Google Business Analysis - Case Study Example

Running Header: Google Business Analysis Student’s Name: Instructor’s Name: Course Code: Date of Submission: 1.0 Executive Summary The report analyzes the business situation of Google Inc. and its competition situation within the adverting and browsing industry. Google was started in 1996 by three guys also referred to as ‘Google Guys’. Google has been rated position 39 throughout the world according to Financial Times. Google like any other business is faced by various forces such as threats of new entrants, substitutes, bargaining power of both suppliers and buyers, and rivalry from the competitors. According to McKinsey/GE Matrix, Google has several brands that are behind its success. This rates them in terms of business competitive position and industrial attractiveness. In terms of SWOT analysis, Google has various strengths that enable its survival as well as threats and weaknesses that bring around great challenges to its survival. The BCG matrix also analysis Google in terms of dogs, questions, stars and cows as it will be analysed within the report. Google has also been able to sustain its competitive advantage due to the fact that it has excellent features and aspects that are different from those of its competitors including Yahoo and Microsoft. Such include universal search and Google maps and Google earth. The report also gives various recommendations that Google can undertake in order to survive the increasing competition of current competitors and any new entrants in case there is any. Table of Contents 1.0 Executive Summary 2 Table of Contents 3 3.0 Analysis 4 3.1 Industry 4 3.1.1 Potential New Entrants 5 3.1.2 Potential substitutes 5 3.1.3 Bargaining power of Suppliers 5 3.1.4 Rivalry among Existing organizations (Current competitors) 6 3.2 Market place 7 3.2.1 McKinsey/GE Matrix 7 3.3 Organization 9 3.3.1 Strengths 9 3.3.2 Weakness 10 3.3.3 Opportunities 10 3.3.4 Threats 10 3.4 Google’s BCG matrix 11 3.5 Competitive advantages 12 3.5.1 Free SEO Labor 12 3.5.2 Universal search 13 3.6 Customer’s Segmentation 13 3.7 Recommendations 16 4.0 Conclusion 17 5.0 References 19 2.0 Introduction-Company profile Google Inc. is an American multinational public company that has invested in advertising technologies, cloud computing, and internet search technologies. It was initially started as a research project in January 1996 by “Google Guys” who are Sergey Brin and Larry Page when they were attending their PhD classes at Stanford University. The mission statement of Google is “to organize the world’s information and make it accessible and useful universally”. Google runs more than 1million servers in its data centers throughout the world while processing more than 1bilion search requests. Approximately 24petabytes of user data are generated by day. The company gives various products including online productivity software including Gmail email service, Google Buzz, and social networking tools such as Orkut as illustrated by David & Lewis, (2007). Google also develops Android mobile operating system that are used in various types of phones Motorola Droid and Nexus One. However, the Google’s market position that it has dominated has led to its criticism due to various issues such as censorship, copyright, and privacy. The top management of Google comprises of Larry Page who is Co-founder and president of product. Sergey Brin is also a Co-founder & President of Technology while Eric Schmidt is CEO and Board Chairman. Google is position 39 worldwide according to Financial times (2009) from the companies listed in the stock exchange. In 2008, Google had a turnover of 22billion US-Dollars. 3.0 Analysis 3.1 Industry Although Google has developed and established for many years, it continues to face many forces just like any industry within the business environment. Such forces will be analyzed using Michael Porter’s 5 forces. Such include potential new threats, supplier’s power, buyer’s bargaining power, and substitutes within the market. Other forces include current competitors and degree of rivalry (competitive rivalry) (Kelly & Casey, 2009). 3.1.1 Potential New Entrants The threat of new entrants into the market search is not very high although there is some significant threat that still exists. This is because there is nothing like perfect search engine hence if a better search engine can be invented, it can critically affect Google business. According to Lynch (2009), Microsoft and Yahoo continue to improve their search engine and tools through incorporating other new elements making it a challenge and threat to Google. However, Google is trying to maintain high quality services to its customer while improving its search engines to reduce the impacts of new entrants. Other companies that Google compete with include AOL, Netscape and Microsoft’s MSN (Kelly & Casey, 2009). However, a new entrant must provide faster speeds for searching due to the high competition. 3.1.2 Potential substitutes Internet has become one of the modes that are preferred by most people throughout the world in requesting and retrieving information. Another of the major threats to substitutes for Google is that switching costs is negligible. Yahoo, AOL, Netscape and Microsoft provide an alternative or substitutes for the Google customers as illustrated by David & Lewis, (2007). This is even worse due to negligible switching costs. However, Google is increasing its speed and accuracy of its results as well as overt pushing of ads included in pages and search results. 3.1.3 Bargaining power of Suppliers Although Google is a trusted and famous search engine, it is not globally dominant. Nevertheless, the advertising system of Google is a special feature of a search engine and continues to be a reliable income source as the advertisement makers as well as receivers of the ads are all Google customers. Therefore, the Google search product capability has made it dominate in the market hence low supplier bargaining power. However, increasing competitor’s capacity such as MSN and Yahoo is becoming a threat (Kelly & Casey, 2009). 