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Table of Contents
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1. Executive Summary
21
Reference
Case Analysis: Google Inc. (2010) The Future of the Internet Search Engine
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I. Executive Summary
The present case study is based upon the strategic analysis of Google Company on the
basis of its potential profitability, successors & failures in the industry. The case also highlights
its problems statement and its causes, business strategies adopted by its major competitors,
operation management, its financial position, and human resources strategy. And then the
descriptive SWOT of Google is also discussed accordingly. The case concludes shortly with
recommendations of various strategic alternatives possible to Google Inc. To compete in the
industry, Google may be selected the alternative strategies namely defending current market
share, market modification and product modification. Therefore, above points are discussed
and analyzed in the following parts of this case study.
Google was founded by Larry Page and Sergey Brin in 1998, until now this company is
a giant internet search engine. Google's mission is to organize the world's information and
make it universally accessible and useful.
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market. Reading through the case study, it can understand clearly about Googles issue during
its standing in the potential competitive market as stated. There are some key problems that
need to be solved including:
The strong competition with other companies in technology that was barrier for
growth and corporate expansion in the industry.
The expected revenue growth rate may soon decrease because of direct and
indirect competition, the maturity of online advertising market, and growing size
of firms.
Google has quickly grown incredibly large due to its ability to efficiency settle
needs for data access to a large and growing customer base. The question can ask
that Is a monopoly ever a good thing? If there is one best way to search for data,
should the search industry be allowed to fall into this growth pattern or should it
become a regulated industry in the future?
The liability still uncertain and take risk for the operation of Google both USA
and other countries.
It existed the issue in worldwide not only the firms in USA that are respected and
held accountable the law but other countries must follow, it is the barrier of
business.
Privacy over the Internet is a serious industry issue and there are no industry
standards to be implemented effectively.
Current laws are introducing for the protection of illegal access to data. Example,
hackers and others who take information and use it for identity theft or define for
consumers. It is the ways that a business will use their financial, health and
Case Analysis: Google Inc. (2010) The Future of the Internet Search Engine
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banking information that they have given a company (HIPPA and Children
Privacy act these laws have nothing to do with companies that take a personal
information for marketing purposes store and retrieve it on a computer).
Patent, trademark, or copyright infringement against the Google operation and lost profits
in the market.
The US and international laws restricted the distribution of materials that harmful
to children and collecting information from minor.
The management increased the regulatory scrutiny and put legal issue for concern.
It has a pressure from the government to censor its web content varied among
countries.
The management finds the new and creates innovative ways to maintain a strong
corporation culture.
It could lose its trademarks on the name due to threating trademarks and secrets
Invalid click or click fraud made the company lose confidence from its
advertisers/marketers.
Google has a relationship with the federal US government for data access, how
this impact possible legislation and the public perception of fair practices will.
2.4 Identify and link the symptoms and root causes of the problems
Case Analysis: Google Inc. (2010) The Future of the Internet Search Engine
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Lack capture China the leader in internet usage, especially by using its main
search engine site due to restrict contents and political speech.
Internet access providers may be able to block, degrade or charge for access certain
Google products and services.
In front of international market expansion for Google products and services, there
always has a pressure to Google in censoring its web content. Example, the
management agreed to censor some of its internet search results to china website in
2006.
The intellectual property right was the issue for the Googles management to
defense the web contents and other copyright material without fraud that it may be
let to low image and viability in the global market.
Case Analysis: Google Inc. (2010) The Future of the Internet Search Engine
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The Googles management recognized that the future profit margins may be
tightened by lower profit margins on revenue receive from Google Network
members.
Google spread its operation across the world to dominate in foreign currencies to
gain profitability.
Bases on the statement of problem above, the main problem for Google management is
how to make the company gain best performance in products and service, and expansion the
market in the globe with the strong competitive industry for the future?
Case Analysis: Google Inc. (2010) The Future of the Internet Search Engine
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showed its revenues of $7.0 billion and $51.1 billion respectively. Hence, look at the financial
situation of Google seems to be lower that these two merged companies in market share.
