Google Inc - International Business Strategy - Case Study Example

International Business Strategy Name of the Student: Name of the Instructor: Name of the course: Code of the course: Submission date: International Business Strategy Introduction The launching of Google Inc. in 2008 has seen the corporation rise to become one of the most powerful firms in the planet. According to Kuntze and Matulich (2011, p. 2), Google Inc. is proud to have offices in 14 states and in 36 countries worldwide, which includes but not limited to United Arab Emirates, Australia, China, India, Denmark, Finland, Turkey, Israel and Mexico. The corporation has been ranked by Millward Brown Optimer’s Brandz in the 100 most powerful brands in the world whereby the firm has been in the top ten slots since 2006 and has scooped the niche of the most valuable and powerful brand in the years 2007, 2008 and 2009. Traditionally established as a mere search website, Google Inc. has evolved to incorporate other products and services which include web search, online translation, document sharing, image search and product searches such as blogs and it still remains in a favorable niche in terms of information technology and services (Kuntze & Matulich, 2011, p. 2). Nonetheless, this research paper will primarily focus on the search engine business and critically evaluate the business strategy that the above business has pursued using the Porter’s Generic Strategies Framework. In addition, it will identify and critically assess the unique resources and capabilities that underpin the value chain and support the identified strategy. Lastly, it this analysis will assess Google, the search engine prospects over the next five years through examining the external environment in conjunction with the findings in the preceding segments. Firstly, it is imperative to gain a summative understanding of the Porter’s Generic Strategies Framework in order to get a comprehensive insight into its applicability in the Google search engine business. Porter’s Generic Strategies Framework According to Dess and Davis (1984, p. 469), Porter developed three generic strategies which were possibly successful. These strategies were geared towards the creation of an unassailable niche and outperforming diverse competitors in a particular industry. Firstly, there is the overall cost leadership, albeit not overlooking service, quality among other areas which places more emphasis on low costs floated by a certain firm when juxtaposed with the competitors. Secondly, there is differentiation which necessitates that a firm generates something or a certain product which is perceived as being endowed with extensive uniqueness in the broader industry. This allows the producing firm to command a higher price than the average price in the market. Lastly, there is a focus strategy which is characterized by a certain firm concentrating on a specific cohort of consumers, product line segment or geographical market (Dess & Davis, 1984, p. 469) According to Porter (1980, p. 149), all these three generic strategies represent three wide types of strategic groups and thus the choice of a particular strategy can be perceived as the choice of which particular strategic group to compete in. It is important to be cognizant of the fact that the market of internet search has not only become socio-economically imperative but also extremely concentrated in the recent decades. Argenton and Prufer (2012, p. 1) noted that in the US market, Google has the largest market share with an exemplary 66.2% followed by Yahoo and Bing which had 16.4% and 11.80% respectively as of November 2010. The domination of Google is further epitomized in the UK whereby it commanded an overwhelming market share of 90.83% while Yahoo and Bing occupied 3.21% and 3.12% of the market share in this region as of December, 2010. These trends shows the competitive niche that Google search engine business holds in the market which has continued to exhibit continued growth since its instigation as evidenced in the subsequent figure. Figure 1.0: Search Engine Market Shares from 2001-2008 for the top 3 providers Source: Pollock (2009). Based on the above facts, it is imperative to note that in the international business strategy of Google search engine business, it has primarily utilized the differentiation strategy. This fact is supported by Bhatia (2012, p. 6) who determined that one of the most core strategy at the international spectrum that Google has used has been through molding a robust foundation of wide differentiation of its products, which includes the Google search engine. Therefore, this aspect of differentiation is evidenced whereby the search engine product is perceived as being endowed with inherent uniqueness when compared with other service providers in the same industry in regard to the provision of products like Google maps, Image search, Google news and blog search which are just among some of the highly unique services under the Google search engine business at the international level. As a result, majority of the consumers who use the Google search engine are able to find precisely what they are looking for in the web through an expansive database which ensures that the consumers can be able to search for a specific and precise material in an enormous database, be it an academic material, the map of even the remotest point on the planet among other peculiar services. This has mostly been facilitated through alliances with other companies like Amazon which ensures that the Google Search engine has the maximum number of materials which the consumers might be interested in. This wide database of materials has ensured that consumers from different regions around the world are constantly attracted to this particular search engine based on the rationale of the ease in getting a one-stop source of all the types of materials that they require for their various purposes. In addition, extensive innovations have ensured that the consumers are relieved from the burden of entering search terms which