GOOGLE

INTRODUCTION

Profile of the student

 CASE BACKGROUND
 In 1996, Larry Page and Sergey Brin, both Stanford students, created a web search engine called “BackRub”
which was later changed to “Google”. The name “Google” was an intentional misspelling of “googol”, a word
representing a number starting with “1” and followed by one hundred zeros. (page 161, par. 5)
 In 1998, during the dot com boom, Google incorporated and received its first investor funding of $100,00 and
in 1999 hired its first company chief with only 40 employees. (p.161, par. 6)
 Unlike most other web startups that did not make it after the dot-com bubble burst, Google was able to
maintain its profitability through its advertising revenues. (p. 162, par. 1)
 In 2001, Eric Schmidt was named Chairman of the Board and CEO. Also, Google purchased Deja.com, an
acquisition that evolved to become the Google Groups. (page 162, par. 2-3)
o Google Groups also includes Blogger, Picasa, Keyhole, Writely, and YouTube to name a few.
 These acquisitions enabled Google to leverage its capabilities in new ways and built the Google brand from
one of a simple search engine company with a small set of leaders to a massive enterprise. (page 162, par. 3)
 In the present, Google has four major areas of focus – Web Search, Advertising, Apps, and Mobile
 CASE BACKGROUND
 Web Search (page 162, par. 4)
o This functionality is the heart of Google. Programmers and engineers work constantly to make search
results and page rankings as relevant as possible, devoting more time to it than any other Google product.
The search is available in over 130 languages and Google owns over 160 localized country/regional
domains.
 Advertising (page 162, par. 5)
o Sales from advertising accounted for approximately 97 percent of Google’s total revenues in 2008 and
2009. Google makes a concerted effort to keep ads unobtrusive, clearly marked, and relevant to the end
user’s needs.
 Apps (page 162, par. 6, bullets 1-4)
o This is a suite of cloud computing tools comprised of many of the products of Google’s acquisition. This
includes:
 Gmail – Gmail offers free email with a 1GB, and growing, storage limit. It also has an advanced spam-
filtering techniques that significantly reduce the amount of junk main that reaches a user’s inbox.
 CASE BACKGROUND
 Google Docs – It’s a suite of online editing tools encompassing word processing, spreadsheets,
presentations, drawings, and forms. The most attractive feature of Google Docs is the user’s ability to
share documents with anyone with an email address, thus allowing for simultaneous live editing by
multiple users.
 Google Calendar – An online calendar system that allows for an online and mobile access,
synchronization, to many applications and mobile devices, event reminders via email and SMS, and
easy calendar sharing.
 Other Google Apps – Orkut, Picasa, Reader, Sites, SketchUp, Talk, and YouTube.

 Mobile (page 163, par. 1)

o Google led the creation of the Open Handset Alliance (OHA). This is a collection of 71 technology and
mobile companies responsible for creating the first full, open-source, and freely available mobile phone
operating system called “Android”.
 CASE BACKGROUND
 Google has a diversified portfolio that encompasses an array of products and services all revolving around the
opportunities brought on by the advent of the Internet. With this, the top competitors for Google are Yahoo!,
Microsoft, and Apple. (page 164, par. 1-2)
 Though Google has been a forerunner in the technology industry there are still challenges that they face, such
as:
o Sustaining the growth of Android in the mobile market. (page 173, par. 9)
o The inherent social fears and autocratic form of government led by the Communist Party of China (CPC)
prevent the easy access of foreign countries. (page 173, par. 11)
o Competition with Baidu on China market. (page 174, par. 3)
o Privacy issues with their consumers, especially with the Google Buzz and Wi-Fi Eavesdropping (page 174,
par. 9 and page 175, par. 1 and 2)
TIME
CONTEXT

2010
(page 173, par. 6)
 VIEWPOIN
T

ERIC SCHMIDT
Current CEO
(page 163, par. 3)
General Environment

STEEP Forces

Opportunities

Threats
OPERATING ENVIRONMENT

Porter’s 5 Forces and other forces

Opportunities

Threats
INTERNAL ENVIRONMENT

7 Functional Analysis

Strengths

Weaknesses
EFE Matrix
IFE Matrix
Competitive Profile Matrix
 ASSUMPTIONS
General Environment Stability
 Via its search results and video sharing website YouTube, Google plays an increasingly significant role in shaping the
political environment of countries such as the US and UK. This influence has occurred largely as a result of YouTube
providing politicians and political party leaders with a cost-effective means of communicating with a large number of
people, and also, due to the fact that an increasing number of people are using Google’s search results to find out
information about political candidates during national elections.
 Unlike the large majority of companies throughout much of the developed world, Google has experienced increased
demand for its services and increasing profit levels as a result of more businesses advertising with Google in an
attempt to mitigate the effects of a slowing economy. In short term future, Google is likely to further increase its
profit levels regardless of whether the economy stays the same, gets worse, or improves as there is a growing trend
towards businesses advertising online, especially local businesses.
 ASSUMPTIONS
General Environment Stability
 Google is a multinational corporation that provides its services to many countries throughout the world. The more
internet users a country has, the greater the potential demand from those countries will be for Google owned
services. Although internet usage is fairly pervasive throughout the developed regions of the world, in less
developed regions, such as Africa and Asia, only a small percentage of the population have regular access to the
internet. The primary reasons for this are a lack of telecommunications infrastructure and also low wages which
results in individuals being unable to afford devices such as laptops or computers to access the internet. By
increasing the number of internet users in less developed countries, Google could significantly increase demand for
its services.

