Communication Plan

Implementation of Subsidiaries

Jacob Cowan, Daniel Hupfer, Clay Kiggins, Robert Morgan, Bryanna Samuels
teamgoogle@google.com
March 7, 2017
 Table of Contents
Executive Summary....2

Introduction.....3

Company Overview....3

Opportunity ........4

Root Cause .....4

Stakeholders
Competitors...4

Investors....5

Generation Y & Z.........5

Situational
Variables.......6

Googles History with the Creation of

Subsidiaries...6

Recommendation.....7

Communication Strategy
Competitors...7

Investors....8

Generation Y & Z.........8

Response
Timeline....9

Projected Budget.....10

Return on investment
Tangibles......10

Intangibles....10

Conclusion.....11

References ....12

Appendix ..13

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 Executive Summary
Introduction
Over the last several weeks our team has conducted research and performed analysis on an opportunity Google is
facing in order to develop a recommendation and an effective communication plan. The executive summary will
provide you with a brief outline of our communication plan. This will allow you to gain a strong understanding of
our teams direction for this report. Included in the executive summary is a brief outline of our situation,
background, analysis, recommendation and response.

Situation
Our company is currently in the maturity stage of the company lifecycle. To continue the growth of Google we have
found an opportunity to remain a leader in technology innovation and product development. Externally, this
opportunity is is derived from the overall increase in quality and quantity of technology. Internally, Google has a
large portfolio that requires constant upkeep. Our team has decided that Google must take advantage of this
opportunity by narrowing its portfolio of products.

Background
Here at Google, our stakeholders are very diverse because of our vast portfolio of products. To remain a leader in the
technology innovation industry, we must address the key interests of our stakeholders. Our stakeholders are very
important to us as they can affect the future of our company tremendously; moreover, they can be affected by our
actions and business decisions. The three main stakeholders that we have identified are; competitors, investors, and
generation Y & Z.

Analysis
It is important to not only identify our stakeholders, but also to understand how they affect our success. Our
competitors have narrower portfolios, which allows for more capital investments and product development per
product than Google. Our investors are concerned with return on investments, so they could leave to join our
competitors if we are not able to achieve our goals in a timely manner. Lastly, as the body that ultimately decides
what products succeed and fail, consumers have the ability to shape our sales and determine our longevity.

Recommendation
In order to address this situation, we recommend that Google further divest its efforts into more specific subsidiaries.
These will be separate entities under the parent company, Alphabet. We have come to this recommendation because
Google lacks specialization of its products compared to its competitors. At this time, we have specifically identified
Android and YouTube as two major departments to be moved out from under Google, and incorporated as separate
companies under Alphabet.

Response
To successfully implement our recommendation, our team has created a communication strategy to reach our
Generation Y & Z consumers. We have focused our communication strategy on this stakeholder group because they
directly benefit from the creation of subsidiaries and they currently do not have a communication strategy like our
investor stakeholder group. We have created a five month timeline for this strategy and have a projected budget that
accounts for lost advertising revenue. The return on investments include both tangible and intangible benefits.

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Introduction
At the request of the CEO of Communications, Robert Shilkin, our team created a Corporate
Communication Plan. The purpose of this document is to recommend a strategy to resolve being
overtaken as a leader in technology innovation and product development because of our
extensive portfolio. Our team believes we can turn this threat into an opportunity by streamlining
Googles portfolio into various subsidiaries. This document will allow Googles CEO, Senior
Management and Supervisor to improve the companys growth. Included in this Corporate
Communication Plan our team will analyze Googles background information, recommendation
and response.

Company Overview
Our company entered the company lifecycle as a start-up company in 1995. Google started with
two Stanford University students, Larry Page and Sergey Brin. Together they created the
innovative search engine that has changed the way individuals look for information. In 2004,
Google then moved into the growth stage as they went from a private company to a public
company and expanded their data centers. Today, Google is in the maturity stage. They have
more than 60,000 employees in 50 different countries. They produce 20 main products. In total,
they produce hundreds of products used by billions of people. If you refer to Figure A, Google
must identify an opportunity to further their growth within the technology industry and enter the
rebirth stage.

Figure A: Company Life Cycle

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Opportunity
Since its inception our company has been a dominant leader in technology innovation and
product development. Our team has determined that our threat is being overtaken as a leader in
technology innovation and product development. If you refer to Figure B: Market Share of
Search Engines in the Appendix, Google is losing its position as top search engine, its trademark
innovation. Our team has flipped the perspective of this threat and turned it into an opportunity.
Google has the chance to remain a leader within the technology industry. The next sections of
this Corporate Communication Plan will determine Googles external and internal root causes.

