Business-Level and Corporate-Level Strategies of Google - Case Study Example

Business and corporate strategies of Google of Introduction Google is a multinational corporation, which was founded by Larry Page and Sergey Brin in 1998 and is headquartered at California, United States. It is one of the prominent organizations in the technology industry and is globally recognized for its products and services. These mainly include search engine, cloud computing, software and online advertising technologies such as, AdWords. In 2004, the company went public in order to raise Initial Public Offerings and is traded in NASDAQ. Since its inception, the company has diversified its products and services through innovation as well as acquisition (Google, 2014). Organizations mainly pursue three tiers of strategy formulation, namely operational level, business level and corporate level strategies for growth and long-term sustainability of the business. The business level strategies are defined as a coordinated and integrated set of actions and commitments that a firm implements for gaining competitive advantage by developing the core competencies. The business strategies are developed keeping in view three important aspects: the consumers, their needs and ways to satisfy these needs (Teece, 2010). The aim of this paper is to highlight on various business and corporate strategies implemented by Google and justify viability of the same. Alongside, the competitive environment of Google will be critically assessed so as to determine its strongest competitor and compare their strategies. Business-level strategies of Google The consumers of an organization are determined through market segmentation and can be classified on the basis of personal and business consumption. In the second aspect, the consumers’ needs are defined in terms of features and performance capabilities. Hence, the value that a company delivers can be either differentiated in terms of features or can be low cost from price perspective. Lastly, in order to achieve maximum consumer satisfaction, a firm requires improving, innovating and upgrading its core competencies. According to Porter’s generic strategies, there are four strategies at business level that an organization can adopt. These strategies are cost leadership, differentiation, cost focus and differentiation focus. In case of Google, the generic strategy of differentiation is implemented in the operations and business activities. The differentiation strategy can be further dissociated into a number of components such as, user focused, continuous innovation and improvement, speed, information base, cloud computing and ethical practices. The reason for considering differentiation as the most appropriate strategy for Google is justified in the following section. The mission of Google is to organize and present information is such as manner that it is universally available and useful. The corporation’s primary focus is to present its users with a convenient platform for accessing the internet. The Google homepage is the most accessed search engine by consumers owing to enriched user experience. The products of the corporation are continuously evaluated and modified so as to enhance the consumers’ experience. This is one of the reasons behind the high loyalty exhibited by consumers towards Google products. The modern day consumer experience and requirements are driven by speed, which has been well-acknowledged and incorporated by Google in the products offered. Presently, Chrome is one of the fastest and most preferred internet browsers. In addition, the services provided by Google are highly flexible in nature. For instance, consumers do not necessarily require a desktop to access the search engine and other related services as they can use mobile phone for the same. Also, Google has created the revolutionary free mobile platform, Android, for increasing swiftness of mobile software. The products and services offered are highly customized, which provides Google with a competitive edge with respect to the competitors. Google, by name, is well-known for its search engine service and the most fascinating factor that differentiates it from other search engines is its patented system, the PageRank. It is an algorithm that is updated continuously by the organization so that users are presented with reliable search results within less timeframe. PageRank creates competitive advantage for Google because it is one of the company’s trade secrets and is difficult for competitors to imitate. In addition, Google has also simplified its services through various segments such as, Gmail, Google Earth, Picasa, Translator, Google books and Google maps. The other source of competitive advantage as well as of revenue is the internet driven advertising technology, AdWords (Google, 2014; Teece, 2010). Corporate level strategies of Google The corporate level strategies of an organization are defined as a set of decisions that the senior management undertake for developing competitive advantage in different markets and industries simultaneously. There are three important dimensions of corporate level strategy, namely vertical integration, horizontal integration and geographical scope. In Google, there are mainly four kind of corporate strategies that are employed: stability strategy, growth strategy, retrenchment strategy and combination strategy. Stability strategy The stability strategy is an approach where a firm continues its current activities without major directional changes. The stability strategy is applicable when a firm continues operations in the same market with the same product or with same objectives but incremental changes in its functions. This strategy is also considered when a firm concentrates on narrow product market for achieving competitive advantage. In this context, Google has maintained steadiness in its core objectives, while bringing about progressive improvements in the offerings. Growth strategy According to Ansoff’s growth strategy model, a firm can grow through market penetration, new product development, market development and diversification. Google has adopted a sustainable growth strategy by employing a combination of all four approaches as per the market and consumer needs. Google has diversified its products, created new products such as, Android as well as has developed a strong market for the same (Ansoff, 1987). Retrenchment strategy Retrenchment strategy is implemented by a firm when it is on the verge of losing a profitable position. The retrenchment strategy mainly includes provision for disinvestment and liquidation. In case of Google, even though the financial condition implies that a retrenchment strategy is not required, it is important to have a backup plan for contingencies and crisis. Combination strategy The combination strategy states that every firm can employ a combination of the above mentioned strategies either simultaneously or in a sequential manner as per