Marshawn Pettes

October 8

2013
MBA 664: Satisfying Shareholders

Googles mission is to organize the worlds information and make it universally accessible and useful

Table of Contents:
Problem Statement ...2 Industry ....2 -Competitors ..2 -Problems within the Industry .....2 -Problems within Google ....3 Strategic Objectives ..3 -Googles Mission....3 -Company Values....3 -Objectives...4 Resources ....4 -Who has the Power? ....5 -Who has the Time? ...5 -Financial Health ....6 What Should Google Do? ..6 SWOT Analysis...7 Baxters 7 Forces Analysis.8 Functional Areas of Expertise....9 References.10

Problem Statement Google is in the industry of search and information technology. Managers in technology and media companies around the world are concerned with the boundlessness of Googles potential and opportunities. Google competitors are beginning to duplicate Googles success in which puts Google in the position of being faced with the question: What would Google do next? Industry -Competitors Yahoo! was the leading Internet portal prior to Google. Yahoo! and Google competed head to head in search and paid listings. Googles products were direct rivals of products at Yahoo! (i.e. home page, local search, video, Gmail, maps, Picasa, etc.). Yahoo! was an early investor in Google and was aware of potential paid listings could increase. In response, Yahoo! ended their reliance on 3rd party algorithms for search engines and acquired Inktomi and Overture. This helped Yahoo! master the art of seamless integration and customer centric ease of use across Yahoo! products (i.e. searches of Usher brought all news, music, etc. related to usher in the top search) Yahoo! Provided their own editorial services. Editorial searches are the key distinction between Yahoo! and Google. Google also faced issues with Microsoft office and their franchise for desktop user ability. Microsoft planned to develop paid-listing service (unsuccessfully courted a partnership with AOL) to compete with Google. Later Googles launch of FREE web-based, ad-supported calendar, and office programs threatened profits for Microsoft (and their Microsoft office franchise that required purchased licenses to use). Googles growth in advertisement and products threatened e-commerce companies such as eBay and Amazon. Vendor searches could be done with Google, although eBay was a paid advertiser for Google. EBay was able to protect their business due to the fact that Google did not have an online payment service (eBay had PayPal) as well as a partnership with Skype (which eBay paid 2.6 billion to leverage with a VoIP provider-Skype) As a result, Google became rivals with some of the largest and most powerful companies in the world. Everyone was afraid of Google due to their ever-expanding agenda in which has put in on a collision course with nearly every company in the information technology industry: Amazon.com, Comcast, eBay, Yahoo!, Microsoft, etc. -Problems within the Industry 2

In addition, there are problems that most companies in the information technology industry face. The first problem is technology innovation. Technology is constantly changing over time. Companies are competing with one another with the common goal of having the best and most updated technology. While each company strives for this goal, they run into problems such as techno arrogance and the notinvented-here syndrome. This is when you have people on the team that are smart but inflexible and is always convinced that they can build a better system than the existing one. Another problem is the maturation of the company, the industry, and the work force. Most firms in the industry are in rapid growth stage and are faced with the problem of trying to provide benefits and a work environment that will be attractive to all ages. -Problems within Google In 2005, Google had issues with customer service. Many Google advertisers charged that the company neglected customer service. Interactions with the company had left other business partners feeling that Googles management was unresponsive, self-centered, and dangerously cocky. This could be an example of techno arrogance. This even became an issue with foreign governments as French President, Jacques Chirac (August 2005), started a loan program for development of a Franco-German multimedia search engine because he felt that Google was a tool of U.S. cultural Imperialism. In addition, Google has to make sure that their communication procedures keep pace with their increasing scale. Every project at Google is a team project and it is very important for Googles team members to communicate effectively. The bigger Google grows the more difficult it becomes for Google to communicate as a global organization. Google also have to constantly refine its analytical techniques for detecting click fraud and dummy sites as well as set priorities to help manage the many projects underway. All of the above are very time consuming, but must be done in order for Google to continue to succeed in the future. Strategic Objectives -Googles Mission Googles mission is to organize the worlds information and make it universally accessible and useful -Company Values Google values integrity. Google never compromises the integrity of search results. Google philosophy is to never manipulate ranking to put their partners 3