are highly accurate and they are further aided by the spelling aid from this engine. Moreover, enhancements in the recent past have seen the instigation of ‘faceted browsing’ in this search engine which has tended to change the way in which the results are displayed in the screen. Using this method, the users are endowed with the capacity of easily narrowing down their searches to acquire more precise results. All the above aspects have made the search engine from Google to be a highly unique product which has commanded an expansive market share around the world. The other strategy which has been partially been utilized by Google search engine is the cost leadership strategy. This is whereby through other services like Google books, users of the Google search engine are endowed with the capacity of exploring through a wide alley of books and reading there books online, exploring their specific chapters and getting recommendations of other books with similar content free of charge or purchasing them at a cheaper price when juxtaposed with other competitors like Amazon. This has enabled Google search to gain a sustainable competitive advantage in the market when compared with other search engines which do not provide such services. Nonetheless, despite the utility of the above strategies in the Google search engine business, it ought to make more profound efforts to fortify its focus/segmentation strategy. This can be through fastening its efforts to customize the search engine using diverse languages around the globe in order to suit the requirements of distinct consumers groups from the regions which predominantly use these languages. However, the cognition of the fact that these efforts have instigated is imperative, which is best epitomized by the customization of the Google search engine using the Swahili, Shona and Arabic languages among others to suit the needs of the consumers who predominantly use these languages. Nonetheless, these efforts ought to be intensified in order to meet the language requirements of even the smallest language groups around the world. Unique resources and capabilities This section will identify and critically assess the unique resources and capabilities that underpin the value chain and support the above identified strategy. One of the key resources is human resource whereby Google has been credited for engaging in extensive motivation of its employees towards the creation of unique products, a move which has seen the enhancement of the Google search engine into becoming one of the most successful in the contemporary market around the world. This is best exemplified by the 20% Creative Time Program cited by Kuntze and Matulich (2011, p. 3)whereby Google inspires all of its engineers to devote 20% of their work time in projects that interest them. This program is not only instrumental in challenging the employees and making enjoy doing what they do best but has also been pivotal in providing some of the best business opportunities for the corporation. In actual sense, Google News, Google Maps, AdSense and Google Books are just some of the Google services in the Google search engine business that emanated from extensive individual projects which were highly recognized and rewarded. In addition, this unique human competence which fosters innovation and creativity among the human capital can be viewed as being fundamental in the future efforts towards increased customization of the Google search engine into various languages which will meet the unique language needs of the consumers under the focus/segmentation strategy. Nonetheless, despite that above unique resource, Google Inc. has been accused of subjecting its workers to long working hours aimed at the value maximization and supporting the aforementioned strategies. Kuntze and Matulich (2011, p. 4) revealed that it is not uncommon to find an engineer in the hallways at 3 a.m. deliberating on a project with fellow colleagues. This has long been perceived as a justification by the corporation for the massive expenses on rewards and benefits to the employees. This trend poses significant impact on the output of the unique human resource and the general performance of the corporation. On the other hand, enormous financial capabilities at Google have been cited as being core to supporting the strategies analyzed in the preceding section. According to Savoia and Copeland (2011, p. 56), Google as a company has the capacity and ability to extensively invest sufficient capital towards many speculative projects and innovative ideas. Thus, as a result the company has been in a position to invest in projects which have been key in the generation of unique products which underpin that differentiation strategy explored in the preceding section. In this case, the employees are able to engage in innovative projects based on the notion that their projects will be comprehensively funded by this corporation and when successful, their efforts will be recognized and rewarded. According to Work Institute, Inc. (2007, p. 6) the Founder’s Award is the most meaningful and high profile recognition program whose main intent is to offer exceptional rewards for remarkable team achievements at Google Inc. Despite the fact that there is no viable measurement for accomplishments, the basic fact is that the team that is in receipt of the reward and recognition has engaged in tireless efforts which have culminated in the generation of a product that has created massive value to Google. In this regard, the members of a team receive the award based on the magnitude of their contribution and involvement in the project and the award to an individual member can reach a high of a few million dollars. The effectiveness reward and recognition program at Goggle is epitomized whereby in 2005, there was an awarding of approximately $45 million in restricted stock to Googlers engaged in 11 different projects. This is instrumental in cultivating the attitude of innovation in the firm which is founded on the tendency to reward collective and