Root Cause
The root cause of our threat stems from an observation that Intel co-founder Gordon Moore
made in 1965. He noticed that the number of transistors per square inch on integrated circuits
had doubled every year since their invention. The amount of transistors on a circuit board
directly represents its processing power. In plain terms, it says that the raw power of computers
is doubling every two years. Shown in Figure C: Moores Law, in the Appendix, the transistor
count has shown an exponential correlation since the early 1970s.

At the rate that technology is advancing, we expect there to be increasing problems with
sustaining this growth because Googles product portfolio is so diverse. We are constantly
having to redevelop our products and software to incorporate the newest hardware. This plays a
major role in the challenge of moving Google back into the growth phase because of the speed at
which technology is becoming obsolete.

Stakeholders
Competitors
Here at Google, we face a multitude of
threats because of the diverse range of
products we offer. From our search engine
to our mobile phone, companies are
constantly attempting to pace us in our
various endeavors. In our second
presentation, we identified three main
competitors because of their exceptional
abilities to match us in total revenue and
market capitalization. These three
companies in order of significance are; Amazon, Apple, and Microsoft.

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Amazon is an e-commerce and cloud computing company based out of Seattle. What began as an
online bookstore, has become the largest internet-based retailer in the world. In addition to their
online retail store, they are the industry leader in cloud computing for businesses and have
developed a wide range of unique products. With revenue of 135 billion dollars in 2016 and a
market cap of $403 billion, Amazon is our leading competitor in technology innovation and
cloud computing.

Apple is a multinational tech company that designs, develops, and sells consumer electronics,
computer software, and online services. Apple started with a desktop computer and has now
evolved into the worlds largest information technology company by revenue and total assets.
Apple competes with us in numerous product markets, and their massive cash reserve allows
them to potentially outpace us in research and development. Apple earned $218 billion in
revenue last year with a market cap of $712 billion.

Microsoft engages in the developing, licensing and service for their wide variety of products.
Microsoft is currently a company that is trailing in the tech development industry. However, they
are still are a major player with an exceptional brand name. Microsoft brought in $85 billion in
revenue in 2016 and their market cap currently sits at $499 billion.

Investors
Our investors are very important to the future of Google. Without are investors, our ability to
further our research and development and capitalize on future investment opportunities. Last
year Google had capital investments of $13.5 billion. If we want to keep our investors happy, our
money has to be invested properly to ensure future revenues.

Generation Y & Z
Our final stakeholder group is Generation Y, also known as the millennials, as well as
Generation Z. Generation Y, the largest generational cohort existing, are individuals born 1977
to 1995. In the United States population, Generation Y comprises of nearly 80 million citizens.
As the largest demographic they exert the most influence on future trends within the technology
industry. Generation Z includes those individuals born in the year 1995 or later. Generation Z is
project to be vastly larger than the millennials. Together, they will occupy greater than 26%, or
$1.4 trillion, of all United States consumer spending in
2020.

Additionally, between the two age demographics,

nearly 80% are at least moderately brand loyal.
Essentially, as new products are released, 80% of these
consumers will develop lasting brand loyalty making

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these consumers relatively unreachable to other firms producing similar goods. At the same time,
however, about 50% of millennials and generation z consumers are at least moderately open to
switching brands. This means that if a weak product is released by a brand consumers are loyal
to, there is a significant chance that consumers could switch brand loyalty to get a better product.

Situational Variables
After analyzing our stakeholder group, we transition to the situational variables. Our team has
determined that our competitors, our investors and the Generation Y & Z consumers are our
situational variables. First, our competitors have a more streamlined portfolio of products than
Google, which allow them to create high quality products that rival Googles, refer to Figure D.
Second, if you refer to Figure E, our competitors are spending way more per product than
Google. Therefore, they are able to invest more into each product, which allows them to produce
high quality products attracting consumers. Third, Millennials and Generation Z will decide
which products succeed, and which fail. Given this, we must ensure that the products we create
are not only satisfactory for current consumers from these demographics, but also are desirable
to similar consumers not already aligned to our brand.

