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Google was started as a research project by two Stanford PhD students named Sergey
Brin and Larry page. They registered the domain name in the year 1997 and
in September 1998, it became a privately owned incorporate Google Inc. With its
extensive research on search algorithms and use of state of the art technology, Google
successfully established its brand name in internet search engines market. By the year
2004, Google came up covering over 75% of US web search market. Though Google is a
dominating player in internet searching market, it has to compete with its rivals in this
field where there is no long time entry barrier. Google can expand change its business
model to survive in this best search engine race. Google's management techniques have
proven to be fruitful. One of their "10 Golden Rules" Google's compilation of ten rules
which help motivate their employees is place employee's in the same or even different
departments in close quarters to allow them to communicate, which in turn, makes
coordination extremely efficient. Google runs a unique and exceptional work atmosphere,
from its constant technological advances to its friendly work environment. Google is now
the most dominant search tool on the web, setting the standards that others try to follow
and better, as yet unsuccessfully.


Type Public
Founded Menlo Park, California (September 4, 1998)
Founder(s) Sergey M. Brin, Lawrence E. Page
Headquarters Googleplex, Mountain View, California, United States
Area served Worldwide
Industry Internet, Computer software
Revenue $ 3,189 million (2004)
Net income $ 399 million (2004)
Total assets $ 3,313.4 million (2004)
Total equity $ 2,929.1 million (2004)
Employees $ 3,021 million (2004)


Our mission is to organize the world information and make it universally accessible and
useful. We believe that the most effective and ultimately the most profitable, to
accomplish our mission is to put our need of our user first. We have found that offering a
high quality user experience leads to increased traffic and strong word-of-mouth
promotion. Our dedication to putting user first is reflected in three key commitments we
have made to our users:
• We will do our best to provide the most relevant and useful search results
possible, independent of financial incentives. Our search result will be objective
and we will not accept payment for inclusion or ranking in them.

• We will do our best to provide the most relevant and useful advertising. If any
element on a result page is influenced by payment to us, we will make it clear to
our user. Advertisement should not be an annoying interruption.

• We will never stop working to improve our user experience, our search
technology and other important areas of information organization.

We believe that our focus is the foundation of our success to date. We also believe that
this focus is critical for the creation of long-term value. We do not intend to compromise
our user focus for short term economic gain.


Organization Customer Product & Service Markets


Technology Concern for survival, Philosophy

Growth & Profitability


Self- Concept Concern for image Concern for employee


Organization Customer Product & Service Markets

Criterion YES YES NO


America NO NO NO

Technology Concern for survival, Philosophy

Growth & Profitability

Criterion YES YES


America NO NO YES

Self- Concept Concern for image Concern for employee

Criterion YES YES NO


America NO NO YES

Organization Customer Product & Service Markets

Hatboro Area YES NO


Integrated YES YES NO


Technology Concern for survival, Philosophy

Growth & Profitability

Hatboro Area NO YES YES


Integrated YES YES YES


Self- Concept Concern for image Concern for employee

Hatboro Area NO NO NO

Integrated YES NO YES


Organization Customer Product & Service Markets




Technology Concern for survival, Philosophy

Growth & Profitability


Idaho NO

Self- Concept Concern for image Concern for employee


Idaho NO


Google's long-term objectives are to deliver new advertising technology, develop

tracking mechanisms, and enable users to search a larger base of information. Based on
the SWOT analysis of internal and external factors, the next 10 years will define the
longevity and sustainability of Google as a company. Quick and dramatic changes
characterize the technological environment. To keep up with the market Google plans to
focus on delivering new advertising technology, developing tracking mechanisms, and
enabling users to search a larger base of information. The creation of patents and
intellectual property will hold the keys to gaining competitive advantages in the market.
The retention and recruitment of the best human resources are also a critical factor for
Google in order to reach the changing needs of consumers and advertising clients.


Google's short-term objectives are to expand the workforce for Anticipated growth,
expands further into international markets, and continues developing new products.
Expanding the workforce will help achieve the long-term objective of delivering new
advertising technology. Google's organization structure is primarily functional but also
includes a few geographical organizations. Google has a unique culture and policies to
promote innovation.


