Executive Summary This project examines the internal and external challenges Google faces and the strategy

it employs to meet these challenges. These challenges are brought out by pressures from both internal and external environment. SWOT analysis is used to analyze Google. External Environment Analysis Political Factor Google has been embroiled in a number of government lawsuit and restriction. The partnership between Yahoo and itself brought itself into an antitrust lawsuit with the US government. (Gamble & Thompson 2009) While in China, the government implementation of information regulation filtering is against Google policy thus affecting Google investment in China (Gamble & Thompson 2009). Due to new regulation from many countries, Google application Streetview has been slap with a number of lawsuits as show in exhibit 1 A western Pennsylvania couple has sued Google Inc., saying pictures of their home that appear on the Web site's "Street View" feature violated their privacy, devalued their property and caused them mental suffering. (Foxnew.com 2008) Exhibit 1 Economic Factor During the recession, majority of American companies saw a decline in their business of about 25%. This affected their marketing budget. Despite Google growing by 3% during that period, it was still affected as companies were not investing as much as they did in advertising; the main source of revenue for Google. To date, America remains the biggest market for Google and the current slow recovery from the recession will impact Google growth. (Gamble & Thompson 2009)


Azure was acquired to compete with Google on their cloud computing concept. Bing is a threat to Google due to factors like huge financial muscle of Microsoft and Yahoo’s 19. Search engine Bing was the fruit of the partnership which will contest with Google’s 37% market share. Such social networking platform will continue to see increase in usage. these threats are weak as they cater to different audience. Yahoo and Microsoft are in a partnership to compete against Google for a larger market share in the area of search engine. Software programs that supports cloud computing is shaping the future of the industry. The industry is estimated to be worth USD$95 billion by 2013 (Gamble & Thompson 2009) Strong Rivalry among Competitors Microsoft and Yahoo are Google’s biggest rivals. This only further increases internet usage. it is a platform that one can communicate and express themselves. Currently. Recently. Threat of substitution Television. 2 . print media and radio are tradition media avenues. Youtube allows individuals to post videos. However. These are the substituted threats which account for 84% of the American market.Social Factor Social media such as Facebook and Twitter is the leading the way to how people communicate with one another. Google recognize the potential growth if it were to diversify into it Technological There is an increase in smart mobile phones which allows for internet surfing and communication through social network.6% of the market share who are mostly loyal users.

An example would be the development of Adsense. which in turn use Google as the default search engine in the phone. It also further enhances its search function efficiency to have a competitive edge. Secondly. They utilize innovation and creativity to solve complex problems and exploiting opportunities. who have a mindset and creativity that makes a difference. These applications enabled them to provide solutions to any problems in the shortest time possible. In the mobile market. Threat of New Entrant Search engine Baidu overtook Google in China is an example of the threat new entry poses to Google. Adwords and Chrome browser.Power of suppliers Power of suppliers is weak as Google. consumers prefer Google. Internal Analysis Value Google best capabilities are its employees. advertising campaigns and providing professional advice from experts is what attracts audience. This is possible because the entry barriers for new competitors are low. by developing a unique way to translate 3 . The large audience group make Google attractive to advertisers to invest in advertising space. Google provides the Android software to mobile phone manufacturers such as Samsung. Finally. a result of a great partnership relationship with them. the cost of switching vendors is low for consumers. Power of Buyer Despite the variety of search engine available. the market is open for anyone with the financial means and creativity to try. The products and services offered by Goggle ranges from traffic estimation.

HTML Formatted files which can be read on mobile devices for wireless users and the Android system. such as Adwords and Adsense to target massive potential users through the aids of its acquisitions. creative and are willing to work for longer hours with minimal wage. Google’s management system is relatively flat. For example. Microsoft launched a new search engine and search advertising system. An employee’s time is split in a way where they spent 70% of their time on work 20% on projects and 10 % personal interest time to create innovation culture SWOT Analysis Strength Google has always been highly innovative and constantly implementing new ways and services to improve and set new standards that enable them to enjoy great 4 . They adopt team level structure to achieve synergy and creativeness among employees. 2009) Organisation Google recruits young people with strong academic backgrounds. but this can be copy. Hence. Google’s employees are passionate with their jobs and always having a mindset of making a difference. rarity is high in term of their functional abilities. Imitate-ability The possibility of imitation is low as their costs structure and complexity are extremely high to imitate. There are plenty of internet advertising companies nowadays but Google has developed unique and cost effective advertising services. (Brandt. Rarity The unique culture in Google is unlike any corporate or enterprise in America. Google has gain a large market share. This is because they intellectual. code named Moonshot in 2004 and 2006 respectively to compete against Google but it failed.