Case Analysis: Google Inc. (2010) The Future of the Internet Search Engine
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example in China because there are some limited free speech on the web. Other hand, the limit
of internet usage, languages, culture, political problem, and government pressure on
informational and law still challenged to operation in some countries. It is a trade barrier for
Google in providing the service and information because it is the most successful exports of
Google. So, it is also very hard for meeting the needs of users because of government of each
country that make the market share of Google lost.
Case Analysis: Google Inc. (2010) The Future of the Internet Search Engine
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The fiscal year revenue 2008 obtained $21,796 billion with the yearly grow rate 31%
The fiscal year revenue 2009 obtained $23,651 billion with the yearly grow rate 9%
The fiscal year revenue 2010 obtained $29,321 billion with the yearly grow rate 24%
The stock price increased from year to year, it increased from $192.79 per share in 2004
to $619.98 per share in 2009 however the price of stock dropped 307.65 per share in 2008 due
to the economic crisis and other problems.
Weakness
Customer satisfactions
Lack of information
Case Analysis: Google Inc. (2010) The Future of the Internet Search Engine
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Opportunities
Threats
Copyright lawsuits/issues
market
Focus into developing tangible technology
senior citizens
Data Scams
Strengths
Google gains a strong market on search engine and other products and services that
made a good brand name in the world. The revenue for this company increases from
year to year that lead and strengthen the market expansion.
To build the supply chain in the world and stronger in the industry, Google has purchased the
new companies to increase and sell the service and products to its users through spending on
other companies like YouTube.
One of other things that makes the Google strong in the market, it has the active
founders and good human resource management. For example, Google hired a skilled
Case Analysis: Google Inc. (2010) The Future of the Internet Search Engine
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employees like PhDs to enhance algorithms; and do research to create searching faster,
efficient and relevant. For reward system of Google, it provided to the top talent
employees with paid 10% and 10000 cash bonus. This makes the employees satisfies
what the Googles management does.
In compete with others in the industry, Google has also competitive advantage on an
interface to 88 languages to users in different countries with comfortable searching for
their business, education, and others. With simple interface and giving comprehensive
results, all these things make a satisfaction to its users and it is the achievement of
Googles technology.
It gets reputation by its popularity which proceeds by its word of mouth publicity, so it
doesnt need to put much effort in marketing its search engine.
Google has the good innovation in making a good technology in indexing millions of
web pages on internet with using low operation cost of UNIX web servers.
Google produced variety range of products and service to serve its customers with free
and 97% of Googles revenue come from advertising. For separating from advertising
and actual results Google gives sponsored links tag to sponsored results when users
search to get information. It always keeps the relevant sponsorship on the top when
doing search.
Google also has a range of innovative additional services like Images, Groups,
directory, and News. Google didnt complicate its website by making itself a portal;
rather it kept tabs for these services on its homepage so users can easily navigate and
that also keeps the website as simple as it was earlier.
Google offers localized search called search by location where users can get results
showing vendors, products and services nearby their areas.
It has a low operation cost regarding its products and services, but gained high revenue.
Case Analysis: Google Inc. (2010) The Future of the Internet Search Engine
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It has also acquired YouTube which provides video services to users across the web
and which is regarded to be the number-one online video portal users.
It has AdWords and AdSense programs working as the main mechanism to attract
advertisers and publishers to come to Google more and more because of mutual gain in
business.
Weakness
It is true that Google provides to users with good search engine, but many spammers
on internet manipulate Googles ranking technology by creating dummy sites with
thousands of links to pages that they wanted Google to rank highly. It could make a
concerning to users of Google in the future.
Googles Cost Per Click advertising charging and ranking policy is confusing and
makes it difficult for marketers to predict where their ads would be positioned and how
much they would cost. It always has the impact of click fraud practice on the business
that make the advertisers lost their confidence on Google operation and let to loss of
profits.
Googles localized search algorithms too sometimes result in errors due to automated
indexing.
Although Google is a dominating player among search engine websites, only 50% to
65% of web search queries are answered accurately by it.
Case Analysis: Google Inc. (2010) The Future of the Internet Search Engine
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Google doesnt have sticky like Yahoo! And MSN have which can attract users.
Google doesnt have highly personalized search by which it could charge users with
switching cost if they decide to leave Googles services.