business requirements. It was observed that in Google, combination strategy is implemented. Aspects of growth as well as stability strategy have been applied to secure the firm’s competitive position. The corporate strategy of Google aims at accelerating innovation and strengthening brand image as a whole, along with that of its products and services. The company incorporates various transformational changes in the products and services offered in a timely manner so as to enhance the overall corporate value (Google, 2014; Applegate, Austin & McFarlan, 2007). Analysis of competitive environment of Google Google has gained a certain degree of competitive advantage over its competitors such as, Microsoft and Yahoo, owing to comprehensiveness, relevance, speed and user friendliness of the products and services offered. Apart from these companies, other corporations such as, Apple, were also observed to lose market shares to Google. However, the largest and strongest competitor of Google is Microsoft as both these companies have similar kind of products and services to offer. Microsoft is nearly two generations older than Google; yet, the latter has managed to transform into a tough competitor for the company. Recent developments in Google and Microsoft show that both of them are producing similar, yet differentiated, products and vying to gain the greater market share. In the following section, a comparative analysis has been conducted based on products offered and strategies adopted by these technology giants (Microsoft, 2014; Google, 2014). Products offered Microsoft, in addition to hardware, sells a number of software packages such as, Office suite, operating systems and presents consumers with web browsers such as, MSN and Internet Explorer. Google is yet to develop its own application software package. The company has come up with Chrome operating system and a rather more versatile and user friendly web browser, Chrome search engine. Considering the operational time span of both organizations, performance of Google is more appreciable. Even in case of mobile phones, the companies are competing through their generic application platforms such as, Android and Windows. Consumer reviews suggest that applications and software interface of Microsoft is more complicated than that of Google Android. In addition, Google products are way more cost efficient with respect to that of Microsoft (Microsoft, 2014; Google, 2014). Strategies In Microsoft, the corporate and business level strategies are primarily driven by innovation, which is further reflected in its products. The company focuses on product diversification as its main business strategy. In terms of diversification, Microsoft has extended business in software as well as hardware industry over the years. Even so, diversification does not act as an adequate strategy when there are too many competitors in the market. For instance, although the Microsoft operating systems are still preferred by consumers, it has lost significant market share due to introduction of the operating systems by Google, Apple and Linux. In this context, differentiation strategy of Google is worth appreciation as it has enabled acquisition of a large portion of market share within few years (Microsoft, 2014; Google, 2014). Performance of Google in fast-cycle and slow-cycle markets In fast-cycle market, the market forces are favorable to first moving organizations. However, product loyalty of the firms diminishes in a fast cycle market as every firm vies for gaining greater share of the market. Since fast cycle markets are driven by innovation, lawsuits over copyright and patent infringements are witnessed very frequently. In addition to that, companies primarily focuses upon earning quick profit since products are imitated at a rapid rate in fast-cycle markets. In such a market, product price is greatly unstable and shows declining trends after a specific period. In order to survive in a fast-cycle market, Google will have to depend heavily upon innovation and differentiation strategy for developing competitive advantage. Since the technologies developed and implemented by Google are difficult to imitate, it will add to company’s competitive advantage in a fast-cycle market. As Google products are highly user friendly, brand loyalty and market share can be maximized easily. In this context, it is important to mention that fast-cycle markets are highly volatile in terms of product innovation. As a result, Google must concentrate on continuous improvement in its services and incremental innovation so as to earn profit at a rapid rate. On the other hand, the slow-cycle market facilitates firms with long-term protections from imitators as process of replication is comparatively costly therein. In a slow-cycle market, the activities are slow. Consequently, Google have to develop its core competencies for gaining market share. Nonetheless, Google will be privileged if placed in a slow-cycle market. This is because the company will be able to deliver its offerings to the consumers without worrying about product imitation (Carrillo, 2005). Conclusion The technology industry is rapidly growing with a number of companies struggling to gain the maximum market share. One of the important corporations in this industry is Google. Google is not a very old company compared to other technology giants such as, Microsoft. Yet, the former has gained tremendous consumer loyalty in recent years. One of the most distinguishing features of Google is to present the end-user with applications and software platforms that are versatile, user friendly and can improve overall experience of consumers. It has implemented segmentation of its products so as to integrate differentiation in the marketing approach adopted. The corporate level strategy applied is a combination of growth, stability and retrenchment strategy, which empowers the technology giant to innovate as well as enhance consumers’ satisfaction level. When compared to Microsoft, Google appears to be a tough competitor owing to its innovative technologies that are difficult to imitate. Even in the context of fast-cycle and slow-cycle markets, Google has the ability to position itself as a stable organization due to the strong business and corporate level strategies. References Ansoff, H. I. (1987). Strategic management of technology. Journal of Business Strategy, 7(3), 28-39. Applegate, L. M., Austin, R. D. & McFarlan, F. W. (2007). Corporate information strategy and management: text and cases. Boston: McGraw-Hill/Irwin. Carrillo, J. E. (2005). Industry clock speed and the pace of new product development. Production and Operations Management, 14(2), 125-141. Google. (2014). About Google. Retrieved from https://www.google.co.in/about/. Microsoft. (2014). About Microsoft. Retrieved from http://www.microsoft.com/about/en/us/default.aspx. Teece, D. J. (2010). Business models, business strategy and innovation. Long range planning, 43(2), 172-194. Read More