Strategic Management Analysis of Google - Case Study Example

STRATEGIC MANAGEMENT ANALYSIS of GOOGLE Tutor: Prepared by: Table of Contents Table of Contents 2 Introduction 3 Corporate Social Responsibility 4 General Environment Analysis 4 Political 4 Technology 5 Social 6 Economic 7 Industry Environment Analysis 8 Likelihood of New Entries 8 Power of Buyers 9 The Degree of Rivalry 9 The Substitute Threat 10 The Power of Suppliers 10 Conclusion 10 References 12 Introduction Google Inc. is a multinational corporation based in the United States of America. Primarily, Google Inc. provides internet related services and products. Some of the services provided by Google Inc. are cloud computing, internet search engine, advertising, language translations, advertisement to mention but a few. Advertisement revenues are Google’s Inc. strong hold as they contribute to the biggest percentage of its profits. Founded in the late nineties by Sergey Brin and Larry Page, Google Inc. was initially a school project for them during their study in Stanford University. What was initially a Stanford Digital Library Project, whose initial functionality and objectives were to develop the enabling technologies for a system that was integrated and a universal digital library (Edelman, 2010). After the foundation of Google Inc., it was incorporated as privately held company. This was in the year 1998, and Google Inc. remained a private corporation until the year 2004 when it had its first IPO (Initial public offering). The mission statement for Google Inc. is [To organize the world’s information and make it universally accessible and useful]. In addition, Google Inc. has an unofficial slogan which is [Don’t be evil]. Since the foundation of Google Inc., and its IPO yeas later Google has rapidly grown into one of the world’s most successful corporations. Furthermore, the growth of Google Inc. has brought about a series of acquisitions, partnerships, products in addition to the company’s core web search-engine. Google Inc. offers online productivity software and most importantly, most of its software products are freeware (Edelman, 2010). These productivity software products are office suite online application, social networking, cloud computing and emailing services. Additionally, Google products extend to the desktop platform with software products such as a web browser (Google chrome), photo and video utility application tool (Picasa), and an Instant messaging application (Google Talk). Moreover, Google Inc. has ventured into system application development. The corporation leads in the development of the Android Mobile OS, and the Google chrome OS. Google Inc. has also ventured into the hardware section as she has collaborated with big manufacturing companies. This move led to the development of the Google Nexus series of devices. Furthermore, Google Inc. acquired Motorola Mobility in the beginning of the second quarter of the year 2012 (Girard, 2009). Google Inc. has ventured into internet service provision. This move was pioneered by the construction of a fiber-optic infrastructure in Kansas City. Dubbed Google Fiber broadband internet service project, this project is just one of many that are to come. Corporate Social Responsibility Since its foundation, Google Inc. has actively participated in global philanthropic practices. These philanthropic practices are a way of addressing global challenges of poverty alleviation, challenges of education and climate change. In addition, Google started additional social initiatives in China. Google anticipates that they will have the capacity to leverage locally available resources. As a result, Google will be in a position to advocate for the importance of corporate philanthropy. Furthermore, Google will create awareness for the contribution and participation to the development of social responsibility ("Google Inc.," 2011). General Environment Analysis Political In the last quarter of the year 2004, there were rumors that the infamous know photos of Abu Gharib prison abuse were no longer in the Google Image search. This was in contrast to similar search performed in other search engines. Since Google-search engine is rated as the best engine compared to its counterparts in the year 2004, the only explanation for the lack of fruitful search on the photos of Abu Gharib implies that there were external influences (Girard, 2009). Furthermore, these photos were accessible via Google search for a small period. This was not the first ethical case of raised about web search engines. Since Google Inc. is a multinational corporation, the use of its search engine tops the list of Google services used worldwide. Every nation has their own rules and regulations as far as data and access of information is concerned. Google Inc. has gone to great length to ensure that she abides to all eligible regulation stipulated on web search engines. In response to these, Google Inc. official states that their search results are independent of the beliefs and preferences of her employees. Google Inc. continues to add that all her generated search results are completely objectively. Google stresses out that she will not give into petitions to alter their search results with an exception to when they are legally compelled and for malicious sites that try to alter her search results (www.oup.com, 2007). Secondly, Google created NetPAC in an attempt to create a way of making corporate donations. Its primary objective, NetPAC