Google case study & Process/steps to follow - Strategic Management Assessment Answers

Strategic management - Case study Assignment Help

Industry definition

Many people believe that they, who use Google as a search engine are its real customers. However, they are wrong. They are simply the products that Google sells. The real customers of Google are enterprises, corporations, and businesses that purchase their ads (Heinemann, 2009, p. 56). Google creates high-quality ads that are appealing, at least always. These companies then purchase them for advertising their products and services. When a Google user institutes a search, Google avails results that match the search as well as other ads that have high chances of being clicked on by the user. To offer high quality and fast searches results, Google strikes a balance between filters the trafficked demographics. The boundary of the Google’s market is a technological limitation. That is, advanced forms of technology such as computers and the internet are not accessible to a great proportion of the worlds’ population.

General Micro and macro environment analysis

The macro environment for any corporation includes political, economic, social-cultural, technological, legal and ethical environment.

On the other hand, micro-environment incorporates all factors that are internal to Google. This may include its staff, organizational structure, and corporate culture. Luckily, this environment is favorable for Google. Due to this the company is running successfully.

Industry Environment analysis

Bargaining power of supplier

Google is relatively less dependent over suppliers and due to that cost of services is low for Google. This includes how easy it is for suppliers to drive up prices in the market. This is mainly affected by the extent of monopoly in the market. There are so many suppliers in the market thus suppliers are not very powerful. Result: Moderate.

Bargaining power of buyer

In this industry the bargaining power is very high. This includes how easy it is for buyers to drive prices down. The more the buyers, the more power they have and this case buyer comprise of large number. They tend to purchase large part of total output. Result: High.

Competitive rivalry

There are a number of competitors in this industry due to that competitive rivalry is very high in this industry. As case suggests that there are various direct as well as indirect competitors in the industry. Google faces very tough competition in the market. Result: High

Threat of substitution

Substitution in this industry is not easy and due to that customers are not to find new ways of doing what the company enables them to do. As the case also makes it clear that the services provided by Google are one of its kinds and thus there is no substitute to it. Result: Low

Threat of new entrants

There are numerous entry barriers in this industry and due to that threat of new entrants is low. The skills and capabilities require to survive in this market is something that is not possible for everyone thus possibility of new entry is low. Result: Low

Looking at the industry generally, it is attractive to Google. This is particularly the case because nearly everything now relies on technology. Every single person now runs their life on technology thus their customer base is exploding every other day.

Competitor analysis

Google has some competitors some of whom are strong while others are weak. They include Amazon, Apple, Facebook, and text messaging. They not only have attempted to replace Google, but some of them have also actually taken its place. This is discussed as below.

Direct Competitors

Amazon

For most people, the main competitor for Google is Yahoo or at least Bing. But that’s different. In 2014, the CEO of the company stated that Amazon was their number one competitor when he visited Berlin. A survey by Forrester indicated that at least a third of search engine users had started using Amazon as their search engine. Another study by ComScore the same year stated that the searches on Amazon had risen by a surprising 73% within a span of one year only.

Face book

From a mobile perspective, Google and Facebook fetch up to a half of the market when combined. This is distributed as 33% for Google with the remaining portion belonging to Facebook. When it comes to traffic, especially to a given website, Facebook is simply irreplaceable. This may not seem like much, but it is.

Indirect Competitors

Apple

It’s not their share in the market that worries Google, but it's their constant push towards innovation that scares them. There are more reasons why Apple is a nightmare to Google. According to (Heinemann, 2009, p. 10), Apple blocked ads in the i-phone operating system that block ads. Since Google rely on ads for revenue, this move was a direct assault on its income. However, this enhances user experience on Apple-made products. Lastly, and most importantly is their search and publishing platforms.

Top opportunities and threats for Google

Lawsuits on violation of copyrights: At least 98% of the contents that Google avails to its users are not it’s made products. Taking Google book, for instance, it has copied at least 15 million without explicit authority from their author’s and even worse; it copies a few million more every year. If Google were sued for this infringement today, it would not be the first time. In 2012, the firm was sued by the Governments of France and Germany for the same violation.

