GOOGLE

Strategic Analysis
The Vision
To make search engines so powerful they would
understand "everything in the world".

The Mission
To organize the world's information and make it
universally accessible and useful.

The Focus
Google continues to focus on innovation and on the
user experience.
 Google Strategy
• It’s the same as of Honda & Sony
• Both these companies have major share in
world manufacture share of Engines and
Electronic Goods
• Google wants world wide web’s major share.
 QUESTION?

• IS GOOGLE IN THE RIGHT INDUSTRY?

Let’s Analyze the Industry

The Industry Stats
 Country Analysis

Country Users (Mn) Usage Growth

(2000-2007)
US 210.00 120.80%
China 162.00 620.00%
Japan 86.30 83.30%
India 42.00 740.00%
Brazil 39.15 682.8%
World 1173.00 225.00%
 QUESTION?

IS GOOGLE IN THE RIGHT BUSINESS?

Lets Look at Products and Rev Model.

 Google Products (>60)

Web Standalone Communication &

Search Applications publishing
Maps AdWords Editor 3D Warehouse
Ride Finder Gmail Notifier Blogger
Analytics Hello Pack Calendar, Docs&
Directory Photo Screensaver Spreadsheets
Google Mini Picasa Dodgeball
SMS Secure Access FeedBurner
Search Mash GTalk Gmail, Orkut
SketchUp YouTube
Advertising Desktop Extension Reader
AdSense Blogger Web Mobile Products
AdWords Comments Blogger Mobile
Audio Ads Browser Sync Calendar
Click-to-Call Dashboard Widgets Gmail
Grants Send to Phone News
TV Ads Toolbar iGoogle
Reader
Maps Mobile
 Core Products & Revenue Model
• Core Products – Search and Adwords.

• Revenue Sources -
• Contextual Ads - Adsense.
• Adwords.
• Licensing Google search.

• Approx – 10 Billions Dollars.

 Internet Advertising - 2007

Global - By E-Marketer
• Number 1 – Advertising Medium in terms of growth
rate.
• Ad spending on the Web should net out at $21.7 billion
this year VS $20.4 billion on radio.
• E-Marketer predicts that online advertising will reach
$28.2 billion next year (an increase of 30 percent)
• Online advertising will account for a nearly twice as
many dollars - constituting a hefty $44 billion market
 Internet Advertising Trend
and Predictions
Global - By Zenith Optimedia
 Internet Advertising Trend
and Predictions
Global - By Zenith Optimedia - continued

• The internet will grow six times faster than traditional

media between 2006 and 2009 and increase its share of
the ad market from 5.8% to 8.7%.
• All of the fastest-growing ad markets are in the Middle East
and Central & Eastern Europe
• These regions are growing at double-digit rates,
compensating for an under performing North America
• World Adspend to grow 5.2% in 2007, on par with long-
term trend
• Olympics, elections and football to lift growth to 6.2% in
2008.
Global Market Share
in Search

Total search in year 2006  99.57 Bn

Google is doing 138.1 Mn search per day
Porter’s Five Forces Model for Google
Search
Supplier bargaining power :
• Supplier concentration is low
• Switching costs is low
• Threat of forward integration is low
• Importance of volume to suppliers is high

Entry barrier:
•Entry barriers due to brand
identity and scales is high
Rivalry factors:
• Few players of relatively smaller
size industry is growing at rapid Substitution threat:
•Mobile search. But due to
pace
•Product differentiation is low less sophisticated
Switching cost is low technology threat is far away
Exit barrier is low
few years
•Switching cost zero
•Informational Complexity due to •Switching cost is LOW
secrecy of internal algorithms

Buyers bargaining power:

• Buyer size/volume is very small
• Change cost/frequency is very low.
• product/service importance is high.
• Ability to backward integrate is very less.
• Price sensitivity is high
• Product differentiation is low
 QUESTION?

• WHAT MAKES GOOGLE?

ANDAR KI BAAT
 Leadership
• Dr. Eric Schmidt,
• Chairman of the Board and Chief Executive Officer
• Larry Page, Co-Founder & President, Products
• Sergey Brin, Co-Founder & President, Technology
 Philosophy of Google
• Focus on the user and all else will follow.
• It's best to do one thing, and do it well.
• Fast is better than slow.
• Democracy on the web works.
• You don't need to be at your desk to need an answer.
• You can make money without doing evil.
• There's always more information out there.
• The need for information crosses all borders.
• You can be serious without a suit.
• Great just isn't good enough.
 Google’s Culture
• Heart of Small Company
• Hand’s on contribution to the Products by each employee
• Flat Hierarchy
• Each employee having several responsibilities in different departments
• Hiring Policy
– Non Discriminatory
– Preference of ability over experience
• Multilingual company environment
• Multidomestic culture
• Recreation along with work
• Common café for all employees
 Google’s Global Presence
•21 countries at present
 Uniqueness about Google
SEARCH
• Speed, Accuracy, Objectivity and Ease of use of.
• Fit between their technology and the consumer
behavior.
• Page Rank technology – Orkut merged
• Solved the scale up problem
• Positioned as “Fastest Crawling Technique”
• Keeps the search “Up to date”
 Uniqueness about Google
• 1st to get it right advantage
• Advertisers tie up as “CPC”
• Trade off between “Speed” & “Compression”
• Best asset utilization (Efficient storage space)
• R&D expenditure = 50% Net Income(10% of
Revenue)
Continuous Innovation
 Biz Model