Google does not document a Vision or Values on the Google website.

They do state a philosophy on the Google website, some are listed below:
• Focus on the user and all else will follow.
• It's best to do one thing really, really well.
• Fast is better than slow.
• Democracy on the web works.
• You don't need to be at your desk to need an answer.
• You can make money without doing evil.
• There's always more information available.
• The need for information crosses all borders.
• You can be serious without a suit.
• Great just isn't good enough.
• No pop-ups.

Google strives to employ the most qualified applicants and reward the greatest
contributors, in order to promote good performance and facilitate hiring and retention.
Google's 70-20-10 rule for employees is:

• 70% of employee time is spent on core business.

• 20% for adjacent areas such as a Gmail and Google desktop search.
• 10% for creativity and freedom to innovate.

Google introduced pay per click services which are the bread and butter of the new
search giant.


Google, having their initial IPO in 2004 has grown exponentially. 2004 was a big year for
internet adoption, and the first year Yahoo had a true competitor.


Google's search engine business is the dominant business of the Company. Google has
built a competitive advantage based on search engine differentiation. Google's strategies
are innovation and concentric diversification.


Google currently pursues the generic business level strategy of differentiation. Google
offers many unique products and services to many different kinds of customers. By
offering so many distinct products and services, Google is able to achieve a competitive

The Google web search engine, the company’s most popular service, offers users a more
reliable way to search. Google’s web search engine has differentiated itself from
competing search engines by utilizing a patented system called Page Rank. Page Rank
delivers search inquiries by computing a recursive score of web pages based on the
weighted sum of the Page Ranks of the pages linking to them. This means that relevant
web pages can be accessed based on a users search interest instead of based on how many
times a search term occurs on a webpage which is how competing search engines work.
The Page Rank algorithm is constantly being updated to ensure the best search results
possible. Also, employees at Google keep many of the algorithm’s criteria secret. Since
Google’s search engine criteria are kept secret and the fact that it is difficult to imitate
intangible products, Google has maintained its competitive advantage and will continue
to do so for a long period of time.

Another of Google’s products that support its differentiation strategy is Google’s

internet-search-driven advertising. Google Ad Words is for advertisers who want to reach
a qualified audience as efficiently as possible. What differentiates this Google product
from its competitors is that it is easy to create ad text and manage online advertising
accounts with no large upfront payment required. Also, the ads appear across Google’s
growing roster of partners. Advertisers can even target customers in specific geographical



“No one will stand par to us; we want to become LEADER in information & technology
not pioneers”


Our mission is to provide our user one of the finest and refined searches according to
their need. In parallel to this we know our shareholder’s believe and value to cater these
in persistent manner, we always strive for the best. We believe that the best does not rest.
Our restless workforce always keeps us motivated, we will never stop working to
improve our user experience.


The external environment involves three areas: remote, industry, and operating. Remote
concerns for Google are new laws and regulations, increasing intellectual property
claims, and access to more information. Industry concerns for Google are competitive
threats from Yahoo and Microsoft and new unknown competitors that may be
international. Agreements with advertisers could potentially become competitive as well.
Operating issues are the current ad base, design of the ads, and shrinking advertising
budgets of customers. The quality of service provided by the Google organization and
retaining qualified help is also an operating issue.


• Unmapped countries 23/64 expanding services

• New advertisement format and tracking mechanisms
• Size of current customer base and market share 23/64 leverage advertising
• Offer an easy starting point
• Reach new user groups
• Reach new content
• Easy and expert search fully integrated using Open URL
• Higher usage of valuable (expensive) content


• Competition from Microsoft and Yahoo 23/64 greater resources, bundled

• services, and ability to attract and retain users through portals Increasing
intellectual property claims 23/64 resources needed for legal claims

• Increasing competition reducing operating margins
• Shrinking advertising budgets by companies
• Increasing international competition
• New laws and regulations 23/64 domestic and international
• Lost sight (control) of indexing policy
• Possibility of censorship
• Users get lost/confused
• User ends up at wrong copy (i.e. doesn't get to the institutional subscription)
• Print collection become less visible
• Information skills will disappear
• Library services become less visible


CPM weighs international markets, as the most important item on the list of critical
success factors. Google’s score on this factor is the highest in comparison to their two
chief competitors, Yahoo! and MSN, reflecting a distinctive competitive advantage in the
Internet market. The customer loyalty factor of Google ranks the highest, leaving behind
Yahoo! and MSN. Google is ahead of both Yahoo! and MSN on the culture and
innovation and accountability factor.