Federal Trade Commission and the consumer privacy groups Junkbusters have
increased public concern.
The Justice Department request for records for millions of searches made on Google,
AOL and other popular search engines in an effort to bolster its case for an online
pornography law.
Opportunities
The opportunity to grow the Googles business expansion as global needs strong
strategies though management and other stakeholders. There are opportunities for
reaching new groups/segments and reaching for new contents for increasing revenue.
Its can enhance by having new acquisitions and continue wireless network expansions
move to the internet usage in some countries which will render the usage of google.com
to be increased as well.
Looking a good practice, it can relive the trend like Yahoo! and MSN and become a
mass market portal for users that will increase switching costs for its potential users.
Case Analysis: Google Inc. (2010) The Future of the Internet Search Engine
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It is the good opportunity that it can add localized vendors paid advertisements on the
localized search and provide more services to the hand-held devices to capture more
market that goes past the conventional internet.
For increasing the revenue, Google could increase its overall ads and as well as the
online video like YouTube is what the preference to users to spending time.
Readdress privacy issue that can be set industry standards on privacy and become a
leader in privacy protection.
The relationship with Microsoft via Google Microsoft search and browsers and search
sites targeted toward specific markets such as children with protections or senior
citizens with limited computer knowledge and visual impairments.
Threats
Case Analysis: Google Inc. (2010) The Future of the Internet Search Engine
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There is no long time entry barrier in this business. Many competitors can emerge in
coming years with same services, better interface and names and can catch up Googles
market like earning advertising that let to decrease of advertising space.
Googles confusing Cost Per Click ranking and charging policy could disappoint its
advertisers and company would start losing many of them.
Foreign exchange rates could become a major threat for Google. International revenues
account for 44% of total revenues fourth quarter so the exchange rates could have
caused $18 million to $81 million loss if they had not changed.
Public perception of data stored by Google is another threat how Google manage the
information secret or not for its users.
Google is the big competitor for Microsoft in USA and other counties so the marketing
power of Microsoft could make Bing strong in search engine and a serious competitor
after Microsoft and Yahoo is partnership.
Anti-Spyware programs such as XoftSpySE and NoAdware that can block cookies to
monitor users.
Case Analysis: Google Inc. (2010) The Future of the Internet Search Engine
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Case Analysis: Google Inc. (2010) The Future of the Internet Search Engine
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Power of Buyers
Google has two basic customers; paying and nonpaying. The nonpaying customers are
users of Google's search services and other freeware applications. These individuals are the
core of operations because they allow Google to attract their paying customers. The paying
customers are usually firms who use targeted ads accompanying Google searches to reach
individuals. However, there are some individuals who do not want to be bombarded with ads,
and pay for that convenience.
Case Analysis: Google Inc. (2010) The Future of the Internet Search Engine
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As of 2007, 99% of Googles revenues are derived from advertising. However, no single
account contributes more than 3% to net revenue, and less than 5% of the revenue is generated
by any given network partner site. This means that no single buyer has a controlling interest.
In Googles system many advertisers bid on keywords. Popular keywords like Dallas Texas
are sold for much higher value-per-click through than obscure topics. This distributed approach
allows Google to attract both large companies and small mom-and-pop shops keeping buyer
power low.
Potential Substitutes
In 2008, the internet has become the mode chosen by millions of people all over the world
to request and retrieve information. In light of this fact, there really is no suitable substitute for
search. Information can be organized in different ways including 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.
Google has positioned itself well to weather each of Porters Five Forces of Competition
as well as stay afloat in a turbulent external environment. Googles ability to please its
stakeholders will continue to define the success of the venture and the future of the company.
Google is in the business of making relevant information accessible and usable. The
competitive environment is interesting because the industry is vaguely defined. There are other
company that do differing levels of the same thing, but Google does it so well that its name has
become synonymous with the industry. For these purposes, and simplicity, it will concede that
the Google is in the Data Organization and Retrieval Market.