Google could also venture into offline advertising. Facebook and Twitter controls the majority market share of social networking websites.000. Microsoft reacted by luring Google users. Their costing structures to offer advertisers are cost effective and relevant.000 $10. The mobile phone applications market and search-based advertising is also growing. Opportunities Emerging markets such as Russia. and websites.000 2005 2007 2008 2004 2006 $0 Exhibit 2: Google’s revenues by Advertis ing R evenue Lis ing& other ens revenues source. Their international market has been another weakness.000 $15. Furthermore. India and China offers opportunities for Google.000. pg 393 Another weakness is by trying to compete against Microsoft by trying to create a new operating system. advertisers. In doing so.000. This makes them vulnerable when their competitors overtook their leader in the industry. Weakness Their main weakness as shown in exhibit 2. 2009. majority of Google’s revenues depend on internet advertising.000 $5. This is due to their ability to constantly anticipate the needs and wants of the consumers. They have been losing market shares in due to lawsuits and government policies. Google has the potential to become the dominant provider of ‘cloud computing’.000. 2003-2008(in thousands) Source: Google’s revenues cited in essentials of strategic management 2nd edition. 5 . $20. Their search engine provides the user with relevant information in the matter of seconds.success and become a market leader. Their competitive advantage derives from relationship with internet users.

With this differentiating strategy and its strength of it brand name Google. Medium Amount Percentage Newspapers $48.5% Internet $21 billions 16% TV $20 billions 15.6 billions 37.Threat Currently the two biggest threats to Google are Bing and the shrinking advertising budget from companies in US. Google is able to track viewers’ habits during commercial breaks and use it to identify ads that are more relevant to viewers of different programs.4% Radio $20 billions 15. This will induce higher chances of providing advertisers with appealing service as it immediately raises the effectiveness of Google’s advertisement in every aspect through the proliferation of its targeted audiences and advertising platforms. Criteria for Evaluating Strategy Increase market share for search engine Increase revenue Open new market based on its strength Three Strategic Alternatives and Evaluation One of the strategic alternatives is to venture into offline advertising such as television advertising.4% Network TV $20 billions 15. As show on the exhibit 3 below.4% Source: Essential of strategic management (Gamble and Thompson 2009) Exhibit 3 6 . it distinctly shows that they will be able to diversify into new area of business successfully. offline advertising accounts for 84% of the market. Problem Statement Google is diversifying into too many areas without first strengthening their core business which are advertising and search engine.

adding the value of these unique features. In 2008 Google accounted for 63% of searches performed on internet-enabled phones. if Google is able to dominate the offline advertising industry just like its successful internet advertising. Google’s strategy to dominate search based advertising on mobile devices had been very successful. it might receive sharp revenue growth for its overall advertising revenue within 2 to 3 yrs. Hence. Their core business is still their search engine. spreadsheets. and presentation software for mobile users to expedite in their works. by choosing this option they would be diversifying into unrelated business which carry the risk of unable to achieve the outcome of 1+1<2. This mobile service does not only instil convenience in locating the data.( Gamble & Thompson 2009) Exhibit 4 As supported by evidence in exhibit 4. it will stimulate more buyers’ interest to purchase Android operating system than other mobile operating systems such as Window mobile and etc. The company’s introduction of its Android operating system for mobile phones was expected to allow it to increase its share of mobile searches and expand the market for other type of internets ads delivered devices. By using software-asservice model which is one of the three cloud models. The industry is new to Google so it will be at a disadvantage as they do not have much experience in this industry. it also provides commonly used business productivity applications such as word processing.Based on the criteria.( Gamble & Thompson 2009) Many information analysts agreed that ‘cloud computing’ would become a common software platform and could grow to a $95 billions market by 2013. Google provides the services by hosting both the applications and data which enables the end user to freely use Google’s services from anywhere through their mobile devices. The next strategic alternative is to adopt a broad differentiation strategy through integrating cloud computing into its Android system. Even thought they are opening a new market but they wouldn’t be able to exploit their strength. Google dominated 63% of searches performed on internet enabled phones in 2008. It is predicted that 7 .

