Business Model Canvas Report: Case of Google corporation - Essay Example

?BUSINESS MODEL CANVAS REPORT Nowadays the Internet is a significant tool, which makes the world a small village. With the internet and its componenttechnology known as the Search Engine, a person is taken to any website where much information can be acquired about a needed subject or topic. One of these sites or Search Engines is Google. Google is an American multinational corporation that uses the Internet to provide products and services such as Data centers and Email. The Email service provided by Google is known as Gmail. The Google company was founded in 1998 by Larry Page and Sergey Brin. Google’s headquarters is in Mountain View, California, and the company has over 70 offices in 40 countries around the world (Google, 2013). Google’s mission is “to organize the world’s information and make it universally accessible and useful” (Google, 2013). The organization believes that having a successful corporation depends on successful team members, so the company has over 300,000 people working behind Google’s website. In addition, the company creates user satisfaction by providing the best user experience in finding information. Also, Google believes that user’s time is value and that it is important for users to find the information they need in the fastest way. To this end, the organization provides the answer right away when users do a search. 1.0 CURRENT CNVAS Customer Segment: Google Corporation provides a variety of services such as browsing, advertising, and chatting. The selection is almost endless. Through the notion of customer segments a company can identify its favorable and more likely customers who desire to utilize its services. Google Company divided its customers into two main categories: 1- Regular Internet Users: through the invention of the Google search engine, Google plus and the browser Chrome, Google has reached a massive proportion of end-users around the word. For example, in 2008, in America only, the company’s search engine recorded 127 million users. 2- The Business Sector: Due to the magnificent features of AdWords, Google has been able to help a lot of investors and companies to advertise their products and attempted to deliver them to a large number of customers. Therefore, these two groups have different desires and needs that need to be fulfilled. The Regular Internet Users usually tend to look for general information, whereas in the business sector users try to concentrate on meeting their business requirement. Value proposition: Due to the multiple services that Google Corporation provides, the company has attracted a huge number of users gradually. Especially, since the establishment of the company and due to the invention of its remarkable search engine, Google succeeded in delivering its idea to people. The company’s value proposition is tremendously high because of the popularity Google enjoys. In addition to this, Gmail and Google Plus play a tremendous role in grabbing users’ attention (Reichheld, 2006). Therefore, despite the importance and popularity of Hotmail and Yahoo, the company pulls its customers very fast through the brilliant specification that the company developed in its Gmail and Google Plus. Furthermore, the company has successfully initiated and developed Google play, which is a store that enables people who are using the Android operating system to purchase different things such as books, music, apps and pictures. Last but not least, Google allows other developers to develop and maintain any new application the company release. Thus they get paid for that. Customer relationship: Google cares about its customers. It wants to have a close relationship with them.  A user's Google Account provides to them many benefits such as E-mail, Calendars for organizing, a social platform, and much more. Google creates value to its users by building a strong sales infrastructure including promotion and advertisement among businesses and customers in quick and direct ways. Through technology and automations, Google provides users with easy and convenience ways to interact. Google is a tool to create culture with long term, highly communicative and productive environment that aims to group people in several channels such as Facebook, twitter and other social network sites. Google is also a relationship building tool for businesses. Businesses are benefiting from Google services by using its engine to reach customers and Google users, with fast and less expensive procedures. Google provides free advertising space for businesses to list their products and services. Businesses can also use Google as an educational tool through attending online educational training and programs (Kotler, 2005). Channel: Nowadays, 80% of users on a Global scale use Google Display Network. It is becoming the number one Advertising Agency enabling thousands of advertisers to reach their clients in an effective and efficient manner (Malhotra, 2005). According to Google, around 100 different languages and for more than 50 countries are able to reach Google products and services. Through Google online tools such as bloggers, page creators, and Gmail, people are able to update daily interaction with others. Google is a market place to direct and shared sale force among multiple product lines through search engines, marketing campaign, and advertising. Current Canvas: Revenue Streams: Revenue Streams is the way a company makes income from each customer segment. There are several ways to generate a revenue stream: As Scott indicates, Google is one of the leading companies in the world as far as technology is concerned (Scott, 2008). Its popularity is primarily associated with the giant search engine that has achieved success through the development and execution of a highly innovative business model. The search engine maintains a vast directory of websites, which are useful for accessing different forms of web contents, such as video, images, news, and maps (Scott, 2008). It addition, Google provides free mailing services through its Gmail product and a social networking service through the aid of Google+. Most services that Google provides through the Internet are free and so Scott argues that the company generates it revenue from advertisers (Scott, 2008). It creates text-based advertisements, which appear alongside search results, and the basis of payment is CPC (Cost per Click). Recently, the company developed an open source mobile software platform, Android, which can be used by phone manufacturing companies to create applications for mobile devices. The company is collaborating with a number of Original Equipment Manufacturers (OEM) to develop computers supported by the Chrome operating system (Scott, 2008). Through Google Apps, the company serves as an enterprise market for web-based applications. Google Apps include Google Calendar, Google Doc, Gmail and Google Sites. The company has developed a Sales and Support infrastructure with specialized staff across the board. Google’s multi-product is a force in charge of selling campaigns, which include Display, Mobile, and Search advertising. It uses a self-service approach to help its customers with the goal of fostering automation capabilities. This is achieved through the help of a support group that helps Google network members and advertisers get optimum value for their offerings (Scott, 2008). Key Resources: Key Resources is the building block describing the most important assets needed to make a business model work. Every business model requires them, and it is only through them that companies generate Value Propositions and Revenues. There are four key recourses: physical, intellectual, human and finance. The key resource of Google is its powerful IT infrastructure, which includes hardware and software. The Intellectual resources have the highest potentials to achieving substantial values (Day, 2009). Examples of these are brands, advertising patents, game patents, social network, wireless and mobile patents. Human resource is an important key resource, which includes the supplier and buyer. In term of financial part of Google’s company, Google invested 3.762 billion on research and development. In addition, it gained 12.8 of revenues in 2004. Cost structure: The cost structure describes all costs incurred to make a business model work. The company has four key elements with regards to cost namely Traffic Acquisition, Data center operations, Sale and Marketing and R&D. Google has invested highly into R&D with the goal of creating and enhancing new products. In 2004, Google invested $3.762 billion and gained $12.8 billion of revenue. In data centers around the world, Google is estimated to possess approximately one million servers processing around a billion search requests every single day. It invests heavily in management of the data centers and their operations, which continues to be a key contributor to the company’s huge costs. The money paid to the distributors and partners constitutes the traffic acquisition. Sales and marketing expenditures include cost for the management of support and sales teams, as well as promotional and advertisement expenses. A huge chunk of Google revenue is generated from advertising, although it has recently evolved into the production of operating systems for mobile devices (Levin and Rubin, 1997). Key Activities In order for Google to function successfully, there are two key activities that are played by the company to enable it to achieve revenue and enhance the quality of the deals offered to its clients: 1. Research and development to enhance the existing products and services in order to meet the clients’ or users’ needs. Research also helps to predict future customer needs since needs change with time. Also, Google has risk mitigation technological tools to eliminate any problem before it occurs. 2. Management for the huge information technology infrastructure of Google. Since Google provides its services through the Internet, it has to administer the core services, which are Adwords, Adsense, and Google search engine in order to provide the services securely and efficiently. Moreover, Google created a problem-solving department to provide solutions for any kind of technical issues that arise during the use of any of Google’s services. In addition, Google creates innovation continuously and develop the platform of its search engine in order to make it more effective and faster. Key Partnerships: Since Google has a variety of business platforms, it employs partners to gather many new customers. In addition, it utilizes partnerships to keep old clients by providing new services. Google enables interaction between its partnerships and customers. Google’s revenue would drop sharply if there were no key partners. If there were no advertising revenue from clicking on links, then 97% of Google’s revenue would not exist, which means there would be no Google online. 2.0 NEW CANVAS Customer Segment Although Google is a well-known company, it has limitations in some customer segments. The company mostly focuses on those people who are not classified as disabled. From the nature of the company, it seems that Google corp. does not put a lot of emphasis on users with disabilities even though they can be a great source for Google to build trust and boost Google’s profit in an indirect way. This would happen as a result of inventing programs that are suitable to their skills. This would have a great impact on this sample size. The second customer segment that Google is not focusing on heavily is children and illiteracy people. It has been said that Google is not appropriate for children because Google may show content such as words, pictures and videos that children are not supposed to learn from. Therefore, it has been suggested that Google should change the way that subjects pop up. In the case of illiterate people, Google might have to rewrite its topics in a more readable way, because some topics are written in an advanced way which makes it difficult for them to be read. Value Proposition: On one hand Google has many advantages over it competitors but it still have some issues that need to be solved or developed to gain trust from users and businesses around the world toward its services. One of these problems is privacy. It has been proved that Google Company sent someone’s information immediately to developer after making payment process (Day, 2009). This happened without telling the buyer directly that the information had been forwarded to the developer. The developer was from Australia. Another Issue Google would improve is the translation. Google translator does not allow the person to get an accurate translation from a text. For example, if someone wants to translate an English sentence to Arabic language, there will be usually confusion in the meaning because there is direct translation instead of the use of semantic translation. Customer relationship: 1. Google can provide a new strategy called “start with customers” that can let clients use an online e-suggestion box to give the company ideas about their needs. Google then will report back to these consumers to let them know their ideas have moved into development and will be introduced. This will help Google to overcome significant challenges by reaching a high volume of submitted ideas that customers need. 2. Google can have a strong relation with its customer by providing interesting ways to hold their customers’ attention with its brand, such as the establishment of training club. Google can make training sessions for professional athletes, and celebrities. Channel: 1. Google can provide other ways to deliver their tangible products which is by trucks. Google will use a truck that can deliver its new physical products (laptops and smartphones) to its customers with high quality and speed for these people who do not like to shop online. 