Security liabilities: Individuals, Governments, and institutions have found themselves in trouble after relying on the security policies of this company. For example, the world's most powerful Government, the US government found its security under threat after its defense forces website was broken. Just to cite a few, cyber crimes, hacking of e-mail accounts are other instances in which the security policies of Google have been a disappointment at their very best and disgust at worst.

External Analysis and Review Statement

Online Shopping: Today, the need for a physical presence for a transaction is fading away. This is replaced by an online marketing strategy that may be a stepping stone for Google. This can be taken advantage of by developing a partnership strategy with online shops. The growth of Android OS is very beneficial. Android OS does not limit ads. Since Android is the Operation system that is used the most today, Google may now having an opportunity to reach further markets (Sutherland, 2011, p. 23).

This can be taken advantage of through the strategy of partnerships. That is, a partnership with mobile phone manufacturers as they did with Motorola.

Google’s resources, both tangible and intangible

Tangible

The substantial resources range from financial (securities, cash and the capacity to borrow) to physical resources (mineral reserves, offices, land and equipment’s). The finances of Google average to about $ 14.89 billion.

Intangible

The intangible resources of Google range from technology, culture, and good reputation.

Capabilities Identification & Value Chain

The primary activities of Google in its value chain range from traditional model to finished goods for sale. For traditional models, raw materials are processed so that they can yield the services that are desired by customers. Google collects all the raw materials it requires for use, which in this case are web users. These users are attracted to its product, “searching services” that are delivered in a fast, efficient and relevant manner. Then, through its sign that is asserted, in this case, the text advertisement directs these users to the sites of advertisers (businesses). Google, by directing this user to such websites not only creates value for businesses but also asserts these users for them. These users are more likely to buy the products more than any other persons.

As seen in the above diagram, the activities that lie within the value chain of Google heavily rely on its human resources. This is especially true because Google has always tried to hire the most qualified skills in the market that aid in its research and development activities for its systems and markets. After the employees in their cost structure is their infrastructure. These systems allow them to operate, distribute, and sell their services. Each of these activities in the value chain enhances the profitability of the firm by adding on Google’s revenue. The firm is located all over the world ensuring the most productive marketing activities. In addition to these, the cultural and social awareness of Google ensures that the firm remains profitable (Sutherland, 2011, p. 45). Also, Google has advanced and analytical abilities on its users. The data on the history of users helps the company improve its advertisements and search algorithms.

Core competencies according to (Sutherland, 2011, p. 23-50)

Google's core competency is built on the technology they utilize in their searches which help them create a database that provides users with information that perfectly match their search. This may be directly linked to their highly advanced software and hardware engineering. In content indexing, it is clear that Google has the superior capability as well as ensuring hardware that is scalable. Additionally, Google has established a culture that believes in innovation. More, Google has long-term corporate survival capabilities, imitation difficulty, enterprise uniqueness, skills mix and resources that are simply fit for its need. On the side of its products, Google has core products such as PageRank, advertising platforms, mapping platforms and indexing technology. Google Ads is a user-friendly way so that users do not even feel the loss of their experience. This they do by ensuring that ads that are availed to users are mostly. For instance, G-mail as part of their product is sourced from Google ads, indexing technology, and PageRank. This can be summarized as below.

Weaknesses of Google that investors must know

Google, like another company, seeks to achieve the maximum possible returns from its opportunities. However, their blind impatience is a mission of self-destruction, to say the least. The way they include many pages coupled with their background advertisements that are seemingly endless in their indexes is intolerable to users, at least not in the long-run. Spammers are persistently taking advantage of this weakness and getting a better grip on the throat of this company. Second, the way they engage in copyright infringement is worrying. This has seen them in suits several times. Who knows what the courts may decide next? They may be ordered to pay all their wealth to the people against whom they violate these rights. Third, is customer aware? Though a lot of mischief by the firm goes un-noticed, this may not last longer. This is because as Google gets greedier, users continue to get impatient and may resolve to detach from the company. Fourth, is competition? The speed at which other search services providers are catching up with Google, or at least competing against is worrying. Amazon watched their user’s base explode by a surprising 73% in a span of 12 months alone.