According to the discussion about the problem and situational analysis, it can be
showed that Google has many strength compared to its competitors in the industry but it has
Case Analysis: Google Inc. (2010) The Future of the Internet Search Engine
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also the weaknesses to considered and improved. The expansion operation on services or
products in some countries still the barriers and pressure to Google while the competition in
the market is full and take risks. Google is strong in cash flow with low cost of operation and
get high revenue but buying other companies still in front for competition/difficulty. The law
regulation, culture and language of each country is different that is the problem for Google at
international operation.
4.1 Strategic Alternative evaluate the pros and cons of each alternative
After done on analysis, there are some possible strategic alternative to be considered for
Google including three strategic alternatives are defending current market share, market
modification & product modification.
Case Analysis: Google Inc. (2010) The Future of the Internet Search Engine
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maintain its technology, users and business growth, and before the industry situation drop in
any case.
The pro for this strategy is securing and maintaining the market share stability of
Google in the global market with its existing competitive advantage and
competency among competitors. The users is increasing every day so it is the good
for Google lets them stay on the products and service.
The con for this strategy is Google can lost the market share in other forms of
advertising and being cut-out of the value chain by other companies. This means
that Google lost the profits for its business in other countries and maybe lost the
ability to compete with competitors while they develop their market share/brand
name.
The pro for this strategy is helping the business operation in USA and international
to survive in the touch competition through merges with another company who
strong in different fields of internet technology and acquisition. Google entered into
strategic alliance with other companies to creating global advertising partnership
for expanding business globally. So, the market for Google will gain additional
market share and recognition and high revenue.
Case Analysis: Google Inc. (2010) The Future of the Internet Search Engine
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The con for this strategy comes up with the huge investments on buying new
companies. Google fail in purchasing some companies for its market share like
Groupon that it rejected because of fear common to web entrepreneurs. It maybe
not generate significant revenue if it not grow well.
The pro for this strategy is letting Google focus on the tangible technology that
improve for future competitive strategy what lost advertising revenue/market share.
It help to overcome the current product problems of Google on what the customer
feedback/complain or error for making the loyalty of old/new users. It also build
the image of Google in the Global market stronger and win over the target market
that its competitors.
The con for this strategy would exist if Google did not strong innovate or not
modification the products properly. It will lost money and market share especially
the market share or customers perception as global.
V. Recommendation
As discuss and mentioned alternative strategies above, it can concluded that the best
solution for Google to implement is market modification strategy must be adopted. Google has
a good score in the global market in search engine and other products/service, so this company
could grow its impressions by increasing the frequency of searched by existing and new users,
the users that come from other search engines like Yahoo or About. It also attract the traffic to
Case Analysis: Google Inc. (2010) The Future of the Internet Search Engine
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sites in its search and advertising networks. This strategy provides to Google as market leader
about advance in internet search, increase customer satisfaction, maintaining a positive public
perception. In addition, a contingency plan can be established that Google will be well prepared
for future successes existing in a different environment than they currently have.
Implementation Strategies
Have R&D of browsers, databases and servers continue along with evaluation of
purchasing or partnering with companies that offer what is needed
Have a lobbyist in Washington, DC and California or any high technology state that
has many technology issues percolating into laws and regulations for the new breed
of digital technology issues. Become involved with all watchdog privacy issue
organizations.
Re-evaluate goals how far does Google want to go on the privacy front especially
now that the merger with DoubleClick is raising serious questions about competition
and regulations?
Emphasize the usage of data containing information with permission and have open
discussion on how to protect people as well as their own business.
Create and promote an image of an ethically and socially responsible company that
believes in respecting peoples privacy.
Implement enhanced operational and management systems that will provide the real
time results clients.
Case Analysis: Google Inc. (2010) The Future of the Internet Search Engine
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Develop software for large data gathering systems or purchase companies that do
this.
Conclusion
Google will continue to develop its worldwide domination of all aspects of the internet,
search, multimedia and telecommunications industries. There are some points that need to be
considered including growing competition in global market, the threat is increasing, and world
technology change. In order to achieve the overall vision of Google, this company should be
advantage on its strength, minimize weaknesses, catch the opportunity as competitors, and
limit the threat. Finally, Google will be ready on all fronts with the products and services that
are needed to be successful.
Case Analysis: Google Inc. (2010) The Future of the Internet Search Engine
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