3.1.4 Rivalry among Existing organizations (Current competitors) Google has created products that acknowledge their main internet search service. Presently, they are just some few rivals including Yahoo and Microsoft hence the rivalry degree is said to be oligarchy. The search tools for Google’s rivals are not same as those of Google. Rivalry can also be high due to low switching costs that are even negligible for many searches. Nevertheless, Google still holds the largest market share in the search market as illustrated in the figure below as illustrated by David & Lewis, (2007). Figure 1 Search Engine market share Buyer’s bargaining power Utilization of search ranking is a crucial influence aspect by the search tools owners when bargaining. Increasing complexity of search tool users is making them demand other services even for free. Substitutes for Google customer are increasing at same price or even for free. The bargaining power of Google customers is more as they are many in number with rivals offering more services and discounts in an effort to switch the customers (Kelly & Casey, 2009). 3.2 Market place Google has acquired more than 90 companies whereby an online advertising firm DoubleClick is one of its largest acquisitions for $3.1billion. Most of Google’s acquired firms are found in US. Google has acquired over 91firms since 2001 as argued by Fleisher & Bensoussan (2010). 3.2.1 McKinsey/GE Matrix McKinsey/GE Matrix is also used to analyze the market situation of Google. Google has major brands that are well recognized throughout the world. Such include search engine that is at the heart of Google, it has a market share of 90percent according to Fischer (2009). You Tube is another one with a market share of 73percent in video portal sector. Chrome browser was invented when Firefox and Microsoft has a browser war. They both have 95percent of market share hence difficult for Google to excel in this market. Maps, street, and Earth view is another major brand for the Google as illustrated by Brown (2006). Adwords and AdSense are other brands although these ones are not free. They are the main pillar behind the success of Google. The figures below illustrate more on the Google’s McKinsey. Figure 2 McKinsey/GE Matrix Figure 3 Google’s McKinsey/GE Matrix 3.3 Organization 3.3.1 Strengths Google has a good reputation with high level of familiarity within the market. Google has already established a brand name as a number one search engine whereby its users trust its reliability, promptness, and dependability Its operation cost is low because it uses UNIX web servers with low cost for indexing millions of web pages throughout the internet. Google has high number of PhD holders who continuously enhances search algorithms making the search faster, relevant and effective according to Fischer (2009). Google’s interface has 88 languages making it comfortable for its users to use in different countries. 3.3.2 Weakness The ranking technology by Google is manipulated by spammers who create dummy sites that have a lot of links to pages that they wanted Google rank greatly. Google is only capable of answering 50 to 60 percent of the web search queries accurately. On the other hand, it Google does not have search that is highly personalized whereby it can be able to charge switching cost to its users when they decide to leave services offered by Google according to Fischer (2009). The issues of viewing books and articles as snippet and not entire book as internet user may want if likely to result to lose of some of the research users to other competitors. 3.3.3 Opportunities Google has a chance of increasing its cost of switching by tracking the search histories of its users. It can also remind its users using emails for any vital updates relevant to their personal interest. Google can also start new services including private database, print media, multimedia, and product search. In an effort to lock in large number of advertisers and users, Google can merge with already developed mass-market portal according to Fischer (2009). 3.3.4 Threats Google partly depends on some portals such as AOL which may make it lose some significant amounts of its share in case the contract is terminated. Due to lack of entry barriers currently in the internet industry, many competitors are likely to emerge in the near future with better interface and quality services catching up with Google market and position. According to Lynch (2009, the confusing Cost Per ranking and charging policy of Google are likely to frustrate the advertisers making the company lose some revenue. The concept of copyright is likely its effort to provide its users with information from books, articles and creative expressions. Copyright laws restricting the searchers to only have a snippet view is likely to discourage them. 3.4 Google’s BCG matrix The cash Cow for Google is the search-Ad business; it forms the largest part of profit that Google gets. It is having the largest market share although it may slow down within time. Therefore, it is investing in surplus in the industries that are fasting growing in order to keep up the pace (Max 2010). Question Marks in the Google are mostly the acquisitions; small market shares although in quickly expanding markets. The new acquired Google Web 2.0 should be improved further. Dogs in the Google are the plays losing market share or the sector decreases. Google puts bets early in order for the sector to fizzle out which is credible. Options of low cost have a credible achievement. Chrome is like a dog due to maturity of the browser market hence it is likely to have a low market share and in case the present campaign for consumer Ad will not increase market share, this is likely to be another failure as argued by Max (2010). Star; the acquisitions aim is to become Stars. Stars are those new businesses surpassing old business while launching Google into new areas such as Google Docs, YouTube, and Gmail are the current successes as stated by Jon (2008). Figure 4. Google’s BCG matrix (Max 2010) 3.5 Competitive advantages Google faces a lot of competition from companies like Yahoo and Microsoft MSN among other small upcoming small companies including AOL and Netscape. Google is able to maintain and gain competitive advantage due to its other tools and services such s Google toolbars, Google news, Google maps, and Google earth as illustrated by Brown (2006). Google has as well expanded to mobile phones using its Android operating systems that deliver Google features and services as applications in Mobiles. The aspects that drive Google towards competitive advantage include; 3.5.1 Free SEO Labor Google has SEOs all over the world considered as free labor force for Google. As an effort of ensuring SEOs sites are promoted by the Google as a number 1 search engine, SEOs optimize their sites in accordance to rules of Google, register their sitemaps and ping the services of Google in case a new page is made as stated by Jon (2008). This enables Google attain a better advantage in comparison to other search engines. In addition, it gives SEO advice as well as friendly tools. 