For this SWOT analysis, I chose Google because for me it is a very interesting company and one of the world?s biggest and most successful ones. The first thing that everyone comes to mind, hearing the word Google, is search engine. But Google is much more. One of their strengths, for example, is Android, the operating system for Smartphones. It is remarkable what Google reached since 2007, the year of establishment. A weakness I wrote about is the unprofitable products it developed over the years.
Being innovative is not always a warranty for being successful. One opportunity of Google is obtaining of patents by acquisitions.
Google did that very well by the acquisition of Motorola. So it got even more competitive in the mobile market. A threat I pointed is that Google has many strong competitors, especially in the mobile market what has a big future and makes it even more necessary to stay competitive. “Don?t be evil”, Nowadays it is almost unthinkable that this is the guideline of one of the biggest and most successful companies in this dog-eat-dog society.
We talk about the search engine Google, which was established by Larry Page and Sergey Brin in September 1998 with the name Google Inc. n Menlo Park North, California. (Google Inc. , 2009)
It all started in the years 1996 as a scientific project of two guys enthused by computers. Larry Page wanted to analyze the structure of the WorldWideWeb for his doctorial thesis. Together with Sergei Brin he developed a mathematical model which accentuates the meaning of the links – related to the principle that academic texts of a researcher are particularly fundamental, if many other scientists quote them.
(Search Engine, 2010) But beside the search engine Google is much more. Read an essay about how Google begun
In 2000 Google developed the advertising system AdWords which is still the biggest source of income of Google. In 2003 the second important source of income was founded, AdSense. It works like AdWords do but only on extern web pages. On the 19th of April 2004 Google went public. One big acquisition was buying YouTube for $1. 65 billion in 2006. Android, the operation system for phones, was founded in 2007. Google was cooperating with 30 companies under an open handset Alliance. (Ads and Android, 2010) In 2012 Google and LG presented the Nexus 4 phone.
Today Google is still the number one search engine, does many acquisitions and always tries to be innovative. This analysis will show up some of the strengths, weaknesses, opportunities and threats of Google.
Google has a lot of strengths in their company which has helped them to get one of the most successful companies in the world. But the most productive products are AdWords and AdSense, almost 99% of Google?s revenues are from the advertisement.
(Revenue) AdWords and AdSense are programs that only advertise customer relevant advertisement.
Another secret of Google in doing advertising is that the advertisement is not as dominant as it is for example at the competitors Yahoo and Lycos. There are no blinking banners or shrill promotion, the focus is still on the search result what is very customer-friendly. (Advertisement, 2010) This brings Google almost a monopoly in this market which the following graph shows: Market share of the top 5 search engines worldwide: (Statistic Monopoly, 2012) Through this almost monopoly and other open source products and services Google gets the access to the largest group of internet user worldwide.
This brings Google an extremely large market that they can use to promote and sell its products and services. The next strength is the financial situation. Google is one of the most profitable companies with earning nearly $50 billion in revenues which gives them a lot for investments, like acquisitions or for new innovations. (Earning Billion, 2012)
For example Google supports being innovative very well by offering 20% of the employees` work time for own ideas and innovations.
(Employee) This keeps the innovation-wheel spinning.
According to Boston Consulting Group (BCG) Google is the 2nd most innovative business in the world. Android, the operation system for phones, is the next force. It was founded in 2007 in an Open Handset Alliance with phone manufacturers like HTC, Samsung or some chip manufacturers like Intel and Broadcom. This brought immediately a wide range of customers and that was a reason Android got in 2010 already one third of the phone users and it is still fast growing, up to 74,4 % in 2013 what the next graph, about worldwide Smartphone sales, shows: (Android, 2013)
This brings Google again a lot of money to invest in further acquisitions and innovations what keeps the money rolling.
Weakness: One of Google?s weaknesses is also her biggest strength, the online advertising. Although online advertising is expected to grow double digits in 2013 and so Google’s income will grow in short term but in the long term, Google may slow income growth or even the decline due to few reasons. One point is that the market for personal computers is growing slowly and also the Google experiences overall decline in its desktop search engine market.
