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Knowledge is power, which is why people who had it in the past often tried to make a secret of it. In post-
capitalism, power comes from transmitting information to make it productive, not from hiding it.
(Peter Drucker, Managing in a Time of Great Change)

Google has one of the biggest business success records of all time. Founded in August 1998 by Larry Page and
Sergey Brin, the "Google Guys" from Stanford, it had become a multi-billion-dollar company within a few years. In
2004, it conducted its initial public offering (IPO) through an online auction, achieving a market capitalization of
over $23bn. The most visited website in the world runs on around one million servers in data centers around the
globe, processing over five billion searches and twenty petabytes of user data every day. This means trillions of
indexed web sites and over 80% of online searches worldwide (Heileman, 2005). According to Fortune, from 2013
to 2019, Google was the best company to work for (100 Best Companies, 2019). BrandZ called Google the most
valuable existing brand standing at $245bn (100 Most Valuable, 2019).

Such success could result in slacker business activities, but this is not what we have been observing so far. On the
opposite: the company launches lots of new services annually, inside and outside its core business and target
market. In 2006, the firm opened its headquarters, Googleplex (Heileman, 2005). At one of its entrances, you can
find a replica of a dinosaur skeleton. These ruled over the world, but ended up extinct... And this is exactly what
could be observed in the market: Yahoo used to retain over 50% of the market share until Google entered the
industry in 2002. To avoid the same fortune, Google needs to keep innovating, always. And this idea was taken very
seriously: the company has developed dozens of innovative products and services, with extraordinary results.

Google's revenue worldwide from 2002 to 2018 in billion U.S. dollars, Statista, 2018
Increase your revenue with Ansoff Matrix: Google Case Study | IBS Ame... https://ibs-americas.com/en/online-library/article/34/increase-your-
Increase your revenue with Ansoff Matrix: Google Case Study | IBS Ame... https://ibs-americas.com/en/online-library/article/34/increase-your-

BrandZ Top 100 Most Valuable

(2019)

One of the biggest challenges in management is identifying business opportunities and defining priorities to
expand revenue. And the classic tool to help managers deal with a myriad of options is the Anso ff’s Product-
Market Expansion Grid or Ansoff Matrix (Ansoff, 1957). In his 1957 article, Anso ff defines product/market strategy
as "a joint statement of a product line and the corresponding set of missions which the products are designed to
fulfill”. Supported by this straightforward approach, Anso ff Matrix has defied time and market changes, becoming
one of the most important management tools.

The objective of this article is to better understand how the Ansoff Matrix and its recent developments can be
used by companies like Google to improve their abilities in managing an ever-growing portfolio of products o ffered
to different segments of market. It is particularly useful for managers aiming at better organizing the discussion
about how to expand their companies’ revenues.

Ansoff Matrix: Foundations

The concept of a “mission” is borrowed from military jargon: “A product mission is a description of the job which the
product is intended to perform.” From that point, Anso ff establishes four basic missions for each of the four
interceptions of the matrix.

Ansoff Matrix (Ansoff, 1957)

Each of the above strategies describes a distinct path which a business can take towards the future growth. A
simultaneous pursuit of more than one of them at the same time is usually a sign of a progressive, well-run
business and may be essential for survival in the face of economic competition.
Market Penetration poses the lowest risk since the company will focus on its current products and markets
and will be able to boost its currents assets and capabilities – if it has a strong competitive advantage and/or
the market is growing.
Market Development presents further risks for the company since this means expanding to unknown markets.
It requires company’s strong marketing capabilities on top of core competencies related to its current products.
The firm will be able to explore opportunities, repositioning the brand, exploring new uses for the product or
expanding to new regions.
Product Development is riskier than market access, but it could make sense when the company identifies an
opportunity to sell new products to meet needs from its customers; has a strong brand and large participation
in a competitive market, where continuous innovation is necessary to avoid obsolescence and, finally has a
strong R&D and/or proprietary technologies so that new products can boost their advantage thanks to the
Increase your revenue with Ansoff Matrix: Google Case Study | IBS Ame... https://ibs-americas.com/en/online-library/article/34/increase-your-

pioneering spirit.
Diversification is the path that presents the biggest risks, since the company will be simultaneously developing new
products and entering new markets and will need to
develop or gain new resources and capabilities. The diversification strategy generally requires new skills and
almost invariably leads to physical and organizational changes in the structure of the business which
represents a distinct break with past business experience.

Ansoff Matrix: Expanding the Concept

Several authors offered their contributions to improve the classic matrix, making it more suitable to the challenges
of the high tech, globalized market of the twentieth century. Others created new managerial tools, clearly inspired
in the original one. Ansoff himself reviewed the concept in subsequent articles and books (Anso ff & McDonnell,
1988). In 1999, Philip Kotler suggested an important “expansion” in both axes of the Product/Market matrix (Kotler
& Armstrong, 1999). This suggestion reflects the strong complexification of markets, with increasing competition
and the development of international trade. Inserting an additional step between “current” and “new” provides a
more refined analysis and better orientation for managers.

