Google's Strategy in 2012 - Case Study Example

Case Analysis on Google's Strategy in Analysis of the environment Legal actions that are against Google have mainly originated from infringement as well as other issues that are associated with copyrights (Rimmer, 2007). Nonetheless, the concept of privacy in the internet world is progressively becoming unmanageable and ability that Google has of recording the habits of internet users and broadcasting the information to the people on the internet has lead to the calls for new laws that are more stringent. The external macroeconomic environment that Google exists in encompasses all the outside firms and forces, which have a possible interest or effect on the ability that the firm has to achieve its goals. Despite the fact that Google is an online business, macroeconomics factors greatly affect the broadcast of the company in several regions such as China, which has restricted the use of Google and in some cases unavailable. Google has enjoyed freedom from government interferences since it was established in 1998 since it does not fall under one government jurisdiction. The software that Google utilizes is proprietary and is only restricted by particular court orders in various countries. However, this might change in the days to come with the introduction of a Federal Internet Sales Tax Law in the United States. 1 Strength and weaknesses Strengths The fact that Google has already established a brand name that the users have been able to trust is one of the strengths of the associated with the company. The services offered by this company are dependable, reliable and relatively fast compared to other search engines. The company has an advantage since id does not necessarily need substantial end-user marketing since the name it uses easily gets word of mouth publicity. The interface that the users interact with is simple and the results are generated in a manner that does not confuse the people using Google’s services (Scott, 2008). The operational costs linked to the operations carried out by Google are relatively low since it employs UNIX web servers, which are mandated with indexing millions of web pages in the internet. It also hires highly qualified professionals who put in hard work that is directed at improving the search algorithms and make the processes of searching faster, relevant and effective. To make sure that the people in many different countries that speak different languages are catered for, Google provides an interface in eighty-eight different language. The search technology that is used by Google is regularly used in the indexing of pages to come with results that are most current for the users that need them. The company also weights and ranks the web pages with the Page Rank technology so that the users can be able to access the important pages before the others. The company has no bias as far as advertisers are concerned and therefore separates the relevant advertisements and the actual results by providing “sponsored links” tag to the results that are sponsored when searches done by the users get information with a particular word. It also ranks this and arranges in order with the most relevant being at the top (Ferrate, 2010). It is also able to offer searches that are based on location that generate results that are localized about vendors, products and services. It boasts of a wide range of services that are innovative such as images, news, groups as well as directory while making sure that its website remained simple. It did this by not making it a portal, but keeping tabs linked to these services on its homepage to allow the users to navigate conveniently while maintaining the simplicity of the site. The company has developed solutions for handheld devices that are wireless, toolbars that are personalized as well as catalogues that have essence strength incorporated in them. When it comes to linking routing the users to web pages, Google does it directly without lingering for advertisement revenue. Weaknesses Google’s technology for ranking is manipulated by spammers through the creation of a variety of links to the site, which they intend Google to give a high rank. The ranking that Google does on the links is not necessarily based on the analysis of traffic. Further, the cost per click advertising and ranking policy by the company is complex to understand which makes it hard for the marketers to predict the position of their advertisements and the amount to be paid for the advertisements (Langville & Meyer, 2012). The contextual advertising carried out by Google is considered less efficient in the generation of sales since the users that visit the web pages that show editorial content have a lower likelihood to make purchases than those that visit other sites. The search algorithms that are developed by Google which are contextual and the localized search algorithms regularly make mistakes. The business model that Google has is intricate and is dependent on the search engine’s site as well as mass-market portals for the revenue that it earns. In spite of the fact that the search engine ranks as first among the search engines, only a little more than a half of the web search queries that it handles come out accurately. The company has not been able to develop a search that is highly personalized that it could use to charge users with switching costs in the case that they leave Google’s services. The company also does not have a portal that might allow it to lock in a larger number of users and advertisers and it can develop fully-fledged services for hand held devices to capture market beyond the traditional internet (Warmelink, 2014). Financial analysis/summary Google has posted a consistent average growth rate of 25 percent annually except in 2009 when it was 7 percent meaning that the revenue is consistent and stable at a high level. The company also has a commendable pricing policy where it does not discount on its gross profit margin in order to get more sales. Actually, it continually raises its gross profit margin in pursuit of an optimum level making it earn more revenue. Every year, the company produces a huge amount of excess cash flow and holds four times the amount that it produces annually in cash balances which is a lot of idle resource. This lowers the return on assets significantly and pulls down the company’s advantage on innovation and competitiveness. 2 Identification of problems The primary threat that Google faces is in the increasing number of mobile internet users where it is experiencing hardships in monetizing mobile internet users, as there is minimal space to place advertisements on these devices. In the event that they are able to place advertisement here, they cost much less than usual and the growing number of mobile users translates to fewer searches made on PCs and lower income growth, which could cause a decline for the company. Microsoft is also making huge advances towards outdoing Google through internet and mobile operating systems that it is developing. Although the company is dominant in the search engine industry, the secondary threat that is experiences is emergence of other companies such as Bing that are progressively duplicating the success that Google has. Google like all the other internet search engine companies faces the common issue of dealing with Trojans and malware, which affects mostly the android platform that it runs on mobile devices. 