So Google needs to push the competition back otherwise it will lose not only the market share but the main source of its income as well. This would mean a huge hole in the checkout. Furthermore there are spammer and made-for-AdSense site creators are gaming Google’s system through the practice known as click-fraud. Google said that it has click-fraud under control but it also made some concessions and if AdSense customers continue to grouse, Google might lose a lot of money.
Another flaw is the unprofitable products it developed over the years. Some products like Android or Google Chrome needed it’s time to grow, which costs a lot, but now they are running very well. But Google has many products and services that only add little value for the business or only make losses which decrease the profit. Google puts much time in many projects which is expensive and the employees invest a lot of time what makes it even less profitable because they could have developed new inventions or improved existing ones.
To get an overview how many projects are failing here a list of some: Google+, Google Wave, Google Answers, Google Catalogue, Google Checkout, Google Coupons, Google Video Player, Google Viewer and there are even more.
(Google Fail) So Google needs to work in some ways more effective to save time and money.
Opportunities: One big opportunity for Google is the obtaining of patents by acquisitions. A good example for this is, when Google bought Motorola Mobility in 2011 for $12. 5 billion which was its most expensive bought in Google?s history.
But it also included 17. 000 patents from the business. Next to Android, Motorola was a big step into the world of mobile internet users. But the main point is the patents that are included in this acquisition. For example, in 2011 Microsoft lost a patent dispute against Google in Germany. Out of this Microsoft had to pay compensation and it also has to start a callback of its game console X-Box and of its operating system Windows 7 which damps Microsoft a lot and it is one of the biggest competitors of Google.
So this acquisition brought Google a big advantage. (Google against MS, 2011) Another opportunity is the opportunity for growth, especially in the hardware and phone section. The market is so big and there are still a lot demands which can be satisfied. For example in the second half of 2013 Google wants to launch Google X phone manufactured by its Motorola subsidiary and a new version of its Nexus 7 tablet is also expected around July this year. Google`s try is to get more and more involved in the mobile user market with its low price offers.
The same Google does with its Nexus phones. It generates through this launches more people using Android, Google Maps and the app store of Google, the Play Store. Furthermore they reach more people in online advertising which strength Google?s main pillar.
Threat: One of Google?s threats are the very big and powerful competitors like Apple, Microsoft, Facebook and Amazon it has to face. Despite the winning of Google against Microsoft in a patent dispute, Microsoft is still a strong competitor.
With Windows 8, an operating system for mobile devices, Microsoft wants to carve out in market share against Android. Of course Apple is also a competitor in the mobile operating system market and it is even stronger represented as Microsoft is. Google is expected to pay an estimated of $1 billion to Apple in 2014 for keeping its search engine as the default on iOS devices because Google makes a huge portion of its mobile revenue from iPhones and iPads. In 2012 Google paid $417 million to Apple for the exclusive search rights for iOS, up from $82 million in 2009. Also read the short essay on Facebook and students
Another interesting fact is that in March around 80 percent of Google?s phone-search profit came from Apple, with only 20% coming from Android. Apple is also the biggest competitor in the market of apps. The next graph shows that Google has to catch up and there is still a big potential left. (Google against Apple, 2013): (Google against Apple) Thus far Google has been very successful and it still will, if Google doesn?t disregard being competitive and innovative in existing and new products.
But the whole online and smart phone market is very fast moving, you always have to be well prepared and there is no time for sleeping or rest on one?s laurels.
In conclusion the SWOT-analysis shows that Google is a very strong company and it stays strong by being innovative and doing acquisitions. It is always attempting to create new markets or improve its already launched products, which is a good strength. But sometimes it is also a weakness because launched products and innovations are too inefficient, through this Google loses much time and money. Don’t trust? ok, say: “I’ll google it” and go)
So being well prepared is important because the competitors never sleep and especially in fast moving markets like the mobile market. Google has to be careful because often the strengths are also weaknesses what is a thin line. Nowadays you can?t afford you too much mistakes, above all big ones. Google will stay successful and competitive if it is always alert, stay true to itself by keeping the search engine and the advertising customer friendly, and being competitive and innovative, which is not easy in total.
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