This paper will discuss a comprehensive strategic plan for google. First, an analysis of Google’s competitors: Microsoft, yahoo and Amazon analyzed. A critical analysis of Google’s operational and business strategy follows that. Then Google’s approach to corporate strategies that include vertical integration, diversification and Google’s global reach. The comprehensive strategic plan (CSP) is extrapolated from the critical evaluation of business and corporate strategy and based on the degree in which strategy is aligned to support Google’s espoused values and support its mission.
The CSP includes strategic recommendation and measures in three areas: change to either corporate or business strategy, leverage resources that can drive sustained competitive advantage and align organization structure and management to enable resources and capabilities that will drive sustained competitive advantage. Google’s competitive environment With the advent of the internet, competition within the industry of searching the web has intensified. The completion for google has always been other search engines like Bing, metacrawler and yahoo.
In today’s world competition for google is not merely other search engines, but it has reached to advertisement, product and services. For instance google are trying their hand in cloud computing. Google offers a wide range of services, so it only practical that google has its fair share of competitors. Google considers a wide range of services on the internet to be its competitor (Goodstein, Nolan & Pfeiffer, 2006). Google competition comes from those businesses that seek to offer the public with information and provide them with advertisement.
These competitions include traditional search engines; yahoo and Bing. Just like google, E-commerce sites and vertical search engines: kayak, amazon. com and eBay, that offer product and services to consumers. Therefore, users go directly to these sites instead of going through google. Sites like facebook and twitter offer competition because users are now relying on these services for referrals instead of using traditional search engines. Google also has competition for the ad dollar from the traditional form of advertising: TV, radio, Newspapers,
magazines and billboards. In addition, with the development of apps, users are now accessing e-commerce directly from these apps, instead of search engines. Google also offers product and services that comprise of Gmail, YouTube and google docs that competes with new and established companies that offer information, communication and entertainment services. Therefore, google competes with most of the internet (Dess & Miller, 2007). Google receives competition from its rivals on the internet for the market share and financial performance.
Google has introduced google chrome, which is cloud-computing software that allows its users to upload and download documents on the internet. However, the large market share is held by Microsoft’s office. Moreover, google has competition in the mobile industry from its android operating system. (Gru? nig & Ku? hn, 2005). To compete with Apple’s iPhone and to increase market share of ads displayed on smart phones, Google launched their android operating system. Although google receives stiff competition from its rivals, it still holds a high market share because of its brand positioning (Casson, 2004).
Hence, Google holds such a great market share; advertisers would not receive nearly the same amount of ad exposure using a different search engine. Google has continued to make a net profit even as its rivals net plummeted; probably the most important aspect of a company’s financial performance to a potential investor is the earnings per share ratio. It is widely acknowledged that Google puts great stock in being able to show investors that their money is safe. This company’s earnings per share ratio had grown impressively in the four year period from 2007 to 2010, with only a slight decline when the recession hit the hardest.
This shows that Google is a true powerhouse, especially when compared to their top competitors, Yahoo and Microsoft. With Google increasing their percentage of searches, in comparison to all other search entities, it is easy to see that Yahoo and Microsoft are losing the battle against this Internet behemoth. In the period from 2008 to 2010, Microsoft maintained a constant net profit margin (Hitt, Ireland & Hoskisson, 2009). This would indicate that Microsoft is outperforming Google, but these impressive numbers do not tell the story for the segment of Microsoft that is competing against Google.
The operating profit margins during this period for Microsoft’s online services business unit are embarrassing at best, with negative margins in 2009 and 2010. This indicates that Microsoft is hemorrhaging money at an increasing rate while it tries to compete with Google. Similarly, Yahoo shows declining net profit margins for every year from 2007 to 2010, with margins for 2009 and 2010 dropping below 0. 1. (see appendix). Overall, while its top competitors are losing money and market share, Google continues to grow and provide investors with profits.