SWOT analysis for Google at a glance

Existing strategy

The Google Annual Report 2015 points out various areas where strategic decisions are taken by the company. In the Annual Report they talk about Mergers and Acquisition as their most significant strategy. The company also mentioned that they discontinued the same of Motorola mobiles to Lenovo. The existing strategy of Google as per the Annual Report 2015 can be divided into five steps as illustrated below. The Annual Report also talks about strategy of Cost leadership adopted by the company and revenue generation using that strategy. The company is able to operate at a cost cheaper than the competitors. Google is controlling the cost that incurs from the side of the Human resource. The Chief Finance Officer Ruth Porat also stated, they were only hiring what pursued their business objectives. With this strategy the company is saving almost $274 million annually on human resource.

Then there is another significant strategy adopted by the company that is mentioned in its annual report is revenue from advertising. This is mentioned on page no. 32 of the report under the head “Advertising revenues and Monetization Metrics”. This is where the company takes integrated actions that are specially designed to deliver products in ways that are more important to them. This is where companies may adopt new technology as well as develop new products (differentiation) top aid its competitive advantage. By adopting this strategy the company ended up earning revenue of $ 1.511 million more than that of previous year. Google also plans to adopt flexible manufacturing systems such especially user customized searches for the next year to increase monetization. The company also plans to use integrated information networks. This will enable them to track and mine information that is directly related to their users and customers so that they can increase their usefulness. This strategy is working well in current context.

The company has also adopted a strategy of Total Quality Management and for that it plans to use top quality management systems. Under this strategy all Google team players take part in improving the services, products, and culture in the organization. The existing strategy for Google is the conversion of their stock into alphabetic shares. This has increased the expenses by $ 21 million but due to this strategy the profit has been increased by around $ 60 million.

Another strategy is that Google came under the umbrella organization alphabetic. The strategy has two flagships namely a life-sciences division and a longevity firm. The latter would work for diabetics using contact lenses while the other would be called Calico. This is an example of adoption of differentiation strategy by the Google.

B/L strategies for Google

When the B/L strategies for Google are combined, they yield the following summary of interlinked processes.

Future strategy

On the basis of current position of the company the company has more than one strategy to be pursued in the future to achieve success. These strategies are dealing with seasonal fluctuations and market penetration. Thus the company can either implement a strategy to deal with the fluctuations in the market that is a part of generic strategy or work on market penetration that is a part of intensive strategy.

Strategy 1 – Dealing with fluctuations in market – A Generic strategy

The note about forward looking statement of Google in its Annual Report also suggests that there is need to deal with the fluctuations in the market. This is also the generic strategy for Google that is based on Porter's model is differentiation. The services of Google can be used by almost everyone in the world that is they have at least one product for every person. Under this category, Google has chosen to follow two approaches namely differentiation and cost control. Under control, they will ensure that will run on the minimal cost possible. On differentiation, they wish to produce services that can bring all persons on board. These would be done on primary and complementary products. The additional products that would be differentiated include Picasa, Spreadsheets, and Earth Maps. These products are valuable in that they help the company in advertising their services. The argument that the firm held for this argument is that the more services users required from them, the more their chances of showing them their ads. Google also understands that more internet users would attract even more users. That is why they encourage free internet through Wi-Fi services. This is also seen in their foray into the business of cell phones. They enabled the development of T-Mobile OS that enhances internet usage. In this manner the company will deal with fluctuations in internet market.

Strategy 2- Market Penetration-Intensive strategy

The company also mentioned in its Annual Report that there is need to focus on other markets than US. It is also mentioned that this can be done by using market penetration strategy. This may be defined as their approach to the market for growth. The company’s major business is concentrated in US and because of that there is need to penetrate other markets. This will be done by adopting intensive strategy of market penetration. Thus the company will be able to achieve its strategies as well as long term objectives.