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This project examines the internal and external challenges Google faces and
the strategy it employs to meet these challenges. These challenges are brought out by
pressures from both internal and external environment. SWOT analysis is used to
analyze Google.
Political Factor
The partnership between Yahoo and itself brought itself into an antitrust lawsuit with
the US government. (Gamble & Thompson 2009) While in China, the government
affecting Google investment in China (Gamble & Thompson 2009). Due to new
regulation from many countries, Google application Streetview has been slap with a
A western Pennsylvania couple has sued Google Inc., saying pictures of their home that appear on the
Web site's "Street View" feature violated their privacy, devalued their property and caused them mental
suffering. (Foxnew.com 2008)
Exhibit 1
Economic Factor
business of about 25%. This affected their marketing budget. Despite Google
growing by 3% during that period, it was still affected as companies were not
investing as much as they did in advertising; the main source of revenue for Google.
To date, America remains the biggest market for Google and the current slow
recovery from the recession will impact Google growth. (Gamble & Thompson 2009)
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Social Factor
Social media such as Facebook and Twitter is the leading the way to how
people communicate with one another. Youtube allows individuals to post videos; it
is a platform that one can communicate and express themselves. Such social
networking platform will continue to see increase in usage. Google recognize the
Technological
There is an increase in smart mobile phones which allows for internet surfing
and communication through social network. This only further increases internet
usage. Software programs that supports cloud computing is shaping the future of the
industry. The industry is estimated to be worth USD$95 billion by 2013 (Gamble &
Thompson 2009)
Microsoft and Yahoo are Google’s biggest rivals. Currently, Yahoo and
Microsoft are in a partnership to compete against Google for a larger market share in
the area of search engine. Search engine Bing was the fruit of the partnership which
will contest with Google’s 37% market share. Bing is a threat to Google due to factors
like huge financial muscle of Microsoft and Yahoo’s 19.6% of the market share who
are mostly loyal users. Recently, Azure was acquired to compete with Google on
Threat of substitution
Television, print media and radio are tradition media avenues. These are the
substituted threats which account for 84% of the American market. However, these
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Power of suppliers
relationship with them. Google provides the Android software to mobile phone
manufacturers such as Samsung, which in turn use Google as the default search
Power of Buyer
Despite the variety of search engine available, consumers prefer Google. The
products and services offered by Goggle ranges from traffic estimation, advertising
campaigns and providing professional advice from experts is what attracts audience.
advertising space.
new entry poses to Google. This is possible because the entry barriers for new
competitors are low. Secondly, the cost of switching vendors is low for consumers.
Finally, the market is open for anyone with the financial means and creativity to try.
Internal Analysis
Value
Google best capabilities are its employees; who have a mindset and creativity
that makes a difference. They utilize innovation and creativity to solve complex
These applications enabled them to provide solutions to any problems in the shortest
time possible. It also further enhances its search function efficiency to have a
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HTML Formatted files which can be read on mobile devices for wireless users and the
Rarity
Google’s employees are passionate with their jobs and always having a mindset of
making a difference, but this can be copy. There are plenty of internet advertising
companies nowadays but Google has developed unique and cost effective advertising
services, such as Adwords and Adsense to target massive potential users through the
aids of its acquisitions. Hence, rarity is high in term of their functional abilities.
Imitate-ability
The possibility of imitation is low as their costs structure and complexity are
extremely high to imitate. For example, Microsoft launched a new search engine and
search advertising system, code named Moonshot in 2004 and 2006 respectively to
Organisation
because they intellectual, creative and are willing to work for longer hours with
minimal wage. Google’s management system is relatively flat. They adopt team level
is split in a way where they spent 70% of their time on work 20% on projects and 10
SWOT Analysis
Strength
Google has always been highly innovative and constantly implementing new
ways and services to improve and set new standards that enable them to enjoy great
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success and become a market leader. This is due to their ability to constantly
anticipate the needs and wants of the consumers. Their search engine provides the
user with relevant information in the matter of seconds. Their costing structures to
offer advertisers are cost effective and relevant. Their competitive advantage derives
Weakness
depend on internet advertising. This makes them vulnerable when their competitors
$20,000,000
Exhibit 2: Google’s revenues by
$15,000,000 Advertising
Revenue
$10,000,000
Lisensing& other
source, 2003-2008(in thousands)
$5,000,000
revenues
$0
Source: Google’s revenues cited in
2005
2007
2008
2004
2006
create a new operating system. In doing so, Microsoft reacted by luring Google users.