individual projects (Work Institute, Inc., 2007, p. 6). Consequently, majority of the most novel innovations at Google have been outcomes of such products which have had significant impacts in expanding the portfolio of the corporation. However, it is imperative to recognize the fact that the background of such enormous rewards is founded on the solid financial capacity of the company which underpins the differentiation strategy at the international scale. The unique financial resource at Google ensures that the company is also endowed with the capacity of engaging in activities of employees’ development, who eventually evolve into becoming unique resources in the firm. According to Work Institute, Inc. (2007, p. 4), Google Inc. uses massive amount of funds in the employees development efforts aimed at promoting professional advancement and growth most notably through an education reimbursement plan. This is whereby the employees in the corporation (commonly referred as ‘Googlers’) have the probability of being reimbursed up to $8000 per annum on work-relevant and pre-approved courses which are offered through academic institutions and other external training providers. This is best epitomized whereby the engineers can register for an MS at Stanford program which is a one year program at Stanford University structures to elevate the skills and knowledge of the engineers through a master’s program in diverse technical realms. In these instances, the costs that are incurred by the employees during this program are comprehensively covered by Google. These results in the development of employees who have extremely high abilities in terms of producing unique and novel products for the company as a result of the skills and knowledge that they acquired during their learning process. The high level of skills and knowledge out of this unique program underpin the differentiation strategy at Google in terms of creation of products like the search engine which are unique in the entire industry. In addition, Savoia and Copeland (2011, p. 56) noted that Google is also endowed physical resources which have also been imperative in the value chain. This is best exemplified whereby Google has been credited of having a wide network of datacenters coupled with a variety of custom, commercial hardware and software and open source all of which are central in harnessing this computing capacity and make it more efficient and easy to access by the consumers who are both confronted by these unique products from the corporation as well as the internal tools. Thus, the availability of robust hardware and software make the products like the search engine from Google to be extremely attractive to the consumers. Therefore, the ability by Google to develop effective and unique software to support its products like the search engine makes the latter product to appear unique and meet the acceptability among different groups of consumers around the globe. The last unique resource which underpin the differentiation strategy is the wide market share whereby Savoia and Copeland (2011, p. 56) cited that hundreds of people around the globe use products from Google every day. Thus, this expansive market in different regions around the globe has been cited as being highly useful to the company when it needs to try out as well as get feedback on the latest innovations, for instance, those geared towards the enhancement of the search engine. This has been central in the efforts towards the enhancement of the features in the search engine to make them more unique and thus core to the international differentiation strategy by Google. The search engine prospects over the next five years According to Rangaswamy (2009, p. 9), just one and half decades ago, majority of the people could not have imagined the integral role that the search engines would play in the facilitation of commerce among other activities in the contemporary world. However, the prospects of the search engine, mostly that one which is under the ownership of Goggle look bright in the next five years amid diverse dynamics from the external environment. The first prospect is increased innovation which is projected to be spearheaded by the massive technological advancements in the present world. Thus, technological evolution is predicted to play an integral role in facilitating innovations in the Goggle search engine in the next half a decade. This will be imperative in the creation of more novel and unique features which will improve the functionality of the Google search engine. This will be in line with the differentiation strategy by the wider Google Inc. This advancement in technology is best epitomized by the prospective development of alternative technology. This is founded on the background that each passing day, more individuals are using other devices other than the PCs in their activities of accessing the internet. Thus, if the users of these new devices do not fully embrace versions of the Google web search technology or the operating systems which are developed for these devices, then the Google engine search business is bound to be adversely affected and thus these new devices might make it problematic for the utility of the Google search engine service (Ryan, 2010, p. 12). Thus, the next five years might see Google make more profound efforts in the development of the Google search engine software which are compatible with this upcoming technological device as well as making some unique features to be incorporated in the search engine used in these devices in order to capture the loyalty as well as the imagination of the consumers from different regions around the globe. This will be key in the efforts to not only maintain its competitive advantage in the highly dynamic market but also to support its international differentiation strategy. In addition, it is projected that the level of competition from other firms in the next five years will intensify with each firm in the search engine industry making extensive efforts to capture increased market