3.5.2 Universal search Google does not only edge the books, blogosphere, web, and press releases but also the real world using Google Earth or Google Map where people are able to view around the world. Google is also everywhere and it has psychologically dominated the minds of people throughout the globe making it have a competitive advantage as stated by Jon (2008). 3.6 Customer’s Segmentation Google largest percentage of its customer comprises o f scholars and business people. However, students and other scholars form the largest segment. Business people contribute significantly to the customer segment in Google (William & David, 2011). Most of the customers for Google at found within cities, towns and academic institutions. However, they are still a small number of them found within the rural areas although the number is insignificant. Medium and high income earners are also part of customer segment for Google as argued by Fleisher & Bensoussan (2010). Google ensures that every customer segment or group is provided with the appropriate features that are importance to their work. Such include extensive search tools for students and effective advert tools for business people among others. Customer segment of young people has also been looked after through incorporation of android features in the phones. It has relatively young users and does not only target the old generation. This has provided Google with a large market share in almost every part of the world as illustrated in the figure 5 below. Figure 5 Google market share (Alex 2009) 3.7 Recommendations It is recommendable for Google to continue undertaking a comprehensive design and development in order to ensure it keeps a pace away in its current competitive positions. It should also undertake a regular market research in order to know the aspects that need to be improved. Taking feedbacks regularly would enable it make necessary changes in ranking and charging policies. This is an effort towards offering customers the quality services they need. Google should update its services and technology while ensuring it remains within the same simplicity and comprehensiveness it has been from time it established. Google should increase the cost of switching through tracking its user’s histories but through their permission. This is to ensure that it reminds them through the emails in case of any relevant update that is of their interest. Google can as well add chat rooms that are ‘sticky’ as well as email systems in order to attract users and be able to survive the increasing competition. Google can as well enhance localized and personalized searching and also add localized paid listing of the advertisers. It is also recommendable for Google to give full fledged services on mobile devices in order to attract market further than usual internet. Google should focus on making its research engine even more accurate, dependable and relevant which is the main aspect as far as customers are concerned. Getting more users will enable the company get more advertisers and subsequently earn more revenues. Google should start offering other services including travel, print, among others in order to compete with its competitors like Yahoo and MSN. Users can be navigated through simple links on homepages while at the same time be able to maintain its traditional appearance. Google can also generate more revenue through indexing large organization’s databases and offering them with private search solutions. 4.0 Conclusion Competition within all the business sectors have made organizations to re-evaluate their strategies focusing more on those that enables them survive the stiff competition. Google is one of the organizations that ensure that all the available means are put in place towards ensuring it remains at its niche as internet services provider. Yahoo and Microsoft have been major competitors for Google; however, it has put in place appropriate measures as a way of ensuring it survives increasing competition. Google continues to hold the largest market segment throughout the world due to its search engine that is reliable and accurate. However, it needs to continuously improve its search tools as well as incorporate other features as a way of enhancing service delivery to its users. This will ensure it continuously maintains its competitive advantage and its top position in the market share. 5.0 References Alex, C 2009, Google’s Market Share in Your Country, Viewed 3 May 2011, from http://googlesystem.blogspot.com/2009/03/googles-market-share-in-your-country.html Brown, M 2006, Hacking Google Maps and Google Earth, Wiley, Indianapolis. David, C & Lewis, R 2007, Project manager’s handbook: applying best practices across global industries, McGraw-Hill, Ireland. Financial Times 2009, FT Global 500 2009, Viewed 4 May 2011, from http://media.ft.com/cms/8289770e-4c79-11de-a6c5-00144feabdc0.pdf Fischer, M 2009, Website Boosting 2.0: Suchmaschinen-Optimierung, Usability, Online- Marketing, 2 Ed, MITP, Heidelberg. Fleisher, C & Bensoussan, B 2010, Business and Competitive Analysis, Pearson Education Limited, New York. Jon, R 2008, Ultimate Guide to Search Engine Optimization: Drive Traffic, Boost, Entrepreneur Media, Inc., Wisconsin. Kelly, R & Casey, G 2009, Introduction to Information Systems: Enabling and Transforming Business, John Wiley and Sons, New York. Lynch, R 2009, Strategic Management, 5 Ed,Pearson Education, Harlow. Max, A 2010, Google’s Main brands in a GE Matrix, Druck und Bindung, Germany. William, B & David, C 2011, Strategic Corporate Social Responsibility: Stakeholders in a Global Environment, SAGE Publications, New Delhi. Read More