Assignment

on
Google: An Internet Search Service Company

Submitted to:
M NAZMUL AHSAN KHAN
Faculty of Business
American International University – Bangladesh
Course: Strategic Management

American International University – Bangladesh

Date: 28 MARCH, 2011

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 Submitted by:

RAHBAR MAHMOOD ID# 09-93133-2

Section: B, Program: MBA

Google Inc.: The Company

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Google was founded in 1998 by Larry Page and Sergey Brin, PhD students at Stanford
University who were fed up with the existing Internet search technology companies and their
inability to return accurate search results. Google was basically an online company that
specialized in developing a reliable Internet search engine.

Google Inc. became a global technology leader focused on improving the ways people connect
with information. Their innovations in web search and advertising have made their web site a top
internet property and the brand one of the most recognized in the world. Google maintains a
large index of web sites and other online content, which is freely available via their search
engine to anyone with an internet connection.

Google’s Strategic Position:

Google understands the wealth in diversification. Exploring new opportunities constantly over a
solid base of research could prove profitable with the use of products that can reduce cost – cost
of production, advertisements, etc. These new products are crucial in gaining leverage in the
constantly changing market and providing an alternative industry if need be. Google understands
that valuable profits and minimized risk can be garnered with international operations.

Google’s Vision & Mission:

Google’s mission is ‘’To organize the world’s information and make it universally accessible
and useful.’’
Google’s vision is ‘’To develop a perfect search engine.’’

They believe that the most effective, and ultimately the most profitable, way to accomplish the
mission is to put the needs of the users first. Offering high-quality user experience leads to
increased traffic and strong word-of-mouth promotion. Google’s dedication to putting users first
is reflected in three key commitments:
• Doing the best to provide the most relevant and useful search results possible, independent of
financial incentives. The search results will be objective, and we do not accept payment for
search result ranking or inclusion.
• Doing the best to provide the most relevant and useful advertising. Advertisements should not
be an annoying interruption. If any element on a search result page is influenced by payment, it
will be made clear to the users.
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• Will never stop working to improve user experience, search technology, and other important
areas of information organization.
Believe that user focus is the foundation of success to date and this focus is critical for the
creation of long-term value and not intend to compromise user focus for short-term economic
gain.

Google’s Objectives:

Google’s objective is to provide the users the perfect search engine that would understand
exactly what they mean and give back exactly what they want. Now a day’s Google became
successful precisely because of better and faster at finding the right answer than other search
engines at the time.

As Google keeps looking towards the future, these core principles guide its actions.

1. Focus on the user and all else will follow.

2. It’s best to do one thing really, really well.
3. Fast is better than slow.
4. Democracy on the web works.
5. You don’t need to be at your desk to need an answer.
6. You can make money without doing evil.
7. There’s always more information out there.
8. The need for information crosses all borders.
9. You can be serious without a suit.
10. Great just isn’t good enough.

These principles were written several years ago, still now it is revisited to see if the principles are
well maintained through Google’s journey or not.

Corporate Governance

Co-founders Larry Page, president of products, and Sergey Brin, president of technology,
brought Google to life in September 1998. Since then, the company has grown to more than
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20,000 employees worldwide, with a management team that represents some of the most
experienced technical professionals in the industry. Eric Schmidt joined Google as chairman and
chief executive officer in 2001.

Board of Directors:

 Eric Schmidt, Google Inc.

 Sergey Brin, Google Inc.

 Larry Page, Google Inc.

