antitrust Inquiries The firm has been entangled in antitrust inquiries by the European Commission, into claims that Google abused a dominant position in online search, contrary to the European Union Legislations. In particular, Google was accused of downplaying the rankings of unpaid search results of rival services, which are dedicated to offer clients with specific online contents like price comparisons (Google Inc., 2013, p.23). The results of such an investigation can threaten the status of Google as the leading search engine service provider in Europe. PRISM Electronic Surveillance Program PRISM is an electronic surveillance data extracting program owned by US’s National Security Agency (NSA). The program allows intelligence officers from the government to extract information such as file transfers, email contents and search history. It is alleged that the spy agency has unlimited access to the servers of Google and similar companies. For that reason, the organization has been under attack from many governments for allegedly breaching the data privacy legislations owing to its entanglement with the PRISM project (Google Inc., 2013, p.23). Microsoft Microsoft is steadily placing itself as Google’s archrival. Microsoft Company is playing a vital role in offering online search services (Google Inc., 2013, p.23). The introduction of Windows 8, an operating system targeting mobile gadgets is a challenge to Google’s Android. Subsequently, Microsoft is steadfastly competing for both the search and mobile OS market with Google. Where do we want to be? Google has adopted and maintained an effective business strategy in the past five years. By employing and maintaining these competitive business strategies, it has clearly defined its business niche and understands its customers. The essential business strategies that the organization has applied to sustain it in the long-run are: cost leadership, differentiation and focus. As such, an organization operates most effectively when it selects one strategy on which to focus (Porter, 1980, pp. 32-49). Google has applied a number of differentiation strategies to its advantage by offering unique products and services. In 2010, the company launched a new web indexing program, famously known as Caffeine. The system provides over 50% newer results for web queries than the earlier indexes. This has made Google online search more competitive than other firms in the search industry. The uniqueness feature has also brought increased consumer loyalty. This satisfies customers’ needs and entails tailoring the products to the customers, enabling the firm to charge a premium price in order to gain market share (Pharnell, 2005, pp.157-170).Unlike other sophisticated search engines, Google is simplistic and minimalistic. When a customer visits the website, the only things that are seen are the ‘Google’ name and a box to enter search items. Another form of uniqueness is that the algorithm used would return to the user (Newson, Ganiev and Price, 2003, pp.327). When it comes to cost leadership, Google has focused on getting a competitive advantage by setting the lowest price in the market. The company has radically transformed the advertising industry by offering products to end-users for free in exchange for advertizing. It has also reduced the cost of advertizing for different brands thereby achieving cost-leadership. Moreover, the company has a low-cost manufacturing strategy and employees committed to setting the low-cost strategy. Activities deemed as not having a cost advantage have be discontinued or outsourced. The organization also has large market dominance. Google has converted innovations into job descriptions, where employees spend 80% of their time on search (Newson, Ganiev and Price, 2003, p.327). How do we get there? Porter (1980) asserts that organizations which optimize their value chains activities against competition are in a better position of leveraging valuable abilities into competitive advantage. Put simply, undertaking value chain activities using methodologies which enables an organization outmatch rivals is a potential opportunity for competitive advantage (Dekker and Anderson, 2009, p.14). The Value Chain views an organization as a chain of processes where a company’s operations can by divided into two categories: primary activities (inbound logistics, outbound logistics, operations marketing and sales) and secondary or support activities such as human resources, procurement and administration (Cesnovar, 2006, pp.227-229). The model aids a company to find out the value of its business processes for consumers’ satisfaction. The model highlights specific stages in the long chain of business process where value can be added. Google has leveraged on the internet technologies such as Android, thus managed to create a value web (Hitt, Gove and Boyd, 2005, p.239). It has also managed to establish a hub structure geared towards improving the efficacy of supply chain and value chain, through digitally linking suppliers, consumers and other stakeholders. Google has also narrowed the information gap errors along the demand and supply chains, thereby enhancing communication collaboration and corporation. Google Culture Google has brought up a culture that supports innovation. Thousands of workforce in Google’s local and international offices put extraordinary effort to maintain its commitment to innovation. The company has a strategy of investing in brand new products and improving the pre-existing ones. Employing either strategies without overlooking the latter or the former is what has catapulted Google to international prominence (Google Inc., 2013, pp.23-26). Google’s innovative culture is driven by the understanding that even ambitious plans start somewhere. For instance, Google Books, which has reduced the knowledge gap by availing millions of books on the online platform, was an idea Larry Page conceptualized some years back. Initially, it seemed a tall order. People thought it was bizarre to even give such an idea a try. But he went against the grain, purchased a scanner, started scanning pages to estimate the length of time it took using a metronome and found out that it was possible to bring world’s books online. Google has since embraced the idea of encouraging small innovative ideas (Google Inc., 2013, pp.23-26). Google team does not believe in instant perfection. They work continuously to improve the already existing small ideas, and turning them into earthshaking innovations. For instance, the first version of AdWords released in 2012 was not yielding the desired fruits. Countable people clicked on the ads. But in the long-run, the iterative process has made that idea unbeatable in the world. Google has an iterative process in which they observe users in remote areas use their products, from where they find out which ideas best works (Google Inc., 2013, pp.23-26). Finally, Google’s management team has embarked on a program geared towards looking for ideas everywhere. Leaders of Ads products seek for ideas from all the stakeholders, including partners, advertisers and employees. In fact, some of the most groundbreaking innovations are generated when small groups of clients ‘Googling’ take a break at random and start conversing about issues that make the happy. Google Art Project is a case in point (Google Inc., 2013, pp.23-26). Conclusion The ever-increasing Google employees drawn from across the planet come join the workforce with diverse experiences and backgrounds. What has made it possible for the company to grow to the level it has reached is that the firm has a set of common principles, enabling its workers to operate as one and achieve a common objective. As a conclusion, Google is on the right path (Google Inc., 2013, pp.23-26). Its continued acceptance of different cultures, failures and iteration makes it fall in the short-run, but rise at an inconceivable degree. YouTube is owned by Google. Initially, the company started by coming up with the failed Google Video Player. But the human generation remembers the successes more than the failures (Google Inc., 2013, pp.23-26). In conclusion, Google has perfected the art of learning from mistakes and correcting them. Such a trend and practice defines the organization, making it dominant in search engine market. Recommendations Google needs to work on its ethic. The organization has an inclination to overlooking its customers’ ethical demands. A case in point is the continued customer complains on privacy violations. Google should also censure information being relayed to a third party like PRISM. This is because sharing information to third parties violates customer confidentiality and secrecy (Google Inc., 2013, pp.23-26). If Google is to maintain its dominance in the search engine market, it ought to expand the already existing Research and Development Team. This is because innovation correlates with customer loyalty. 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