Competitor Competitive Strategic Direction

Yahoo! Leading “full fledged” • Steering searchers to
internet portal Yahoo’s own services
• Human intervening in
search results
Microsoft Dominant in the PC Developing “software as
software industry services” (Windows Live)
(Windows, Office etc.)


Google Microsoft Yahoo

CTR model, assist marketer CTC model CTC model
Lesser assistance Lesser assistance
Owned by essentially 3 Owned by many Owned by many
people shareholders shareholders
Higher quality search Poor search results High quality but not as good

Focused on search engine A portal, operating system A portal, competed in many
business with many business lines business lines




This section of the strategic environment is a realistic analysis of Google's internal
resources. The following internal traits portray a resource-based view of Google's core


• Strong brand name.

• Broad web site appeal
• Innovative search technology
• Google’s reputation and familiarity
• Google’s speed and user friendliness
• Relevance ranking based on citations
• Extra services
• Multi-disciplinarily


• Growing pains (i.e. finding new key employees and infrastructure)
• Dependence on advertising 3/898% source of revenue
• Google Member Network's lack of popularity
• Weak position in China
• Nearly all revenue from one product line (search)
• Lack of experience
• Heterogeneousness of the material
• Content is arbitrary
• Risk of dead-ends (users find the citation, but can't access the full text)
• No expert search
• Anglo-Saxon (English language) focus




• Broadband expansion.
• Google has a strong and talented employee base.
• Google can start giving full fledged services on hand held mobile devices to
capture market beyond conventional internet
• Google is aware that customer service will play a large role in its growth as it
offers more paid services, and seems committed to improving services for those
kinds of customer’s overtime.
• Google can also merge with an established mass-market portal to lock in large
number of users and advertisers.
• Google can start new services like multimedia, product search, private database,
and print media.
• Google can enhance personalized and localized searching and can also add
localized paid listings of advertisers.
• Google can add “sticky” like chat rooms and email systems to attract users and
survive in tough competition.
• Google can become a mass-market portal like Yahoo and MSN and can increase
switching cost for its users.
• Google has penetrated markets that are still untouched by competitors. SO Google
can increase switching cost by tracking users’ search histories with their
permission and could remind users through emails for the relevant search updates
as per their personal interest.


• Google Already number one search engine has established a brand name, in
which its users trust. It’s dependable, reliable and fast.
• Strong brand name.
• Broad web site appeal
• Innovative search technology
• Google needs very little end user marketing as the name itself is getting word by
mouth publicity.
• Google has a simple interface and it gives comprehensive results without
confusing its users.
• Google has low operation cost as it uses low cost UNIX web servers for indexing
millions of web pages across internet.
• Google has hired PhDs who are continuously working hard in order to enhance
search algorithms and make searching faster, efficient and relevant.
• By 2003, Google has already powered over 75% of the 300 million searches
conducted daily in the U.S. and 300 million plus outside the U.S.
• Google provides an interface to 88 languages to make it comfortable to search for
its users in different countries.

• Google uses state of the art search technology to index pages regularly in order to
give most updated results to its users.
• Google also weights the votes and ranks web pages with its Page Rank
technology to give its user access to most important pages first.
• Google is not biased towards advertisers. It clearly separates relevant
advertisements and actual results by giving “Sponsored Links” tag to sponsored
results when user searches to get information with some keyword. Moreover, it
also ranks sponsored links to keep most relevant sponsored links on the top.
• Google offers localized search called “search by location” where users can get
results showing vendors, products and services nearby their areas.
• Google also has a range of innovative additional services like Images, Groups,
Directory, and News. Google didn’t complicate its website by making itself a
portal; rather it kept tabs for these services on its homepage so users can easily
navigate and that also keeps the website as simple as it was earlier.
• Google has also come up with solutions for wireless handheld devices,
personalized toolbars, catalogues which are added essence strengths.
• Google quickly routes the user to the webpage and doesn’t linger for ad revenue.