• User Info
• Social Networking
• Page Rank
• Relative Importance
• Customization
• Contextual Advertising
• competitive advantage comes from its core competencies in computer
hardware and software engineering
Value Chain
 Dynamic View
Buying many sites,
Opening offices in many
Countries, Huge investment in
R&D, Continuous investment in
increasing Database
Searching for various
avenues, Continuous
innovation, Developing
people, learning new
technologies

Resource Resource Activities

Endowments Commitment
 QUESTION?

• WHAT IS GOOGLE PITTED AGAINST?

THE BATTLE ZONE

Competitive Landscape
Search
Competitive Landscape
Advertising
Competitive Landscape
Video Blogging
Competitive Landscape

Social Networking
 QUESTION?

• HOW WOULD GOOGLE CLASSIFY THESE

PLAYERS AND WHO ARE THE TOP
COMPETITORS?

THE BATTLE ZONE – Part Deux

 Direct Competitors
OR Complementors?
• Internet companies,
• web search providers,
• Internet access providers,
• Internet advertising companies
 Indirect Competition
Or Complementors?

• Competition from traditional media

companies.
• Most large advertisers have set advertising
budgets, a very small portion of which is
allocated to Internet advertising.
Top Competitors
 Google Identifies Top 2
• Primary competitors - Microsoft and Yahoo! Inc.
• Both Microsoft and Yahoo have more employees than
Google. – Microsoft 6 times.
• Microsoft also has significantly more cash resources.
• Longer operating histories and more established
relationships with customers and end users.
• Microsoft and Yahoo also may have a greater ability to
attract and retain users - because they operate Internet
portals with a broad range of content products and
services.
Strengths Analysis

Weaknesses Analysis
 Threats Analysis

Common Opportunities
• BRIC Countries
•Computer literacy is on the rise
•Telecommuting and at-home-businesses growth
•Mobile technologies offer another opportunity.
•Cheaper global telecommunication costs open new markets

Google Yahoo Microsoft

Traditional ad domain Other Software Pay Per Use office
Office Suites Apps. Internet Ads
 Competitor Analysis
• Google – Aim – To make everything free for the Virtual User.
 QUESTION?

• SO WHAT IS GOOGLE DOING AND WHAT

SHOULD IT DO?

ACTION ITEMS
 Inorganic Growth - List of
Google acquisitions
2004 2005 2006 2007 2008

2Web Technologies dMarc Xunlei

Phatbits Broadcasting– Adscape – Video
Urchin S/W Inc. Radio Advertising Game advertising
Dodgeball Trendalyzer
Reqwireless Measure Map Tonic Systems
Current Comm. Group Upstartle Marratech
Android @Last Software GreenBorder
Skia Orion Panoramio
Akwan InfoTech Neven Vision FeedBurner
AOL (5% stake) JotSpot PeakStream
-Internet YouTube- Video Zenter
Sharing Grand Central –
VOIP
Endoxon
5 year Performance
 5 year Performance
• R&D -> More than 10% increase Y/Y since
2002
– Continuous Innovation, creating new products.
– New products every year, Need Based Positioning,
Depth rather than Breadth.
– Ready to deal with dramatic change.
• Cost of Revenue – around 40% increase Y/Y
since 2003
– Find new sources of Revenue, margins reducing.
 Recommendations
• Diversify earnings not products

Country Revenue %

US 61%

UK 14%

Rest Of
25%
World
The Growth Share Matrix
 Recommendation
• Search : Competition from both big web companies and
well-funded startups will force Google to remain focused on
continuing to innovate in search.
• Contextual Ads – Continue good work
• Other Ad formats - With Google clearly intent on spreading
its advertising platform to the offline world, go for more
acquisitions.
• Video – Continue Good work. Consolidate position.
• Social Networking – Acquire other players.
• Office Suite – Continuous R&D
 Recommendations

• Be Multi-domestic company
• Find new sources of revenue.
• Continuous Innovation is the key to maintain
dominance in such an aggressive
environment.
• Concentrate on BRIC nations.
 Recommendations

• Balance Scorecard
 Have we left any
QUESTIONS unanswered?

“THE POWER OF GOOGLE IS ENPOWERMENT.”