Figure D: Comparison of Google and its Competitors Main Products

Company Number of Products

Google 20

Apple 9

Microsoft 11

Amazon 5

Figure E: Comparison of Google and its Competitors Investment per Products

Company Investment per Product

Google $675 mill

Apple $1.1 bill

Microsoft $1.09 bill

Amazon $2.84 bill

Google's History with the Creation of Subsidiaries

In August of 2015, Google made an executive decision to create a new public holding company
to encompass its subsidiary companies, Alphabet Inc. Larry Page, Googles CEO, made this
announcement to redesign the structure of Google to narrow the overall scope. The company
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Alphabet would entail Google as well as its other businesses such as Google X, Google
Ventures, and etc. The largest subsidiary within Alphabet is Google, but it also acts as the parent
company to its smaller developments like Google Fiber, Waymo, Sidewalk Labs, Nest Labs, etc.
Eric Schmidt originally stated that there could eventually be more than twenty-six subsidiaries
within Alphabet.

In the original restructuring process the roles of these

two companies were to be one owner and one
subsidiary until it was reversed. First a subsidiary of
Alphabet was created. Next, Google merged with that
subsidiary which converted Googles stock to
Alphabets. Google enacted this change without
consulting shareholders. Under a law known as
Delaware Law, a rearranged holding company like this
can be formulated without any input or vote from
shareholders. The entire restructuring process was
finalized on October 2, 2015. Alphabet retained Google Inc.s stock price history along with its
past stock ticker GOOG and GOOGL.

Recommendation
Our recommendation to management is to further divest Google into more specific subsidiaries.
These subsidiaries will not be under Google, but instead equal companies under Alphabet. This
recommendation can be justified because Google lacks specialization compared to its top
competitors. We are at this time specifically recommending that Android and YouTube break
away from Google and restructure as independent entities under the parent company Alphabet.
Android will include products such as
the Pixel, CarPlay, Google Fi, and all
related mobile developments. These
separate subsidiaries will be able to
hone into one distinct product line,
while still being able to share
information and technology between
companies. This change will also
streamline the internal communication
process, making it easier for
management to share or exchange
information, ideas, and news.

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Communication Strategy
Competitors
No formal communication strategy needs to be created in order to inform our competitors of the
benefits of our recommended changes. Since competitors gain little from Googles success,
communicating value through restructuring to this stakeholder group would have a negligible
overall effect. While we should not create a plan to communicate to our competitors, it would be
beneficial to pay close attention to them following our proposed changes to monitor any
activities that may positively position any competitor or otherwise negatively affect Google.

Investors
Since our investors have the great capacity to affect Google, it is especially important that we
communicate the added value our proposed changes offer. The potential for increased revenue
and overall returns through divestiture of Googles subsidiaries must be emphasized to this
stakeholder group. Since these investors are concerned with their return on investments, any
opportunity for future growth should be stressed in our communications. Since we are already in
contact with our investors, no additional funding or communication restructuring would be
needed to create a communication strategy to this stakeholder group.

Generation Y & Z
The stakeholder group most needing a developed communication strategy is our future consumer
base, composed of generation Y and Z. Not concerned with increased revenues or organizational
structure, this stakeholder group instead needs to be ensured of the added value our
recommended changes would create for our various products.

Consumers need to be reminded of the increased focus and development our products will
receive as a result of divestiture. By moving subsidiaries under Alphabet, Google will be able to
focus more efforts on developing our search engine functions. At the same time, the divested
subsidiaries will be able to grow and develop better under the more flexible structure of Alphabet
instead of having to align to other project goals under Google. While the specifics of the
divestitures will not need to be communicated to the average consumer, it is important that they
are made aware that our actions are done to increase the consumer experience.

Since a consumer is more likely to see a companys commercial or advertisement than to read a
companys press release, the most effective way of communicating to this group is through
advertising. While the benchmark medium for such an advertising campaign has historically
been the television, we must cater our plan to the younger consumers in generations Y and Z.
These are consumers raised on the internet who are more comfortable seeing an on-page
advertisement or 10-second video byte than a traditional primetime commercial. Because of this,

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we need to focus our communications to take place over the internet through static and video
advertisements. Since Google already has many high-traffic sites such as Google.com and
YouTube, we will have better chances at reaching as many target consumers as possible.

Response
Timeline
The next phase of the communication plan after outlining our strategy is to create a timeline. Our
team determined that it is not practical to form a communication strategy around our competitors
as they will not gain from our restructuring process.Therefore, a timeline is not necessary. A
timeline is not required for communication with our investors because a communication system
is already in place. Our company is in constant contact with our investors through the Investors
Relations page on our company website. On the Investors Relations page, we provide our
investors with financial news, weekly highlights, a founders letter and other relevant news and
information.