• Google commands about 50% of all online searches and Yahoo! has only 24%
according to Neilson/Net Rating.
• Consumer attitudes towards online advertising may become more negative.
• Increasing strength of competitors.
• Social websites such as MySpace and Facebook are now breaking into the
online advertising market. Yahoo! Inc. has beaten Google in the mobile market.
• Yahoo! Inc. has many more auxiliary products compared to the competition.
• Yahoo! Inc. has strong brand recognition.
• Information access through Yahoo! is available to anyone with internet
• Google partially depends upon some portals like AOL. Getting those contracts
terminated, Google would lose considerable share of its revenue.
• There is no long time entry barrier in this business. Many competitors can
emerge in coming years with same services, better interface and names and can
catch up Google’s market
• Google is pushing into a whole host of businesses in which it is a newcomer,
such as Google Apps, Google Voice, and now Google Maps Navigation. It can
either rise or fall in it.
• Google’s confusing Cost per Click ranking and charging policy could
disappoint its advertisers and company would start loosing many of them.


• Many spammers manipulate Google’s ranking technology by creating dummy
sites with thousands of links to pages that they wanted Google to rank highly.
• Google’s link based ranking did not employ actual traffic analysis.
• Google’s Cost Per Click advertising charging and ranking policy is confusing and
makes it difficult for marketers to predict where their ads would be positioned and
how much they would cost.
• Google’s contextual advertising was perceived by marketers to be less effective in
generating sales because visitors to web pages showing editorial content were less
likely than searchers to be ready to buy.
• Contextual search algorithms are not 100% perfect and many a times make
• Google’s localized search algorithms too sometimes result in errors due to
automated indexing.
• Google’s business model is complex, depending upon both and mass
market portals for its revenue.
• Although Google is a dominating player among search engine websites, only 50%
to 65% of web search queries are answered accurately by it.
• Google doesn’t have “sticky” like Yahoo! And MSN have which can attract users.
• Google doesn’t have highly personalized search by which it could charge users
with switching cost if they decide to leave Google’s services.
• Yahoo! Inc. has beaten Google in the mobile market.



• Been in the search game for many years.

• Is better than MSN but nowhere near as good as Google at determining if a link is
a natural citation or not.
• Have a ton of internal content and a paid inclusion program. both of which give
them incentive to bias search results toward commercial results
• Things like cheesy off topic reciprocal links still work great in Yahoo!


• new to the search game

• is bad at determining if a link is natural or artificial in nature
• due to sucking at link analysis they place too much weight on the page content
• their poor relevancy algorithms cause a heavy bias toward commercial results
• likes bursty recent links
• new sites that are generally untrusted in other systems can rank quickly in MSN
• things like cheesy off topic reciprocal links still work great in MSN Search.


• has been in the search game a long time, and saw the web graph when it is much
cleaner than the current web graph
• is much better than the other engines at determining if a link is a true editorial
citation or an artificial link
• looks for natural link growth over time
• heavily biases search results toward informational resources
• trusts old sites way too much
• a page on a site or sub domain of a site with significant age or link related trust
can rank much better than it should, even with no external citations
• they have aggressive duplicate content filters that filter out many pages with
similar content
• If a page is obviously focused on a term they may filter the document out for that
term. On page variation and link anchor text variation are important. a page with a
single reference or a few references of a modifier will frequently outrank pages
that are heavily focused on a search phrase containing that modifier
• Crawl depth determined not only by link quantity, but also link quality. Excessive
low quality links may make your site less likely to be crawled deep or even
included in the index.
• things like cheesy off topic reciprocal links are generally ineffective in Google
when you consider the associated opportunity cost




Market Capital Return on Equity Current Ratio Gross Profit Margin COMPETITVE
ADVANATAGE Market share Customer loyalty Website quality Technological know


Technological Changes Rates of Inflation Demand variability Competitive pressure

INDUSTRY STRENGTH Growth potential Profit potential financial stability Ease of
entry into the market.