3 Alternative solutions Efficiently organizing activities that are associated with marketing is a hard task since it entails technical issues that include transportation rates, handling of materials and preparation of movements. Google will have to develop marketing and purchasing functions since as an organization, there is a close relation in terms of marketing to most of the companies and the marketing mix and the main competencies that Google will follow will determine success strategy. 4 Recommendations and Justifications The success that Google has as well as its market position is founded on the tactics and influence of its market research and analysis where product innovation solutions assist it to acquire market share and attract millions of customers worldwide. The use of market research and innovations is because of the integrity of the factors, the availability of data, and appropriate connections that is different from other marketing situations. 5 Analysis of the firm Google is a worldwide technology company whose main goal is improving the people all over the world link with information. The company earns its revenue mainly through advertisements carried in its online site. By the end of 2011, Google mainly had its focus on sectors that included, search, advertisements, OS’s and platforms combined with ventures. Many businesses from different parts of the world use the AdWords program that is developed by Google to promote the products and services that they manufacture of market with advertising that is targeted. There are also third parties that are part of the Google Network who utilize its AdSence program in the delivery of relevant advertisements, which are meant to generate revenue. In mid 2011, the company came up with Google+, which is a way to share online and by January 2012, nearly 100 million people had signed up to Google+. The company typically maintains an index of websites as well as other online contents and consequently avails through the search engine to any person that has an internet connection. 6 Analysis of threats and opportunities in the environment Threats Among the threats that Google faces is the possibility to lose control over the policy that it uses in the indexing of the pages that it posts are results when users make searches. If a censorship is imposed, it will make many of the services that are offered by Google become less efficient. The library services that are offered by Google are also becoming less visible and the users are ultimately not getting to the institutional subscription. Through using Google as a search engine for a variety of disciplines, informational skills are quickly disappearing while at the same time Google is facing competition from other firms, which have search engines such as Yahoo and MSN (Hill & Jones, 2013). Google collects the search habits of the users that use the site, this has been a source of federal lawsuits and legal trials and this in effect erodes the perception that the public has of the company. In the cases that it makes contact with other portals like AOL, Google loses a significant amount of revenue. In the kind of business, there is no time constraint, meaning the competitors are in a position to develop better interface of the search mechanisms that might make the company lose the market share it has. In addition, the cost per click policy that is difficult to understand may disappoint the clients and the simple interface that it has might be lost in case it decides to change into a portal. There is the risk of remaining stuck in issues if the company decides that it will acquire information linked to its users that is of a personal nature. A merger between the company and another portal that is established would be a good decision but this might make the company lose the brand name that it has already earned. Opportunities The company has many opportunities that allow it to access new groups and content while having an expert search that is easy and simple and can be integrated using open-url. The company is in a good position to use content that is of a higher value in the web and it can be able to relive the trend the same way that Yahoo and MSN have done to make it a mass-market portal users, which will consequently increase the costs of switching for the users. It can be able to add paid advertisement by the localized vendors, which will be featured in the localized searches, and it has the potential of merging with the mass-market portal that is already in existence to be able to serve more users. It is in a good position to increase the overall expenditure on advertisements online and improving by making new acquisitions. It can be able to increase the internet usage considerably, which will in effect make the usage of the Google’s site to increase also. 7 Analysis of industry demand and competition Google has established a strong brand name as far as search technology is concerned but this does not mean that the competition that is coming from its rivals can be ignored. The competitors are chasing Google by trying to make their searches even better through developing a semantic web that is aimed at overtaking Google. MSN and Yahoo are constantly trying to do their best to oust Google at the first position and the way in which they charge for their advertisement is relatively more organized that the manner which Google does it which may be confusing to some degree. There is also competition that comes from Apple in terms of Smartphone as well as tablet computers, which directly rival their mobile platforms. 8 Development and evaluation of alternatives In 2010, Google formed an alliance with Intel, Sony and other companies that were aimed at allowing it to come up with Google TV that would be build on Android platform and would run on the same software as the chrome browser. The Google TV users will be able to use the internet through their sets as well as access cloud based services (Ferrate, 2011), which include Google Apps and the customers that use the DISH network services would be able to use Google TV if they acquired a Logitech set top box. 9 Implementing the plan of action Google made an acquisition of the On2 technologies, which develops video compression technology in early 2010 that involved a stock and cash transaction of USD124million (Ireland, Hoskisson & Hitt, 2012). This was supposed to enhance the video streaming capacity that Google TV had and Google lobbied the Obama administration for Federal Communication Commission for rules that would develop internet neutrality. This was to ensure internet providers regulate traffic so that it does not restrict the customers from the ability stream Google TV. References Ferrate, A. 2011. Building web apps for Google TV. Sebastopol, CA: O'Reilly. Ferrate, A. 2010. Google Wave. Sebastopol: O'Reilly Media, Inc. Hill, C. W. L. & Jones, G. R. 2013. Strategic management. Mason, OH: South-Western, Cengage Learning. Langville, A. N. & Meyer, C. D. 2012. Google's PageRank and beyond. Princeton [N.J.]: Princeton University Press. Ireland, R. D., Hoskisson, R. E. & Hitt, M. A. 2012. Understanding business strategy. Mason, OH.: South-Western Cengage Learning. Rimmer, M. 2007. Digital copyright and the consumer revolution. Cheltenham, UK: Edward Scott, V. A. 2008. Google. Westport, Conn.: Greenwood Press. Warmelink, H. 2014. Online Gaming and Playful Organization. Hoboken: Taylor and Francis. Read More