Our team has placed an emphasis on creating a new detailed communication plan to the
Generation Y and Z stakeholder group. Our objective is to communicate the increased value and
quality our products will deliver through the creation of subsidiaries. Below in Figure F:
Timeline for Generation Y & Z Communication Strategy, our team has included a timeline with
periodic deadlines to ensure the execution of our communication strategy. The timeline will
ensure that our company communicates with our consumers, Generation Y & Z and ensure
Generation Y & Z the value they will receive through the creation of subsidiaries.

Figure F: Timeline for Generation Y & Z Communication Strategy

Item Date Notes

Pitch ideas for December 2017 The strategy will begin 9 months after the decision to implement
advertisement our plan. This timeframe will allow amendments to the
campaigns on Youtube recommendation and strategy. It will also allow time to plan
and Google Search how the portfolio will be divided into subsidiaries. During the
Engine. meeting pitches will receive feedback from senior management.

Select advertisement January 2018 One month after the pitches, there will be a meeting held to
campaign & determine present final ideas incorporating senior management feedback.
frequency of ads. At this meeting an advertising campaign will be chosen as well
as the number of times the ad should be played on each
platform.

Produce advertisement March 2018 Between January and March the advertising campaign will be
campaign. produced. Three months will allow time for feedback and
changes.

Release advertisement April 2018 In April, the campaign will be released on Youtube and Google
on Youtube and Google. to Generation Y & Z consumers. At this time the creation of

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 subsidiaries should be finalized.
Projected Budget
One of the large benefits of our proposed communication strategy is that there is no tangible
cost to the company. Since we will be solely advertising on Google and Alphabet-owned
websites, there is no cost to promote said advertisements. At the same time, the advertisements
will still reach a wide audience due to the high traffic nature of these websites. For Google itself,
the strategy will be extremely cost effective.

Despite not having monetary costs, our communication strategy will include the opportunity cost
of advertisements from outside firms through AdWords not showing on our sites. Because our
own advertisements will take up ad space on many of our pages, we will momentarily lose
revenues from displaying outside advertisements. It is difficult to determine potential lost
revenue since Google AdWords fees range from less than a dollar to fifty dollars per click, but
based on historical data shown in Figure G we estimate that we will not generate approximately
$1.2 billion in ad revenue for every month of our ad campaign.

Expected Return on Investment

Tangibles
Alphabet funds fifteen subsidiaries that help
Alphabet save money on their corporate taxes.
According to Sun, receiving a $3.5 billion
windfall would certainly be a positive
development for Alphabet investors, but it also
raises questions about fair taxation. Alphabet's
total effective tax rate for 2015 was just 17%, less
than half the U.S. corporate tax rate of 35%.
Since the US corporate tax rate is high Alphabet
keeps its cash overseas to minimize their tax bill.
The IRS cant tax the income Alphabet makes
from its subsidiaries, but the subsidiaries do pay a royalty to their parent company Alphabet.
This allows Alphabet to generate greater profits because income from their subsidiaries isnt
taxed.

Intangible
Alphabet works hard to ensure excellent employee performance and customer satisfaction. They
do this by focusing more attention on fewer products. This means that products will improve
because there is more time, money, and energy spent on each individual project. This will
increase customer satisfaction and help promote our brand. Alphabet customers also advertise

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through Google Ads. These Ads are programmed to appear depending on the key word searches;
they are measurable, cost effective and maximum relevance. Customers can then see how
beneficial their ad actually is.

Conclusion
In summary, for Google to remain a leader in technology innovation and product development,
we must create subsidiaries to streamline our portfolio. A narrower portfolio will increase our
competitive presence in the market, increase returns for investors and increase value for
Generation Y & Z. With the creation of subsidiaries we must effectively communicate this plan
to the Generation Y & Z consumers. Our team has focused on this stakeholder group as they
directly benefit from a streamline portfolio, they receive higher quality products. The timeline
for this project will take about five months, dollars and have a tangible and intangible returns.
Please reach out to our team if you have questions. We can be reached at
teamgoogle@google.com.

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 Appendix
Figure B: Market Share of Search Engines

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 Figure C: Moores Law

Figure G: Googles Ad Revenue Rises

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