share around the globe. The reality of this competition in the current period is revealed by Ryan (2010, p. 6) who cited prospective competition from the traditional search engines like Yahoo! Inc. and Bing from Microsoft Corporation. This is founded on the background that Yahoo! was the first search engine which managed to gain widespread acceptance around the world. It nonetheless lost its domination to Google when the latter company instigated a more superior search engine technology. With the attempt by Microsoft to purchase Yahoo! In 2008 which failed culminating to the instigation of its own search engine, Bing in 2010, it is expected that Microsoft will use its robust marketing power to make Bing a serious competitor to the Google search engine in the coming few years (Ryan, 2010, p. 6). Based on this reality, Google is bound to invest increased resources in the development of more features to be included in its search engine aimed at sustaining its competitive advantage in the market. Against these efforts, Google is expected to support more innovative efforts aimed at the generation of more unique products which will make it to continue standing out in the market. The creation of these unique features to fortify its search engine will ensure that Google continue to support its differentiation strategy in different regions around the globe. The other prospect of the search engine by Google is that of the elevation of the legal and regulatory issues. It is important to be cognizant of the fact that Google has in the past been subjected to heightened regulatory scrutiny which had effects on its operations and business in the search engine. Thus, the next five years might see increased regulatory issues directly or indirectly related to probable monopolistic power as the wider search engine is confronted by elevated growth and consolidation (Ryan, 2010, p. 8). In relation to the above prospect, it is important to note that the Digital Millennium Copyright Act was enacted but did not contain provisions which totally eliminated the liability by Google for listing or having direct link to websites which were third party websites in nature. This included materials which breached copyrights or other rights as long as the concerned company was in full compliance with the statutory requirement of this Act (Ryan, 2010, p. 8). Against this background, the next five years might see increased legal limitation of the materials which are to be displayed or distributed in Google’s search engine which might detrimentally affect the search engine business of company. In addition, there is projected elevation of the legal restriction of materials which are considered to pose negative impacts on the minors as well as collection of personal data from the users. This latter development is currently in the realms of data protection efforts whereby different states have enacted laws which necessitate the notification of the users whose personal data has been breached, for instance, the Information Practice Act in California (Ryan, 2010, p. 8). Against this backdrop, Google might in the next five years make more efforts to be compliant with the forthcoming legal standards limiting the distribution of the materials which are distributed in its search engine. This compliance include Intellectual Property (IP) laws and the laws which will see Google develop more water tight mechanisms to limit the distribution of materials which are considered to be harmful to children. Consequently, more finances are projected to be pumped into the development of software which sieve off materials deemed as being harmful to minors in different regions of the world. Lastly, Google is expected to shift its websites from countries or regions which are characterized by extensive censorship and political influence. This can be perceived in light of the controversial decision in early 2010 by Google to move its websites from China since the country restricted political speech and internet content. As a result, Google moved its websites from China.cn where it was under extensive censorship pressure to its site in Hong Kong (Google.hk) which was not filtered aimed at reaching a wider audience and meeting the consumer needs (Ryan, 2010, p. 8). Such moves are expected to intensify in the next five years with the company seeking to create more unique products in the Google search engine in line with its differentiation strategy without external political interference which will be central in meeting the diverse needs of the consumers and boosting its performance at the international scale. Conclusion From the preceding analysis, it is evident that Google has evolved into becoming a major corporation in the world, mostly in its search engine business. This has extensively used the differentiation strategy according to the Porter’s Generic Strategies Framework, although other strategies like cost leadership have been partially used in its search engine business. The differentiation strategy has been primarily supported by unique resources and competences like human resource, financial capital as well as physical resources. In the next five years, the search engine business by Google is projected to undergo major shifts as a response to external factors like increased competition, legal and regulatory framework as well as political influence. References Argenton, C. & Prufer, J., 2012, ‘Search Engine Competition with Network Externalities’, retrieved 05 December 2012, . Bhatia, A., 2012, Strategic analysis of search engine giant: A case study of Google Inc., International Journal of Computing & Business Research, Vol. 1, No. 1, pp. 1-13. Dess, GG. & Davis, PS., 1984, ‘Porter’s (1980) Generic Strategies as Determinants of Strategic Group membership and Organizational Performance’, The Academy of management Journal, Vol. 27, No. 3, pp. 467-488. Kuntze, R, & Matulich, E., 2011, ‘Google: Searching for Value’, Journal of Case Research in Business and Economics, vol. 1, no. 1, 1-10. 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