Their international market has been another weakness. They have been losing market
Opportunities
Emerging markets such as Russia, India and China offers opportunities for
Google. The mobile phone applications market and search-based advertising is also
growing. Google could also venture into offline advertising. Google has the potential
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Threat
Currently the two biggest threats to Google are Bing and the shrinking advertising
Problem Statement
Google is diversifying into too many areas without first strengthening their
- Increase revenue
for 84% of the market. Google is able to track viewers’ habits during commercial
breaks and use it to identify ads that are more relevant to viewers of different
programs. This will induce higher chances of providing advertisers with appealing
aspect through the proliferation of its targeted audiences and advertising platforms.
With this differentiating strategy and its strength of it brand name Google, it distinctly
shows that they will be able to diversify into new area of business successfully.
Medium Amount Percentage
Newspapers $48.6 billions 37.5%
Internet $21 billions 16%
TV $20 billions 15.4%
Network TV $20 billions 15.4%
Radio $20 billions 15.4%
Source: Essential of strategic management (Gamble and Thompson 2009)
Exhibit 3
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Based on the criteria, if Google is able to dominate the offline advertising
industry just like its successful internet advertising, it might receive sharp revenue
growth for its overall advertising revenue within 2 to 3 yrs. The industry is new to
industry. Even thought they are opening a new market but they wouldn’t be able to
exploit their strength. Their core business is still their search engine, by choosing this
option they would be diversifying into unrelated business which carry the risk of
through integrating cloud computing into its Android system. By using software-as-
service model which is one of the three cloud models, Google provides the services
by hosting both the applications and data which enables the end user to freely use
Google’s services from anywhere through their mobile devices. This mobile service
does not only instil convenience in locating the data, it also provides commonly used
presentation software for mobile users to expedite in their works. Hence, adding the
value of these unique features, it will stimulate more buyers’ interest to purchase
Android operating system than other mobile operating systems such as Window
mobile
Google’s strategy and etc. search based advertising on mobile devices had been very successful. In 2008
to dominate
Google accounted for 63% of searches performed on internet-enabled phones. The company’s introduction of its
Android operating system for mobile phones was expected to allow it to increase its share of mobile searches and
expand the market for other type of internets ads delivered devices.( Gamble & Thompson 2009)
Many information analysts agreed that ‘cloud computing’ would become a common software platform and could
grow to a $95 billions market by 2013.( Gamble & Thompson 2009)
Exhibit 4
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Google will increase its overall market shares in mobile and search industries to
about 80% in 3 years. Google could acquire more mobile search profits than its
market share of internet users. Cloud computing on mobile platforms can also
China.
As shown in exhibit 5, think local, act local concept is best when the host
country is diverse and complicated and the advantage to cater to the individual
need of the market. Through partnership or acquisition, they will be able gain
share in the target market. Based on the criteria to gain market share they will be
at an advantage.
Acquisition of companies will need large resources and time and they
might interfere with the countries anti monopoly regulations. This will affect
The last criteria; opening new markets, is not practical as they will still
be in their same business. Based on the blue ocean strategy, it will be better to
create a new industry or distinctive market than push out competitors, which is
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Recommended Alternative and Execution
We would like to recommend to Google that they should adopt the strategy of
integrating cloud computing into its Android system as this strategy fulfil all the
predetermined criteria.
Exhibit 6
this primary project. With the current Google culture, they have the necessary policies
and facilities for this project. They will need to realign their present product to
accommodate this project for instance their Google chrome. Rewarding the team for
the project success will motivate them. Upon completion of the system, they will need
to negotiate with their strategic partners and implement this system in their products.
The limitation of this strategy is the failure of Google unable to successfully develop
the system. This will result in the loss of investment. Google must gain the advantage
of being the first in the market, if competitors are able to develop new technology that
surpasses Google technology. That might result in the loss of new market for Google.
With Google’s vast cash reserve and progressive positive growth in revenue, they are
able to market this technology at a strategic pricing. Ultimately, it will ignite the
revenue growth when there is a surge in their overall positioning. Hence, the
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References
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Gamble & Thompson, 2009, Essential of Strategic Management- The Quest for
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