The market capital for Yahoo! is 37.25 billion, Google is 150.03 billion and the industry
is 296.7 million. The return on equity for Yahoo! is 8.5%, Google is 23.26% and the
industry is 12.1%. The current ratio for Yahoo! is 2.54, Google is 10. The gross profit
margin for Yahoo! is 3.75 billion and Google is 6.38 billion.

There is unlimited growth potential in the industry due to the increasing use of the
internet. There is an increase in the amount of advertiser spending on the internet which
will create high profit potential. The industry is stable due to the increasing use of the
internet. New internet companies are not as lucrative as Yahoo! and Google so therefore
the ease of entry into the market is relatively low.


Technological changes are occurring rapidly and are increasing the demand for
technological experts Inflation will hinder profit in overseas ventures. Demand is
relatively stable for advertising on the internet. There is an increase in competitive
pressure between Yahoo!, Google, MSN and other well known companies. -13


The market share is increasing globally. Customer loyalty is very low. Websites are
increasing in quality and ease for all users. Google offers many unique products and
services to many different kinds of customers. By offering so many distinct products and
services, Google is able to achieve a competitive advantage.

Google’s Percent of Revenue by segment (year ended December 31)

Google w eb
80% sites
60% Google
netw ork
licensing &
0% others
2002 2003 2004









Google’s Cash Flow


Google Inc. is a single-product-line business search engine technology. In order to

compete with other media titans such as Microsoft and Yahoo!, Google has sought to
employ the power of differentiation to create a competitive advantage. The strategies of
Google have been focused on becoming a search engine that in the words of the firm's
co-founder, Larry Page "Understands exactly what you mean and gives you back
exactly what you want" (Google, 2005d).
In the case of Google, by applying concentric diversification focus on the core product of
search services the company has also been able to benefit from a competitive advantage
in "faster response times, greater scalability and lower costs" (Google, 2005d).
Hence, not only does Google have a high advantage in the differentiation arena, but a
cost and speed advantage as well. According to Allen Weiner one key element in the
media strategy of Google's future will be making searches more relevant and useful to
end users and maintain its competitive edge over other search providers by retaining and


• To have a corporate structure which allow quick decision making & encourage
innovation unlike competitors.
• Higher focuses on innovation, 20% policy, result in new products.
• To offer News, free software to marketers so they could optimize their investment
in Google
• No adoption of commercial agendas unlike competitors, focus only on improving
algorithms for better results
• Focused search engines like Froogle which are for specific products.

• Faster, better search with many enhanced features like search history , language
flexibility etc.
• Google should offer personalized features like personalized search, search history
• Expand service range add features like desktop search , base , search Gmail,
• Higher quality of accurate search results obtained faster
• Competitive rates to advertisers & better services like Google wallet, to increase
their sales and reduce costs
• Google should lock itself as dominant design preferred by customers & firms who
would incur switching costs if they changed their search engine.
• Google should bring the online video site, which contain videos of every related
• To reach an agreement to acquire DoubleClick
• A browser designed to be fast enough for the modern web



Monitoring strategic projects must involve contingency planning in the event that
Google's present product offerings become obsolete with the invention of new internet
devices and in case of a competitive threat.
This can be done by continuous monitoring of competition and expanding current product
offerings. Gathering of data detailing consumer needs and search preferences will ensure
that Google continues to be an industry leader among search engines.

Establishing realistic time frames and goals for milestone reviews will be significant
since Google is growing at such a rapid pace and lacks experience in areas such as the
Time Warner/AOL alliance. Identifying the correct monitoring systems will be essential
to the continued success of Google.


Google not only entered the .com scene much later than Yahoo and Microsoft but the
financial world as well. Nevertheless, given the phenomenal results of the fairly recent
and unique IPO of the company's dual-class shares, from around $100 in late 2004 to
over $400 in future. One can gather that this company is projected to be successful. In
fact, it is expected Google's 2005 revenues to increase 91% in 2005. It is estimated that
2006 and 2007 will see 88% growth in Google's gross margin. This seems in line with
Google's historical compounded growth rate of revenue being 94% and of net income
being 59%. Revenues will benefit from increased spending on Internet advertising, the
efficiency and appeal of keyword search advertising, market share gains in certain
segments, new offerings, and international expansion. Actually, media advertising
accounted for 99% of 2004 revenues at Google. 2004 saw online media companies
generate $9.6 billion in advertising revenues. Furthermore, this was a record figure and