Several factors are what make customers prefer google to its competitor. The search industry giant’s success is a cause of many key resource strengths and competitive capabilities. Google gains the trust of users through reliable, accurate searches and a clear distinction of upfront ads in searches. Their online business conducted with minimal physical locations and a low fixed cost. Instead of looking at these locations as burdens, they maximize the creativity and high-spirit of their work environment. The reason that makes google stay ahead of the curve is its ability to provide main resources to the users.
Google would not be highly valued without the high content that it provides to its users. (Hitt, Ireland & Hoskisson, 2009).. Google’s Operational and Business Strategy The relevant searches that google provides, and the large amount of available information, is what makes google attractive to its users. Amazon a company that deals in downloading books, music and videos, offers google competition in the provision of content. The technology for providing relevant searches to end users, thus competition has become stiff. Therefore, google has to develop new ways to remain ahead of its competitors.
So google has gone to develop its technological expertise as its key resource. (Centindamar, 2013). Currently as the leader in the industry, Google is attracting the best and the brightest. However, technology is a rapidly developing field that is continuously changing and improving. For Google to maintain the high standard of performance expected by users, they must attract and retain top technological experts. The search industry is changing to encompass not only searching technology any longer. Users’ preferences are constantly growing.
A service provider provides mobile phone search and business technology software. There has also been a shift in how search engine users are using the product. This is mainly due to the emerging new capabilities of the Internet. For example, ever since Google acquired Keyhole, a digital mapping company in 2004, they are able to show users satellite and street view images of any location in the world using Google Maps. Google has added over 40 different tools and services aimed at providing the user the best experience possible (Hitt, 2002).
Google is also able to customize which advertisements appear next to the users’ search results by tracking their history. While some may like this idea, the lack of user privacy has raised ethical concerns. In the next three to five years, the industry will most likely continue to change and evolve even further, adding more tools and features to further cater to the needs of the typical user, the mobile on-the-go traveler and the business person alike. The search industry giant’s success is a cause of many key resource strengths and competitive capabilities.
Google gains the trust of users through reliable, accurate searches and a clear distinction of upfront ads in searches. Their online business conducted with minimal physical locations and a low fixed cost. Instead of looking at these locations as burdens, they maximize the creativity and high-spirit of their work environment (Volberda, 2011). Employees are hired selectively amongst some of the greatest minds in technology and related fields, and are given the tools, freedom, and encouragement to be innovative and fulfilled by their job.
Several iconic features of Google remain unparalleled, including their extensive Google Earth and Google Maps capabilities, YouTube video streaming, and Google Search Appliances that allow other companies to feature Google search bars within their own sites (Hitt, 2002). Google has continued to have an edge over its competitors because of its goals and values. Google’s number one priority is to offer value to their users. Enshrined in their ten values, that makes up Google’s corporate philosophy. At the top of the list is, “Focus on the user and all else will follow.
” Google has developed a certain trust factor with its users over the years that many companies strive to become. Google has always made decisions with their users in mind, and has not ever chosen to make a change in order to increase shareholder value if it did not also improve the user experience (Hitt, Ireland & Hoskisson, 2009). By resisting the desire to make a quick profit that many other companies give in to, Google has made a lasting impression. That is evidenced by the growth in their percent of searches from July 2006 to June 2009.
While Google led the pack back in 2006 with 43. 7% of searches, Yahoo was not far behind with 28. 8% of searches. In the following three years, however, Google has been able to increase their percentage of searches to 65% and increase the gap between itself and Yahoo! from 14. 9% to 45. 4%. Google’s Corporate Strategy Corporate strategy refers to the overarching strategy of the diversified firm (Colley, Doyle & Hardie, 2008). Such corporate strategy delves “in which businesses should we compete?
” moreover, how one business add to the competitive benefit of another portfolio firm, as well as the competitive gain of google as a whole. Google has relied on vertical integration to stay ahead of its competitors by diversifying their products and services (Casson, 2004). In September 2008 before google chrome was launched, companies like Microsoft wanted to prevent Google from collecting user specific information. They allowed users of Internet Explorer and Mozilla Firefox to block their viewing history and Internet address so that Google could not collect this information.