was for candidates seeking elected offices and as a result, Google was painted as a possible kingmaker. Furthermore, Google is looking to address numerous issues via the PAC. One of the issues is Net neutrality, where there are concerned that players with high bandwidth internet services to pay a congestion fee (Wray, 2009). This can hamper Google considering that after the acquisition of YouTube, a tow tier net would certainly hamper innovative opportunities for Google. Google Inc. also advocates having regulators in place to be in the core of any laws and regulation making and amendments. Soon after launching Google China (www.google.cn) and the web search-engine accounting for a quarter of all search requests in the country, authorities started blocking Google searches. This initiative to block Google searches was dubbed the great firewall of China. Google response was, they launched a censored service and advocated to have a representative in China (Wray, 2009). Finally, yet importantly Google books searches still upset numerous publishers and writers. Google has a full digital library. The library is a copy of all copyrighted books and this annoys key publishers. Despite constant battles with publishers, Google is collaborating with big universities in the digitizing of books (Wray, 2009). Technology Technology is the driving power of our world in this current age. With information being at the core of technology, businesses, organizations, corporations and nations are going an extra mile to ensure that they keep up with the world in terms of technology and communication (Google, 2010). On the other hand, Google Inc. mission statement states that Google’s primary objective is to organize the world’s information and make it universally accessible and useful. Therefore, it is eminent that Google Inc. utilizes to the maximum all available technology and related infrastructure to not only, meet their mission statement but also to remain in prosperity on a global scale (www.oup.com, 2007). Most of The Google products are affected by technology. From competitors, cybercrimes and poor It infrastructures all affect access to Google services and products. Google Inc. has ventured into web service provision that entails online application software, email and instant messaging services, Android OS to mention but a few. It is without a doubt that there exists competition in practically all the mention services and products that Google have. Their portable communication devices, Nexus run on Google Android OS that is constantly under attack from other mobile OS giants as Apple and Microsoft. Intellectual property rights embedded on Apples IOS, and its applications, Microsoft Mobile OS and its applications, Symbian OS and its application and lastly, the Android OS and its applications are vast. With Google pushing for open source and going an extra length to provide most of its services (Android OS and Google services) free, constant law suits of infringements of intellectual property rights from competitors. In addition, cybercrimes are a constant threat to Google Inc. Google has gone to great length to ensure their services and products are well secured at all times. This is an eminent move by Google to ensure that all its services and products are always accessible and working in an optimum level (Google, 2010). Finally, yet importantly, access to Google services are limited to availability of information technology infrastructures. Since most of the Google products and services are accesses online, it is mandatory that users have access to the internet. This is a challenge for the developing countries. Despite mobile internet services being available in most areas, this can still limit access to the services depending on pricing by service providers and connection speeds for the internet (Google, 2012). Social Google Inc. has grown over the years, and it is a multinational corporation. Spanning throughout the globe, Google services are available practically in every nation. However, different nations belong to different cultures. In addition to political influences, social influences affect Google Inc. in different ways. Primarily, Google is widely known for its search engine. Different nations and cultures have their own opinion toward the level to which they should use Google’s search and its limits (Google, 2011). Some individuals have raised concern toward Google to inquire if Google’s search algorithms can be altered. However, Google’s response to this was in an official statement. The statement states that Google’s search results are independent of the beliefs and preferences of her employees. Google Inc. continues to add that all her generated search results are completely objectively. Google stresses out that she will not give into petitions to alter their search results with an exception to when they are legally compelled and for malicious sites that try to alter her search results (Google, 2012). Finally, yet importantly, other Google services like video hosting alongside YouTube videos are greatly affected by social influences. Access to content on YouTube and Google videos is limited to most users globally. Despite Google videos being governed by Google’s search, YouTube is not. Any individual with a Google account can use the very account to access and post content to YouTube. This implies that content are not filtered on a real-time basis before they are uploaded. Google depends on reports