2. Google can provide a new strategy to catch new customers from previous ones who have been online. By previous customers’ information, Google can reach to new customers who do not know its product and service. Revenue Streams: There are numerous opportunities for Google to explore in the external environment. This will only be guaranteed by its ability to grasp and implement such opportunities to place the company in a stable position in the industry well ahead its competitors, such as Yahoo, Amazon and Microsoft. For instance it has been suggested that Google could create a new device with its brand name such as laptop, use Android to sign into Google on a public computer without entering user ID or password, make new products, and provide voice message services in a variety of language, not only limited on English language. Another idea that Google Company would develop is establishing credit card on Android operating system. This would have a great impact on the speed of purchasing process. It would also build a great advantage over the user which enables the user to get rid of all bank card or cash (Reichheld, 2006). Key Resources: Investments focused on the software development offer a great opportunity for Google to assert and expand itself in the market. The launch of Chrome, an operating system, which incorporated key weakness of competitors opened a new avenue for Google to persuade businesses and its customers to buy and use its lucrative ads.  Other areas in which Google can commit to enhance its operation and increase revenue includes value addition services such as, pricing, transaction and recurring services (Scott, 2008). As long as the company would create a laptop or tablet under its brand name, it needs funds, labours and designers to help creating theses gadgets. This would bring several benefits for Google Company toward its competitors. This would also bring another channel of revenue for the Google its self. Google has another diminutions KEY ACTIVITY: Making new laptops by Google is one of the most significant key activities in order to achieve high revenue. Creating laptop devices will establish great opportunity to build new operation systems; Google operation system leads to create work environment for application and programs where it can be sold through Google stores. That will lead many of the users to switch to Google laptop since it is accessible and it has innovative technology. As a result, Google laptop would achieve high revenue through selling hardware and software. Nevertheless, producing a little device that allow the users to make VOIP (voice over Internet Protocol) calls via WiFi will undertake to add a great and significant value to Google’s services. Cost Structure Even when revenues remain stable and expenditure goes down, profits are sure to go up. This means that the new cost structure for Google must be one that eliminates as much avoidable expenses as possible. As avoidable expenses are being eliminated, it will be prudent to introduce new cost or expenditure that will have higher revenue returns. The new model should therefore focus on brand equity, creation of new hardware and software that bears the brand name of Google would be the way to achieving this. Key Partnerships: Moving forward, much of the key partnership that Google undertakes should be those that are directed at minimising cost structure of the company. Already, it has been outlined that the company spends on research and development, human resource development and advertisement more than any other area (Levin and Rubin, 1997). To this end, the company would want to go into a kind of partnership that will brings the advantages of undertaking research and development, human resource development and advertisement at even lower costs. For instance by partnering with other online social platforms like Facebook, Google will get the advantage of cheaper, if not free advertisements from Facebook’s platform as a partner. Partnering with Yahoo would also give access to the company to easily advertise and raise a large human resource base through the use of Yahoo’s much acclaimed yellow pages. Going into partnership with non-internet based institutions like universities would also offer the company an advantage of undertaking specialised training for students to be employed directly into the work stream of Google after graduation. Students from these same universities could also undertake research works for the company as part of their academic dissertation presentation. SUMMARY OF CURRENT AND NEW MODEL Table 1: Current Business Model for Google Corporation KEY PARTNERS Advertising agencies KEY ACTIVITIES Management for the huge information technology infrastructure Research and development VALUE PROPOSITION Remarkable search engine Google Plus Google Play Gmail CUSTOMER RELATIONSHIP Through the creation of Google account CUSTOMER SEGMENTS Regular Internet Users Business Segment KWY RESOURCES Brands Advertising patents Game patents Social network Wireless patent Mobile patents 300,000 human resource CHANNELS Bloggers Page creators Gmail COST STRUCTURE Traffic Acquisition Data center operations Sale and Marketing R&D REVENUE STREAM Advertisement Direct sale of products Table 2: New Business Model for Google Corporation KEY PARTNERS Facebook Yahoo KEY ACTIVITIES Creation of Google laptops and tablet computers VALUE PROPOSITION Solving problems with privacy Improvement of translation services CUSTOMER RELATIONSHIP Start with customers Establish training club CUSTOMER SEGMENTS Children Illiterates Disabilities KEY RESOURCES Launch of customised software application Launch of customised hardware application CHANNELS Use of trucks Use of precious customer’s information COST STRUCTURE Investing in the creation of brand equity REVENUE STREAM Creation of a new device with its brand name such as laptop REFERENCE LIST Day, G. S. (2009). “A Two-Dimensional Concept of Brand Loyalty,” Journal of Consumer Research 2, 4, 241-258. Kotler, P. (2005). Marketing Management. New York: Pearson Education Levin R. I and Rubin D. S (2007). "Statistics for Management" Bombay: Prentice Hall of India Malhotra, N. K. (2005). Marketing Research: An Applied Orientation. New York: Pearson Education (Fourth Edition) Reichheld, F. (2006). The Loyalty Effect. Boston: Harvard Business School Press. Read More