When Google Chrome was released, it gave Google a way around this Internet “firewall”. Google understood that as the Internet shifts toward cloud computing there would be a need to have a browser that is able to support multiple programs at once. Getting users used to Google Chrome now before the switch to cloud computing begins, gives Google an upper hand when that switch occurs. This Google’s diversification development represents some kind vertical integration, though, google was known for being just a search engine (Chopra, & Meindl, 2007).
Google has diversified to same-day delivery by the provision of a courier services for it users. As online users are embracing e-commerce, online retailing is skyrocketing. Therefore, same-day delivery is going to be a commonplace thing in the future. Google has gone to exploit this opportunity, thus edging its competitors. Google same day delivery has already rolled out in the United States. Therefore, Google’s diversification strategy is going to make it the top e-commerce technological tool. Google is soon to own the browsing and buying and finally the delivery to homes.
Therefore, the so-called google shopping express provides diversification on technology and data. Already google is ahead of its e-commerce rivals with its easy to use user interface (Volberda, 2011). From Google’s mission statement, it exemplifies this idea of being a global brand. Its mission statement is to organize the world information to be globally accessible to users. Google is not only available to English speaking countries, but available in other languages of the world Casson, 2004). Furthermore, google has developed an app specific language, therefore being global.
Again, google has taken up over fifty companies to export itself globally. The co-founders have expanded into foreign markets to satisfy the internet experience globally. Comprehensive Strategic Plan Google’s weaknesses, while fewer in number than their strengths, could have serious implications on the future of their business. The low revenue earned from YouTube represents a lost opportunity for such a large online presence. Their grasp on the comprehensive social networking market is far behind those of their competitors.
Although, they remain an industry leader, their international reach in emerging markets such as China leave much lacking (Hitt, Ireland & Hoskisson, 2009). The organization and management system should align resources and address several strategic issues to remain competitive in the coming years. Recommendation is that the management system must encourage innovation in their strong labor force and expand research and development to its fullest achievable potential. Placing more emphasis on Chrome through advertising would increase market share in web browsers, allowing for access to more information.
This goes hand-in-hand with the goal of strengthening users’ reliance upon Google accounts, comparable to those existing with comprehensive Yahoo accounts (Hitt, Ireland & Hoskisson, 2009). It is also crucial to pay attention to the path and future of mobile advertising, likely to progress through rich media ads that can synchronize with existing smart phone features and apps. Furthermore, it would be wise for Google to condense their wide selection of Android phones, keeping enough variety to suit consumer desires, but streamlining their product line to a more lean production (Dess, 2012).
When there is potential to be profitable, Google should also expand its efforts to developing countries that are passing computers by and accessing the Internet through mobile phones. This would portray Google as a reliable product and service in these countries and build a strong brand recognition early on. To increase revenue from YouTube, they can consider charging corporations for having accounts solely for business purposes (Hitt, Ireland & Hoskisson, 2009).
Google’s strongest ability lies in their existing features, though they must fine-tune the quality of their weaker applications like Google+ and Google Docs that have trouble comparing to industry competitors. Further developing features to compete with the capabilities of Microsoft Office can gain a major advantage, by promoting users to share documents, by Google Docs. Overall, Google must capitalize on its existing features, refine them, and continue to use research and development along with innovative technology to maintain their position as the leader in the search engine industry (Fox, 2012). Conclusion
Because of the rapid growth in industries revolving around technology and the Internet in particular, many opportunities present themselves to Google currently and in the near future. Internet and mobile advertising growth lead the way for the increasing importance of Search Engine Optimization for marketers. Using data collected from searches and Chrome, more data on users becomes more readily available. Possibly the most important up-and-coming necessity for innovative companies such as Google is the availability for users to have all of their information in one account through cloud computing (Casson, 2004)..