toward contents before reviewing the content to decide if it remains accessible to others or not (Kotler & Lee, 2004). Economic From the start, Google Inc. had a goal to prosper in internet search. However, as the corporation laid grounds, its potential drastically grew, and the Google expanded in an unbelievable rate. After its initiation, Google received a loan of $100,000 USD. Then was later followed by a round of equity fund that totaled to about $25 Million USD. Google Inc. continued to prosper and grow as a privately owned corporation until the year 2004 when Google announces its first IPO (Google, 2012). Over the years, Google Inc. has grown exponentially, and despite suffering some economic setbacks, it has still managed to prosper. Google’s primary source of income is their advertisements. Any negative impact on this has subsequent effects on Google’s economic structure. In addition, all services and products that Google depends on for return on investments have to be well kept to ensure they do not affect its economic structure (Vise & Malseed, 2009). On a wider scale, business are estimated to make about 2 million USD for every $1 USD they spend on Adwords. This implies that business stand to make $11 USD for every $1 USD they spend on Adwords. However, this assumption is limited to if search clicks revenue was similar to those brought in by ad clicks. The amount of revenue generated by Google as a single corporation is enormous. It is without a doubt that Google has contributed a lot toward boosting the economy. Primarily from Google searches and Adwords, businesses have prospered to new heights. The online market has grown and this affects the whole world as a global village. However, numerous individual have taken this opportunity to defraud innocent users. To counter this, Google always looks as reports, claims against search scenarios, and acts accordingly. Industry Environment Analysis Google is a highly rated corporation in terms of success. It is without a doubt one of the world’s most reputable and successful organizations. Despite being initiated among well-established corporation with similar ambitions, web search engines, Google prospered and emerged the top of the all. Today Google is the world has most used search engine. In addition to that, Google has grown in capacity to provide additional services and products on a global scale. Nonetheless, in order to obtain a detailed understanding on the path Google has taken to we adapt the Porter’s Five Forces strategy to elaborate this. Porter’s Five Forces provide comprehensive indication of threats and opportunities and will be used to outline them not only to Google Inc. but also to similar related corporations. Likelihood of New Entries Competition is very healthy in any business environment. In most nations, monopoly is discouraged and furthermore when it involves technology. About two decades ago, Google was nothing but maybe an idea to one collage graduate. Even despite Google being primarily a school project, the concept was greatly conceived and nourished to the Google we know of today. During the initiation of Google, giants such as AOL.com, Yahoo.com, Netcenter, Excite.com to mention but a few were already in the market. However, Google prospered and out beat all of them in the web search-engine market. In addition, Google grew to provide more services and products, and in less than a decade after its foundation, it holds the kings share of the market. It is without a doubt that new players can prosper in the web search-engine market. Despite Google and other related corporation holding the lions share as they continue to acquire related organizations in order to expand, new players can still venture in this line of business (Google, 2011). Primarily, Google Inc. prospered due to innovation of a new and better way of doing things, their algorithm for their search engine. New players will have to outdo what Google have done in order to outbid Google in their own game. This is easier said than done. The challenges posed to new players will be high entry cost. The initial capital will be costly for new players. Experiences of existing firms play a vital role in ensuring these firms remain strong in the market as opposed to new players. Users’ loyalty toward existing firms can be hard to acquire. For instance, Microsoft Bing was introduced as a competitor to Google, but despite Microsoft being a reputable corporation, Bing has never been able to outbid Google from the number one spot (Vise & Malseed, 2009). Power of Buyers The ability for consumers to spend on products determines the prices of products within the market. However, for Google Inc. has a series of non-tangible products for the exception of the Google Nexus mobile device. Nonetheless, Google services despite being free, one needs access to the internet to access their services. For this case, the power of buyers will be the ability for users to acquire internet services. Google’s major source of income is from adverts, most importantly from their web search-engine. The more users access Google services and ultimately the adverts the more income Google stands to make (Dr Dean, 2003). In some parts of the world, especially the developing nations, they have limited information technology infrastructures. This limits the ability for potential users to access internet services despite if the buyers have adequate funds to spend on the internet services. As for the Google