higher in their results. Google stays true and acknowledges user trust. No one (advertiser-big resource) can buy a better page rank. Though advertisement is important to Google, they are not dependent on it. When it comes to advertising (not engine search results) they use their sense of ethics (i.e. wont accepts ads for guns, hard liquors, etc.). Wont advertise anything that perpetuates evil which is their personal preference. Google also values technology. Their management team is committed to leading edge technology. Continuous research in both Googles search algorithms and its software for serving advertises. Google invested heavily in the infrastructure that supported lightning-fast returns on search inquiries. Company relies on over 250,000 Linux servers to handle more than 3,000 searches per second. This is custom designed by Google to provide low-cost but high-powered searching engine that benefits both company and public. In addition, Google value making theyre own rules. Google refuse to provide earnings guidance to Wall Street analysts or to smooth earnings to create the appearance of steady growth (p.6). Google will only disclose information according to law but not strengths, strategies, and intentions. Google also has a sense of pride and refuses to compromise their integrity for the benefit of money, positive portrayal (in Wall street), etc. -Objectives Google objectives should focus on solving the internal problems that exist. Products like Talk and Gmail, along with personalization features offered on Googles home page was a good start to create customer satisfaction and better communication. It is very important for the functional areas of expertise (see Figure 3) at Google to communicate with one another effectively. As far as have too many projects, Google have to run the ideas for projects through a strategic objective process. This can be done by setting a base for filters that aligns with both the company mission and the company values. Next, Google could use those filters to filter out the projects that did meet all of the standers. Google can categorize each project into three different categories: Met 0 33 percent of standers, met 34-66 percent, and met 67-100 percent. This process can help Google management set priorities without changing their 70/20/10 process. Resources Google took numerous steps to upgrade its advertising products, such as refining keyword-bidding practices, combating click fraud, and offering free software that marketers could use to optimize their paid-listing campaigns. Google 4

business model depended on paid-listing providers revenue in which depended on the four factors: coverage, click-through rate, average cost per click, and revenue split. Paid Listings allowed Google to expand and move into new search domains. Google launched Froogle which identified merchants for specific products& prices (which was free for merchants to post their products). By March 2003, Google expanded beyond search related advertising by launching contextual paid listings, which provided editorial content (such as blogs, news, etc.) Google top management team is willing to invest (i.e. on a project with a 10% chance of making a billion dollars long term) in promising long shots, high risk, and high reward projects in order to stay relevant to current needs and desires technology wise. Google consistently thinks of long-term goals. 2004-2005 pace of product development was accelerated most initiatives fell into: 1. Improvements to web search 2. Expansion into new search domains 3. Enhancements to advertising services 4. Software tools and services -Who has the Power? CEO, Eric Schmidt, president-technology, Sergey Brin, and presidentproducts, Larry Page, own about one-third of Googles shares but controls over 80% of shareholder votes. They all have immunity from replacement by disgruntled investors who might second-guess the companys strategy. Their goal was to create a corporate structure that is designed for stability over a long period of time. Though unusual for technology companies the dual class ownership has allowed these companies to concentrate on their core, long-term interest despite fluctuations in quarterly results.

-Who has the Time? Management used a 70/20/10 rule for allocating engineering efforts, including discretionary time granted to technical staff. o 70% of engineering time was spent on the core business (web search & paid listings) o 20% of time spent on projects and extended core (Gmail) o 10% spent on new businesses ventures (i.e. offer Wi-Fi service in San Francisco)

-Financial Health Googel possesses decent year over year growth in the earnings department: an adverage of 61% increase in net income each year after 2001 (see Exhibit 1). With this kind of growth, Google will have the financial power to branch into new arenas within the next five year (see opportunities in Figure 1). This provides Google with more leverage and opportunities to create options regardless of which direction the company chooses to take. What Should Google Do? Google should first create a Big Hairy Audacious Goal (BHAG). If Googles mission is to organize the worlds information and make it universally accessible and useful, then Google should create a goal of providing everyone access to the information. The BHAG can be set a providing free Wi-Fi service to everyone. As society moves forward towards the future, more people are becoming more depended on the internet each day. This includes business professionals, scientists, lawyers, doctors, teachers, professors, mothers, fathers, students, kids, males and females. It is safe to say that the internet will be here for the long run. Figure 2 illustrates Google having a low threat of Government regulations and a low threat of natural disasters. There is very low chance of all of the satellites crashes all at one time and by the time the Government figure out a way to regulate the internet bigger and better opportunities could be available for Google. The goal may seem out of reach, but getting even close to it could be huge for Google. They can start by providing free Wi-Fi to America and work their way to other areas. In additional, Google should create its own web-based operating system. Since Google values creating their own rules, this would be the perfect opportunity for them to make information universally accessible and useful under their own rules. There were already presumptions that Google build its own OS and browser. Google users may find it easier or even better to utilize Google web-base to access the information they desire. There is a great deal of strategic leverage for Google in building an ecosystem around content and advertising that is an extension of their search mission. As a result, Google will continue to be successful in the future.

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Reference Eisenmann, Thomas R. and Herman, Kerry: Google Inc. Harvard Business School, November 9, 2006 Collins, James C. and Porras, Jerry I.: Building Your Companys Business School Vision Harvard

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