when there are significant cross-country differences in distribution channels and marketing methods. act local concept is best when the host country is diverse and complicated and the advantage to cater to the individual need of the market. which is both costly and time consuming. Based on the blue ocean strategy. Google could acquire more mobile search profits than its competitors if they can speed up the development of mobile cloud technology. opening new markets. is for Google to perform strategic acquisition or partnership with market leaders such as Facebook and Baidu. Through partnership or acquisition. This will affect their return of investment. Cloud computing on mobile platforms can also help them differentiate themselves from their competitors in markets such as China. think local. A think local. act local approach to strategy making is essential when there are significant country-to-country difference in customer preferences and buying habits. Based on the criteria to gain market share they will be at an advantage. 8 . The last criteria. it will be better to create a new industry or distinctive market than push out competitors. is not practical as they will still be in their same business. Last strategy alternative. when host country governments enact regulations requiring that products sold locally meet strict manufacturing specifications or performance standards(Gamble & Thompson 2009) Exhibit 5 As shown in exhibit 5. Acquisition of companies will need large resources and time and they might interfere with the countries anti monopoly regulations. they will be able gain share in the target market. Cloud computing on mobile device will definitely lead to an increase in their market share of internet users.Google will increase its overall market shares in mobile and search industries to about 80% in 3 years.

Hence. 7. Ultimately. 3. Eight Components of Strategy Execution Building an organisation capable of executing the strategy successfully. They will need to realign their present product to accommodate this project for instance their Google chrome. Google must gain the advantage of being the first in the market. 2. 5. With the current Google culture. 4. the implementation of this broad differentiation strategy will accelerate Google’s progression to dominate as a cloud computing provider in the upcoming future. 9 . they will need to negotiate with their strategic partners and implement this system in their products. Limitations of alternative and conclusions The limitation of this strategy is the failure of Google unable to successfully develop the system. That might result in the loss of new market for Google. they should first recruit Installing information and operating systems that enable company personnel to perform essential activities employees that posses expertise in cloud computing and integrate their search engine Tying rewards directly to the achievement of performance objectives Fostering a corporate culture that promote good strategy execution expertise to leadership needed to propel also need to provide ample Exerting the internalinvent this system. if competitors are able to develop new technology that surpasses Google technology. Using the principal managerial components Allocating ample resources to strategy-critical activities of strategy execution process Ensuring that policies and procedures facilitate rather impede effective strategy execution Pushing(Gamble & Thompson 2009) as shown in exhibit activities are performed for continuous improvement in how value chain 5. they have the necessary policies and facilities for this project.Recommended Alternative and Execution We would like to recommend to Google that they should adopt the strategy of integrating cloud computing into its Android system as this strategy fulfil all the predetermined criteria. With Google’s vast cash reserve and progressive positive growth in revenue. Upon completion of the system. This will result in the loss of investment. they are able to market this technology at a strategic pricing. Rewarding the team for the project success will motivate them. 8. 6. 1. it will ignite the revenue growth when there is a surge in their overall positioning. They will implementation forward resources for Exhibit 6 this primary project.

Strategic Management and Competitive Advantage Concepts and Cases.346770. LAWSUIT ARGUES ASSESSED ON 18 SEPT 2010 FROM <HTTP://WWW.COM/STORY/0.SCRIBD.HTML ON > Gamble & Thompson. 2009.COM APRIL 04. <HTTP://WWW.References Barney & Hesterly. ‘Chapter 3.2933. 2-21.00. Prentice Hall. Essential of Strategic Management. pp.The Quest for Competitive Advantage. assessed 18 Sept 2010.COM/DOC/2259137/VRIO> FOXNEW.Evaluating a Firm’s Internal Capabilities’. 2nd edition.FOXNEWS. New York 10 . 2005. McGraw Hill. 2008 : GOOGLE'S 'STREET VIEW' PHOTOS OF HOMES VIOLATE OWNERS' PRIVACY.

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