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Analysis of Googles Slow Growth

Name: Yanqing Zhao (A00329791) Course Number: ACCT 3343 Professor: Dr Lightstone Date: Nov 18, 2010

Google is a multinational public corporation which is well known for its popular search engine service, and it concentrates on providing users the fast, free and convenient way to satisfy their searching needs. The huge majority of Googles services, such as web search engine, Google book search, Gmail, Blogger, and YouTube and so on, these products are available all around the world and are free to users due to the support of the its online advertising revenue. In other words, Google generates revenue and balance other money-losing products mainly by its sales of search ads (Jessica & Scott, 2008). Moreover, Googles culture encourages innovation and longterm benefits, which is the reason that the company spends attractive perks to motivate its engineers and staffs. However, the company still faces the dilemma of slow revenue growth and development pace. This essay intends to analyze some relevant reasons of the slow growing trend of Google.

Historical performance of Google

In terms of growth rate of Googles revenue between 2005 and 2009, it keeps falling dramatically from 72.76% (2006) to 8.50% (2009). In terms of Googles fluctuated stock price, the downtrend obviously shows the inadequate confidence towards the companys future of stock holders. When refers to Googles return on assets, the rate is 23% in 2009, while the rate is 23.23% in 2008; moreover, the debt ratios are 11.09 %(< 40%) and 11.1 %(< 40%) in 2009 and 2008, respectively. Therefore, figuring out the main factors relevant to Googles unstable and slow development is significant to Googles future.

Factors Relevant to Googles Slow Growth

First of all, on one hand, according to the recent survey of Google, there are 47 products havent brought about any economic benefits to stock holders, and the online ads still accounting for 97% of revenue (Jessica & Scott, 2008). Apparently, the slow development of its core business should be one factor leading to top management to determine to narrow the investment and tight the cost these years ((Jessica & Scott, 2008). On the other hand, the worldwide economic recession in 2008 also contribute to the stagnancy. Although Google is much better than other competitors to withstand, it stills suffer a shock which has an underlying impact on its robust development (Scott, 2008).

Moreover, the prosperous expanding of social networks such as Face book, Msn and Micro blog, has made a compound threats to Googles bottle-neck period, and there is no doubt that once a business completely ruled out, it is difficult to get a breakthrough( Knowledge Base, 2010). As a matter of fact, the interviewees of Fortune indicate that internet environment has changed greatly nowadays, and the social networks have taken the place of function of search engine. Specifically, when we want to buy a new laptop 3 years ago, we tend to Google the relevant information and compare and make a choice; however, now, people prefer to ask friends opinions via face book.

In addition, Googles international operations (geographical difference) are subjected to potential risks which could have a negative impact on operating results. In other words, different countries have different practical rules, foreign laws and regulations, and Google should adjust its own

culture and goals to the specific situation. Indeed, managing diversity has become an increasing important issue in this day and age, and it requires an appreciation of social identity theory. In terms of its management, Google is famous for its employees luxurious treatments, which also result in some problems such as the pell-mell hiring and overload budget, and as the dynamism encourages organic structure, Google needs more top-down management to monitor as well(Jessica & Scott, 2008).

Last but not at the least, from the perspective of Work Design Theory1, Google should pay more attention to employees task significance, identity and feedback, to achieve a high status of psychological states, thereby achieving high internal work motivation, high-quality performance and low absenteeism, which could in return to accounting for the concerning issue of being capable to compete with the primary competitors: Microsoft and Yahoo, for they have more experience, operating history, resources, and more established customer relationship.

In a conclusion, Googles slow growth is not by accident, it is stems from the overly dependent on online ads, the long-term loss on other core business products, the stiff outside competition, and some inside irrational problems. Google should give the priority to merge the overlapping products, and to continue to insist on its tight cost control; moreover, Google would be in better position if it figures out a way to add the social networking service to its core search business and Android. For example, it can publicize in YouTube. Lastly, Google would be well advised to make more efforts to its optimal management.

Six theoretical perspectives on work design are examined for their contributions to our understanding of how work is organized and designed in organizations

1. Google Gears Down for Tougher Times. (2008). Wall Street Journal. Retrieved November 28, 2010, from &sid=1&Fmt=4&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1290957078&cl ientId=18855

2. Googles Decelerating Clicks. (2008). Wall Street Journal. Retrieved November 28, 2010, from &sid=1&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1290961772&cl ientId=18855

3. Developing Crisis of Google. (2010). Knowledge Base. Retrieved November 28, 2010, from