Case Study Analysis

Anh Nguyen

Case Study Road Map

Industry Situational Analysis Company Situational Analysis Strategy Recommendation Implementation Recommendation

Industry Situational Analysis

Dominant Economic Characteristics

Market size & Growth Rate
Revenue: $39 billion (2004) Revenue: $50 billion (2005) Predicted growth rate (2007) 27%

Main Rivals
Google, Yahoo!, Time Warner, AOL, Microsoft, Ask.com, Paid search providers

Dominant Economic Characteristics

Scope of Competition
Global Presence Stronger competition

Degree of Product Differentiation Product Innovation

Google = Domino effect

Competition Analysis
Rivalry among competing sellers
Strong Googles market share dominance

Threat of potential entry

Strong Inexpensive start-up costs Risk of brand new technologies coming in the market

Competition Analysis
Power of substitutes
Strong Zero switching costs

Power of Suppliers
Inexistent

Power of Buyers (advertisers)

Moderate

Driving Forces
Increasing Globalization
Product Innovation Regulatory influences & Government Policies
Privacy Issues Chinese Government censor

Competitive Position of Main Companies

Competitor Analysis
Profile Competitors/Predict Moves
Competitive Scope Strategic Intent Market Share Objective Competitive Position/ Situation Strategic Posture

Company

Competitive Strategy

Google

Global

Maintain the position of leader of the search engine market

Expand through more advertisers and user access

Strongest competitor in the market

Combination of Offense and Defense

Broad Differentiation

Yahoo!

Global

Be among the top in the industry

Expand through new search technology (Panama)

Getting Stronger

Combination of offense and defense

Broad Differentiation

Ask.com

Global

Be among the top in the industry

Expand through advertisement and development of brand name

Still weak

Combination of offense and defense

Broad Differentiation

Key Success Factors

Technology-Related: Expertise in a particular technology Marketing- Related: A well-known and respected brand Skills and Capability Related: Product Innovation Skills Related: Global Distribution Capabilities

Overall Attractiveness of Industry

Attractive Factors
Increased number of users

Unattractive Factors
Very competitive

Issues
Privacy

Profit Outlook
Favorable

Company Situational Analysis

Evaluation of the Current Strategy

Qualitatively: Google is a focused differentiation (or market niche) strategy Complementary strategic strategy: offensive strategic moves, outsourcing value chain activities, and unique website strategies

Evaluation of Current Strategy

Quantitatively
Financial Performance Analysis Net Revenues 2003 2004 2005 2006

$1.5 billion

$3.2 billion

$6.1 billion

$10.6 billion

Net Earning
Shareholders Equity Shares Outstanding Current Ratio

$106 million
$588 million 160 million 2.4

$399 million
$2.9 billion 275 million 7.9

$1.5 billion
$9.4 billion 296 million 12.1

$3 billion
$17 billion 309 million 10.0

S W O T A N A L Y S I S

Strong Market Position Proprietary Technology & Technological Infrastructure AdWorks and AdSense Programs

Google Network Members Social Networking Domain Lack of Product Information

Asia Internet Usage Online Ad Spending in the US Growth in Online Videos

Competition from Microsoft and Yahoo Click Fraud and Invalid Clicks Data Scams

Analysis of Companys Price & Cost Competitiveness

Value Chain Diagram

Analysis of Companys Price & Cost Competitiveness

Value Chain Analysis: Most vital are Sales & Marketing, Technology,

and Systems Development Price Competitiveness comes from Delivering Online Advertising - AdWorks and AdSense Branching out into Different Product Lines
- Google Books - Google Maps - YouTube - Google Earth - gPhone

Weighted Competitive Strength Assessment

Weighted Competitive Strength Matrix
Key Success Factor/ Strength Measure Expertise in a Particular Technology Well-Known and Respected Brand Product Innovation Global Distribution Capabilities Sum of Weights Importance Weights .3 .2 .3 .2 1.00 Google 8/2.7 8/1.8 9/2.5 9/1.7 Yahoo 7/2.5 7/1.4 8/2.0 8/1.7 Microsoft 6/1.5 6/1.4 7/.8 6/1.5 Ask.com 5/2.0 5/1.0 7/1.5 6/1.6

Weighted overall

Strength Rating

8.7

7.6

5.2

6.1

Weighted Competitive Strength Assessment

Weighted Competitive Strength Matrix Analysis

- Google has superior strength over competitors - Yahoo falls in second place due to name brand recognition - Ask.com is increasing product innovation - Microsoft came in last due to lack of product innovation

Strategic Issues Analysis

Will

Google be able to compete with MySpace and Facebook to become the premier social networking site?
Will Google be able to capture the Asian Market and make China the leader in internet usage, especially by using Google as their main search engine site?

Strategy Recommendation

Strategic Inflection Point

Government Reform Structural Crisis Information Explosion

Strategic Vision

Mission/ Vision:
Who What Where Google stands Where Google is heading

Strategic Objectives
Key Strategic Objectives
Gain 53% of U.S market share Expand to China Invest up to $ 20 million in online ad spending Diversify in mobile industry

Key Financial Objectives

Increase revenue in Chinese market by 19% first quarter 2007 Double capital expenditure in 2007 Increase in revenue by 38% in 2008 by online advertising

Strategy Options
Generic Competitive Strategy:
Focused Differentiation

Complementary Strategies:
Strategic alliances Collaborative partnership Acquisition Offensives moves Outsourcing its value chain

Functional Area Missions and Task Statements

R&D Engineering Production Marketing & sales Human resources Finance

Timing Initiatives
Immediate (1st year) Long range (2nd through 4 years)

Implementation Recommendation

Building a Capable Organization

Strategy Critical Position Recruit & Retain Talented Employees Strategy Critical Core & Distinctive Competencies Match Organizational Structure to Strategy

Strategy Critical Positions

Managers Must:
Thinking Clearly Problem Solve Positive Outcomes

Implementing:
Solve Problems in Business Training Day 1: Establish Problems Training Day 2: Establish Improvements

Recruiting and Retaining Employees

Recruiting
Screen applications thoroughly Loyalty Integrity Intellect

Retaining
Provide Reward System Employee Empowerment

Core & Distinctive Competencies

Core
Hardware Software Cutting Edge

Distinctive
Human Resource Department

Match Organizational Structure to Strategy

Value Chain Activities Strategy Activities Authority Cross-Unit Coordination Collaboration

Link Budget
Supply Money to Research & Development Supply Money Internationally
China India

Human Resources

Policies and Procedures

Providing Handbooks to Employees Examination of Procedures Probation Period

Best Practices & Continuous Improvement

Competition: Yahoo!, Ask.com, MSN
Prevent Competition from Benchmarking
Causing change in Information Technology Department

Information & Operation Systems

Developing Updates for Technology

Rewards Systems
Full Benefits Plans Health Insurance Plans Fun Work Environment Maternity Leave Tuition Reimbursement Gift Matching Program

Supportive Corporate Culture

Empowering Employees
Can-do Attitudes

Critical Management Behaviors

Staying Involved with Employees Constructive Pressure on Organization Innovation of Core Competencies Ethical Integrity Corrective Adjustments

Conclusion
Bright Future Continued Expansion