 L. John Doerr, Kleiner Perkins Caufield & Byers

 John L. Hennessy, Stanford University

 Ann Mather

 Paul S. Otellini, Intel

 K. Ram Shriram, Sherpalo

 Shirley M. Tilghman, Princeton University

Top Management:

 Eric Schmidt, Chairman of the Board and Chief Executive Officer

 Sergey Brin, Co-Founder and President, Technology

 Larry Page, Co-Founder and President, Products

 Nikesh Arora, President, Global Sales Operations and Business Development

 Shona L. Brown, Senior Vice President, Business Operations

 David C. Drummond, Senior Vice President, Corporate Development and Chief Legal
Officer

 Alan Eustace, Senior Vice President, Engineering and Research

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  Patrick Pichette, Senior Vice President and Chief Financial Officer

 Jonathan Rosenberg, Senior Vice President, Product Management

Societal Environment

Google is well positioned in demographics because it has a relatively young user base. This is a
good side as the use of internet increases the use of search engines also increase. Internet search
doesn’t depend on factors like gender, religion etc. therefore Google has an advantage over other
businesses.

a. Economy

IT related companies like Google are relatively isolated because search and consequently
internet-based advertisements has become a staple to the world society and economy. Google’s
focus on highly targeted, measurable advertising makes it more recession-proof than many other
businesses in the technical sector. The crucial need to stay informed and constantly connected
keeps such services vibrant despite the parched surroundings.

b. Technology

Technology is obviously always improving and Google has taken specific measures to make sure
it does not fall behind. Google can use commodity computer parts (cheap components) knowing
they will fail by ensuring that every component always has a duplicate. The components are
attached to the computer with Velcro rather than screws which allows for quick swapping and
upgrading.

c. Socio-Cultural

The world is increasingly becoming more connected due to the means of communication
available through the internet. And, for many people, the search giants like Google make the
internet navigable. As internet use increases among all age groups and across all cultures, we
will become increasingly more dependent on internet search.

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Task Environment: Porter’s 6 forces (Forces Driving Industry Competition)

Porter’s 6 Forces analysis is a framework for industry analysis and business strategy
development relative to the competitors of a firm.

Threat of New Entrants

The barriers to entry in the internet search market are high. There are many competitors in
different industries, including traditional search engines, vertical search engines and e-commerce
sites, social networking sites, traditional media companies, and providers of online products and
services. Google’s current and potential competitors range from large and established companies
to emerging start-ups. The market now, however, is more mature with a necessary path
dependency to gather data on both the content of web pages and the search history of users.
Therefore, the threat of new entrants in the internet search market is relatively low.

Rivalry among Existing Firms

Google’s main competitors are Yahoo, AOL and MSN. Presently, Google has nearly 60% of US
market against their search engine. This large market share helps them to improve the quality of
their search results and get ads more quickly than their competitors. The competitive rivalry is
strong and ongoing in this industry because large amounts of advertising dollars flow to the
website that has captured the largest volume of searches.

Threat of Substitute Products

In 2008, the internet has become the most chosen by millions of people all over the world to
request and retrieve information. Information can be organized in different ways including

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categories and sorted by date, but Google provides tools to complete these tasks as well as
conduct searches. A substitute product may be invented in the future, but there are no obvious
substitutes to organizing information on the internet.

Bargaining Power of buyers

The customers of Google are mainly the ad providers. Ad providers are continuously looking for
the search engines which the people use the most to attract the target customers. In this case
Google is number one as the usage of this search engine is the most depending on its fast and
reliable search results and simplicity of the website. Brand value is also a reason for Google
current success. The users play a vital role for Google’s revenue as the popularity of search
engine depends on it.

Bargaining Power of Suppliers

Google’s ad system is a reliable source of income because both the ad-making partner and ad-
receiving individual are both customers of Google’s. So as long as Google maintains its market
dominance with the search product, supplier bargaining power will remain low.

Relative-power of Stake-holders

In Google’s case the main power is on the hand of the investors and other partners. As Google is
a public company its financial stability is very important for the investors. The increase in stock
price proves that the company has a very good reputation and the financial condition is sound.
The company’s expenses are minimal because it had no inventory. But any kind of rules and
regulations in the search industry might affect the company as it may affect the world.

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Internal Environment Analysis:

The internal environment analysis mainly involves the strength and weaknesses of an
organization. Here the strength and weaknesses are found according to Google Inc.’s current
situation.

Strength:

Google has a lot of strengths, below is given the main key points for Google’s success.

• Structured business model (S1):

Google has a very profitable business model. Its diversification in business helps to expand in
different areas of search. Google’s search engine has a huge database which helps to generate the
accurate search results.