Expanded Ansoff Matrix (Kotler &

Armstrong, 1999)
Increase your revenue with Ansoff Matrix: Google Case Study | IBS Ame... https://ibs-americas.com/en/online-library/article/34/increase-your-

Expanded, the Ansoff Matrix has now nine intersections, representing a set of actions that a company may take to
deal with new market opportunities brought by this analysis. A short description of each of the nine possibilities is
presented below.

Expanded Ansoff Matrix (Kotler &

Armstrong, 1999)

As stated above, starting with its main product – the search engine - Google developed a wide portfolio of products
and services, some of them with great success. Using the expanded Anso ff Matrix, we can better understand
Google’s efforts to expand its revenue and develop new ventures. The Anso ff Matrix helps managers organize the
pursuit of new initiatives considering diversification in both axes, markets or products, or both at the same time.

The Google Family

From the very beginning of its expansion, Google invested in new products for its existing customers, which
corresponds to the Strategy 3, Product Development. These clients already used the main Google tool – a search
engine, so the company started to offer new products to its users in order to meet their new demands, thus,
limiting the entrance of competitors in the industry that potentially could threaten the market with the development
of specific products and services.
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Besides Google Search, the “generic” search engine, there are several other search tools: Google Books, for
searching complete texts from books, or Google Custom Search, which allows users to create customized
searches for their websites, and Google Scholar, for searching academic papers. They represent typical
examples of the Strategy 2, Product Modification, an effort to satisfy specific needs of the same market by
adding new important features to the original product.

But Google also targeted new markets developing new products, which corresponds to the Strategy 9, located in
the lower right corner of the Matrix - Diversification. Google Maps competed in the market with companies like
Garmin and Tonton, beating these competitors with solutions that explored the possibilities of cell phones; despite
having different aspects and functioning, the business model is the same: selling ads, in this case complemented
with geo-location. In another initiative aimed at attracting new markets with new products, Google acquired
YouTube in 2006, boosting its search algorithms and applying the same successful revenue model: here, ads are
related to specific content – videos. Other examples of the Strategy 9 are the Google Chrome browser, Gmail,
Google Translator and Android. Most of these products are offered for free to users, generating income when
combined with advertising services like AdSense (advertising service offered for websites owners) and AdWords,
an advertising service in the form of links, a highly
segmented type of advertising, based on the cost per access system. With the DoubleClick technology, it is possible to
map the interests of users; Google Analytics allows
Increase your revenue with Ansoff Matrix: Google Case Study | IBS Ame... https://ibs-americas.com/en/online-library/article/34/increase-your-

Expanded Ansoff Matrix, Google

Products and Services

At the same time, the company tried to establish its presence in new regions with the same tools, a typical e ffort
associated with Strategy 4, Geographic Expansion. Although this strategy was generally successful, Google faced
problems in 2010, when it was banned from China. While crossing national borders following the waves of
globalization, companies may take risks in environments where cultural, market and legal di fferences can bring
unpleasant surprises.

We also oGen see Google adopting the Strategy 5, Expansion with Adaptation, to better meet customers’
expectations in other regions of the world. References to cultural events and national holidays on Google's home
page are common, and the unsuccessful attempts to stay in China were followed by several changes in the tool.

Google Core Values

Google states its core values in the slogan “Don’t be evil”, later extended with “Do the right thing”. However, It is
difficult to create and maintain a business of this size without criticism and problems. Google is accused of using its
immense market power to smash competitors by offering services for free, sometimes losing money until it
becomes the only company standing in the market and then starts charging for its services. Several tax conflicts
with governments around the world brought attention to the company’s ethics. In France, Google was fined with
€1bn for tax evasion, affecting its reputation among clients from all over the world, which proves that companies of
all sizes should follow the rules and reflect society’s expectation regarding their managerial decisions (Google To
Pay, 2019). Nevertheless, it is undeniable that Google provides relevant services to society, vastly increasing the
access to knowledge, even for those who would be completely excluded otherwise. “The maximum of good for the
maximum of people”
– this is the main principle of corporate ethics.

Conclusion

Even aGer over fiGy years from its initial formulation, the Anso ff Matrix is still considered a conceptual framework
useful for the creation of market strategies. The more competitive, dynamic and turbulent sectors/markets are the
more important the creation and execution of adequate strategies will be. Anso ff himself said that creating a
strategy is not difficult – the true challenge is making it work (Anso ff, 1957). But the most important contribution
the Product-Market Matrix created by Ansoff and expanded by Kotler offers is a set of guidelines for managers of
different companies around the world. The case of Google presented here can serve both for better
understanding of this tool and as inspiration for managers to develop the sense of entrepreneurship within their
companies in search of new sources of revenue and growth in their careers.

Sources and References

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