Nexus mobile device, the power of the buyer has little effect, as the mobile device market is very wide. In addition, Google does not greatly depend on the income of this product. However, after recently acquisition of Motorola mobility, Google is looking to venture deeply in the mobile communication device market (Dr Dean, 2003). The Degree of Rivalry The measurement of the level of competition between existing firms is called the degree of rivalry. It is difficult for corporations to generate great profits in cases where the level of rivalry is high. The major rivalry to Google’s web search-engine is Bing.com, Microsoft web search-engine. However, Google has remained in the top seat thanks to its users’ loyalty. Ideally, Microsoft dominates in the world of PC operating systems despite Apple MAC OS and Linux OS. Google are also looking to launch Chrome OS. However, Microsoft launched Bing.com after Google was well established. This made it even difficult to much up users’ loyalty toward Google, and that is why Google is projected to remain in a dominant position as far as web search-engines are concerned (Fortune Magazine, 2010). The availability of large and similar corporation or firms within a given market raises the rivalry levels. In addition, rivalry is high in cases where the investments were costly and pulling out of the market is not an option. Corporations go to greater lengths to prosper in their line of business. Finally, yet importantly, little users’ loyalty brings about high rivalry, as users’ are quick to switch between corporation offering similar services (Google Acquisitions). The Substitute Threat The measurement of ease in which users can deter from one service provider to the other is the substitute threat. Getting users to use ones product is always the first step in any business. Retaining the users is always another new step. Google has grown an extra mile to ensure it retains its users and preserve their loyalty. After the introduction of Google Mail (Gmail), users switched slowly to Gmail accounts (Freedom House, 2011). However, Gmail users have stuck to Google mail and using it as their primary email account after switching from their previous mail accounts. This was a strategic move for Google to ensure their users are satisfied hence remain loyalty. In addition, Google linked up YouTube and eBay to Gmail account holders. This ensures that Google users need not to open new accounts for all these online portals. Furthermore, users can easily access these portals if they are logged into their Gmail accounts using session-based cookies (Peter Sommer, 2009). The Power of Suppliers In any market, suppliers have the biggest say in controlling the market activities. In a market share with strong suppliers, it is difficult for corporations or firms to make profits. This is because the suppliers can dictate the terms and conditions for conducting business. For the services that Google provides, it is without a doubt that Google is in the position of power. Ideally, Google can dictate numerous key terms and conditions on how to do business. However, Google advocates free use of practically all its services. As a result, this limits the extent to which other players or corporation can do business (Freedom House, 2011). Conclusion Google Inc. has come a long way and achieved a lot over the years it has been running. In addition, Google is projected to be in a dominant position in years to come. Their users’ loyalty has never been compromised in any way and still Google is adding to new users on a daily basis. As the developing countries prosper attaining accessible and reliable IT infrastructure, it is without a doubt Google will have a chance to recruit more users. Ideally, Google Inc. should keep up their level of quality service provision, as it will ensure their position in the market share remains strong as it is. Innovation is a key element that Google should uphold in ordered to progress in their prosperity (Juan, Carlos, 2010). References Dr Dean’s speech at the University of Washington in October (2003). Retrieved 15th October 2012 from http:// www.uwtv.org/programs/displayevent.asp?rid=2459. Edelman, B. (2010). Google Inc. S.l.: Harvard Business School. Fortune Magazine, (2010). The 100 Best Companies to Work For,” Retrieved 15th October 2012, http://money.cnn.com/magazines/fortune/bestcompanies/2007/. Freedom House, (2011). 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Google to test display ads on Google Video. IDG News Service. Retrieved 15th October 2012, from http://www.pcworld.com/news/article/0,aid,126217,00,asp. Kotler, P., & Lee, N. (2004). Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause. Hoboken: John Wiley & Sons. Peter Sommer, (2009). Can we separate “comms data” and “content” – and what will it cost? Scrambling for Safety, London School of Economics, Retrieved 14th October 2012, from http//scramblingforsafety.org/2012/sf2012_sommer_commsdata_content.pdf. Vise, D., & Malseed, M (2009), The Google Story: Mew York Delacorte Press. p.39. Dont be evil” is said to recognize that large and established companies can maximize shrot-term profits with actions that destroy their long-term brand wage and competitive position. Wray, R. (2009, 10 24). The search for influence: Google becomes a political player. The Guardian. Retrieved from http://www.guardian.co.uk/technology/2006/oct/24/news.politicsandthemedia. 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