Business Model: Google, Inc.

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IFAS Table (S1):
• User friendliness and fast search (S2):
The simplicity of the search engine helps the users to be more dependable. Most of the time if a
topic is searched the results also are related in a higher rate than Yahoo, AOL or MSN. This is
mainly because of the data relativity and usage rate of the users.

IFAS Table (S2):

• Brand value
Google’s brand value is very high comparing other the search engines. Therefore the brand equity
helps the company to gain more market share now and onwards. The brand identity that Google has
developed has significantly contributed to the success of the business.

IFAS Table (S3):

• Innovative initiatives
Google introduced new concepts in the field of information technology. Its innovativeness helps
people realize some product that they didn’t know they were missing. For example, Google Search
Personalization, Google in different languages, Google News, Google Earth etc. Therefore
Google’s way of introduce of new ideas.

IFAS Table (S4):

• Corporate culture
The culture of Google is an important factor for its organization. All innovativeness comes from
this work-force and every employee helps the organization to grow in a unique way. This culture
helps everyone to think out of the box once a while so the creativeness increases giving them
brilliant ideas that might be the next revenue earning project for Google.

IFAS Table (S5):

Weakness:

• Dependency of advertising business:

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The revenue comes from advertisement. Advertising completely depends on the popularity of the
search engine and its related products. If Google’s popularity decreases the ad providers might
switch to others search engines to make their organization visible to the people.

IFAS Table (W1):

• Has products customers don’t know that it even exists:

Google has a wide variety of products and services. Some of these products are still unknown to
the people. This is a weakness as Google in unable to make the users know about products such
as Google catalogue, Google translate, Google wireless etc.

IFAS Table (W2):

IFAS TABLE:

Internal Strategic Factors Weight Rating Weighted Comments

Score
1 2 3 4 5
Strengths
S1 Structured business model 0.15 3 0.45 Search service customers,
business solutions, marketing &
promotion etc.
S2 User friendliness, reliable and fast 0.25 4 1 Related search results
search.
0.1 4 0.4 Large number of users.
S3 Brand equity
S4 Innovative initiatives 0.15 3.5 0.525 Google earth, Google news etc.

S5 Work-force & corporate culture 0.1 3 0.3 Innovative business ideas.

Weaknesses
W1 Dependency on advertising business 0.15 4 0.6 Most revenue comes from
Google Ad Works, based on an
auction system.
W2 Has products customers don’t know 0.1 2.5 0.25 Google catalogue, Google
that it even exists translate, Google wireless etc.

Total Scores 1 3.525

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External Environment Analysis

The external environment analysis involves the opportunity and threats of an organization. Here
the opportunities and threats are chosen according to Google Inc.’s current situation and future
possibilities.

Opportunity:

• Increasing internet users

The usage of internet is increasing day by day. Since the use of internet is spreading to developing
countries Google is taking the chance of increasing its market share as well. This opportunity is a
plus point for internet search engine providers because the industry is still in a growth stage in
these countries.

EFAS Table (O1):

• Technological change
The technological changes helping Google to expand its users day by day. Google is the leader of
such an industry that most of the advancement creates a new level for Google to make things more
users friendly and simpler. The increase in usage of mobile phones helped Google introduce
Google applications in the mobile phones. Technological advancement creates new areas for
Google to expand its tools.

EFAS Table (O2):

• Expanding to profit making opportunities

Google always seek new arenas for profit making opportunities. Different and innovative
internet devices and advertising platforms may create the opportunity for Google to increase its
revenue.

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EFAS Table (O3):
Threats:

EFAS Table (T1):

• Increased competition in the search engine market
The search engine industry full of competition. There are many competitors in different industries,
including traditional search engines, vertical search engines and e-commerce sites, social networking
sites. Established companies have longer operating histories, and they can use their experience and
resources against Google in a variety of competitive ways. If the competitors are more successful than
developing compelling products or in attracting and retaining users, advertisers, and content
providers, Google’s revenues and growth rates could decline.