an increase of 33% from the $6.432 billion in advertising revenues generated by online
media companies in 2003". It is estimated that the average (advertising) price per click
will be 56 cents in 2006 and 60 cents in 2007 and the click-through rate will be 23% in
2006 and 24% in 2007. Google's volume of searches will increase from 72 billion in 2005
to 91 billion in 2006 and 124 billion in 2007. As online media continues to increase in
popularity, there should be a gradual shift of advertising revenues and budgets to new
media from conventional media.


Strategic controls can be largely affected by environmental factors. Consider the negative
consequences of a significant power outage. Google systems are vulnerable to any
electrical service disruptions resulting in service being impacted. For example, in
November, 2003, (Google) failed to provide search results for approximately 20% of
traffic for a period of about 30 minutes. Additionally, any disruptions in service will tax
the entire Google system and result in lost revenue.

Another environmental concern is new technologies that do not compliment Google's

current operating systems. For example, the number of people who access the internet
through devices other than personal computers, including mobile phones, hand-held
calendaring and email assistance, and television set-top devices, has increased
dramatically in the past few years. Expanding Google's product offering to meet all user
needs will limit the threat of alternative internet devices.


Google's short-term objectives are to expand the workforce for anticipated growth,
expand further into international markets, and continue developing new products.
Expanding the workforce will help achieve the long-term objective of delivering new
advertising technology.
Google's organization structure is primarily functional but also includes a few
geographical organizations. The average manager has 20 direct reports. The human
resources function will strive to hire only the most brilliant people. Job candidates are to
be taken difficult tests and go through an intensive interview process. Google will offer
generous stock options to retain the best talent and align employee interests with
shareholder interests. Google will operate primarily through small, focused project teams
that may remain together only a few weeks before team members are reassigned to other


There are two unique policies suggested to promote idea generation and feedback. Every
employee has to post a weekly review of his or her activities to the company website.
Employees will be encouraged to post ideas on an electronic mailing list software
application that delivers the ideas to every employee in the company.


• Google’s core competence is its strong search technology which gives accurate
results to its users and that also at the right place without misleading them.
Google should concentrate on making its search engine much more accurate,
relevant and dependable which is most important thing as far as the user’s
objective is concerned. Getting more users would also help the company in
getting more advertisers and ultimately earning revenue.
• Google should start giving services like print, multimedia, travel, mail, Instant
Messaging etc. to compete with one stop portals like Yahoo and MSN, but
without changing its simplicity and comprehensiveness. Google can navigate
users by putting simple links on its homepage and at the same time it would be
able to sustain its traditional looks.
• Google has already started contextual and localized search solutions. It should
improve the quality and relevance of results of these services as well as should
start gathering revenues from advertisers who are covering certain areas and
willing to pay only for the results which are accessed by the users of the area in
which they are providing services or products.
• Google should also put in efforts to improve its search algorithms and stop
spammers from spoofing and getting their pages ranked high.
• Google should also start providing personalized search solutions by storing users’
information with their permission and making web search comfortable for them
when they come back. This would help the company in generating long term
relationship with the customers.
• Google should regularly take feedback from its advertisers and should make
changes in its charging and ranking policies if it is appropriate for both the parties
as well as in favor of search engine users.
• Google can also generate revenue by indexing database of large organization and
providing them private search solutions.


Google has cutting edge technology and excellent minds behind it and it should use that
in providing users with 100% relevant search results. Though rival portals are coming up
with strategies to handcuff users but finally users would choose the one who gives most
accurate search results. As far as profit is concerned, locking in maximum market from
quality services would automatically help Google in attracting more number of
advertisers to make money from. Google should try to encourage its users to solve their
issues through forums and troubleshooting pages. It turns to the solution Google employs
for just about everything an algorithm to get the most relevant information regarding
support issues on those pages and before the people who need detailed answers, and fast.
Google is aware that customer service will play a large role in its growth as it offers more
paid services, and seems committed to improving services for those kinds of customers
over time.