EFAS Table (T2):

• Business model imitators

Google has a very profitable business model and there are companies who follow it. Google can face
threat if the followers create a huge data relevancy and create a faster and more reliable search engine.

EFAS Table (T3):

• New media of advertising

Google Inc. generated 97% of their revenues in both 2008 and 2009 from their advertisers. The
advertisers can generally terminate their contracts with at any time. Advertisers will not continue to
do business with us if their investment in advertising with does not generate sales leads, and
ultimately customers. If Google is unable to remain competitive and provide value to the advertisers,
they may stop placing ads, which would negatively harm overall revenues and business.

EFAS Table (T4):

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 • Data privacy
The Google brand may be negatively impacted by a number of factors like data privacy and
security issues. Government might create rules and regulations if Google cannot secure data and
provide services to the users.

EFAS TABLE:

External Strategic Factors Weight Rating Weighted Comments

Score

1 2 3 4 5
Opportunities

O1 Increasing internet users 0.25 4 1 Internet dependency

O2 Technological change 0.1 2 0.2 increase in use of mobile- Google

Launches Nexus
O3 Expanding to profit making 0.15 3.5 0.525 New internet devices and advertising
opportunities platforms

Threats

T1 Increased competition in the search 0.2 5 1 Local search engines are more popular in
engine market markets like China
T2 Business model imitators 0.05 1.2 0.06 Doesn’t impact much

T3 New media of advertising 0.15 2 0.3 Might create threat initially if its not
internet related
T4 Data privacy 0.1 1.5 0.15 Government regulations

Total Scores 1 3.235

SFAS (Strategic Factor Analysis Summary) Matrix:

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Strategic Factors Weigh Rate Weighted Sh In Lo Comments
t Score or te ng
t r
m
ed
iat
e

S1 Profitable business model 0.15 3 0.45 √ Will keep Google successful in

the long run
S3 Brand equity 0.1 4 0.4 √ √ Helpful for intermediate and
long run.
W1 Dependency on advertising business 0.15 4 0.6 √ √ Only focus for revenue
O1 Increasing internet users 0.25 4 1 √ √ Ongoing process as technology
is becoming more popular

O3 Expanding to profit making 0.1 3.5 0.35 √ New internet devices and
opportunities advertising platforms
T1 Increased competition in the search 0.2 5 1 √ √ Local search engines are more
engine market popular in markets like China

T3 New media of advertising 0.05 2 0.1 √ Might effect in the long run
Total Scores 1 3.9

Notes:

1. List each of the most important factors developed in the IFAS and EFAS tables in Column1.

2. Weight each factor from 1.0 (Most Important) to 0.0 (Not Important) in Column 2 based on that factor’s
probable impact on the company’s strategic position. The total weights must sum to 1.00.

3. Each factor rates from 5.0 (Outstanding) to 1.0 (Poor) in Column 3 based on the company’s response to
that factor.

4. Column 4 is the factor’s weighted score obtained by each factors weight times its rating.

5. For duration in Column 5, short term- less than 1 year; intermediate- 1 to 3 years, long term- over 3 years.

6. Column 6 is the rationale used for each factor

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Recommendation:
The company should take upon strategies to maintain its strengths, overcome the
weaknesses and threats and create opportunities to be competitive in the search
industry. Google can take the following `

Implementation Evaluation Control

Maintaining the quality of the Continuous process- Long Term control on company's strategic
search engine and create new ways possible position.
to satisfy the users and relate to
them.
It can also create products like anti- possible Short Term control on company's strategic
virus software’s etc. position.

Create car tracking software’s by Might require Short Term control on company's strategic
the help of Google Earth. permission position.

Create social networking website to possible

compete with most popular website
Face book. External factors cannot be controlled
R & D for new ways of advertising. possible

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Conclusion:

Now a day’s Google is the most popular global search engine. Its reliability and user friendliness
attract users from all over the world. The brand value of Google is higher than its competitors,
but it doesn’t mean that this will remain always. Google needs to take strategies to be the market
leader as there are always new competitors in the search industry. These strategies need to be
updated due to frequent technological change.

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