Industry Growth Prospect

 Google has resources which are concentrated on research and development to create new products that can meet
the needs of its consumers especially with the rapid change in Technology. (page 168, par. 3)
 ASSUMPTIONS
 Google’s mobile strategy of providing free rich feature offering and distribution of the operating system to handset
manufacturers for free or less than free. (page 172, par. 7)
 Google allied with other technology and mobile companies to create the first open, complete, and free platform
created specifically for mobile devices called Android. (page 173, par. 4-5)

Company’s Competitive Position

 Google’s programmers and engineers work constantly to make search results and page rankings as relevant as
possible, devoting more time to it than any other product. Search is available in over 130 languages and Google
owns over 160 localized country/regional domains. (page 162, par. 4)
 As Google is in the business of advertising and coupled with the fact that its products and services are virtual, it is
not necessary for Google to spend a significant amount on sales and marketing. (p. 168, par. 3)
 Google has its own Server Hardware and Storage for all its data and resources. (page 170, par. 1-2)
 STATEMENT OF THE PROBLEM

Formulating an effective business strategy in becoming a global

leader in the technology industry as evidenced by:
 Google’s competitive environment is extremely complicated as it involves different industries and
markets, each with its own set of competitors and challenges. (page 170, par. 8)
 In terms of 2009 Revenue Sales by Operating Segments, Google ranked 3rd with sales of USD
23,651B amongst its competitors Microsoft and Apple. (exhibits 2, 4, 5, and 9)
 In terms of 2009 Operating Income, Google ranked 3rd with USD 17,157B amongst its competitors
Microsoft and Apple. (exhibits 2-9)
 Google led in the creation of the OHA, an alliance originally formed by an impressive 65 member
companies that all agreed to the development and endorsement of a standard mobile device
platform called Android. (page 173, par. 4)
 STATEMENT OF THE PROBLEM

Formulating an effective business strategy in becoming a global

leader in the technology industry as evidenced by:

 Inherent social fears and autocratic form of government led by the Communist Party of China (CPC)
prevent the easy access of foreign companies. (page 173, par. 11)
 In 2008, Comscore data showed Baidu had passed Google to become the most popular country-specific
search engine—and Baidu offers much more than just search. (page 174, par. 3)
 The most notable privacy issues caused by Google include Google Buzz and Wi-Fi eavesdropping. (page
174, par. 9)
 OBJECTIVE
S
MUST -
• To innovate the existing mobile products
• To increase sales in US, UK, and the rest of the world by 35% on the new products
• To provide a higher level of security on the databases used on their existing
offerings
WANT -
• To manage the continuous growth of Android
• To research and develop more products that provides excellent services to end
users that are more price competitive
 SWOT
ANALYSIS
STRENGTHS WEAKNESSES

• OHA Lead Creator (page 173, par. 4)
• Provides google apps at little to no cost (page
172, par. 3)
• Builds own server hardware and storage (page
170, par. 1-2)
• Spends majority of operating expense on R&D
(page 168, par. 3)
• Market leader in search engines (page 162, par.
4)
• Overdependence on advertising (page 162, par.
5)
• Google Docs has less features than full desktop
applications (p. 162, par. 7)
• Google search engine saves user’s information
which poses privacy issues. (page 174, par. 6)
• Google Buzz (p. 175, par 1) – failure in social
media revolution
• Wi-fi eavesdropping (p. 175, par. 2)
 SWOT ANALY
SIS
STRENGTHS
Google has been the market leader in search engines so
much so that the term “google” became a transitive verb that
describes searching for information in the web. Google also
offers an array of services like Gmail, Google Docs, YouTube,
and many others at little to no cost that entices users to sign
up and utilize their services. To hold all the information and
data that they have, Google has built its own server hardware
and storage that is distinctive and different with their
competitors. This gives Google an enormous computing
resource on a scale that is almost unimaginable. And with their
company resources focused on research and development,
they have led the creation of the Open Handset Alliance
(OHA), an alliance with more than 80 companies, that
produced the Android operating system, an open-source
system that is customizable to the needs of the user.
WEAKNESSESS
Google’s success is not doubtful. However, their success
also largely depends on their advertising products,
primarily their AdWords and their AdSense. When a user
utilizes Google’s search engine, their information is saved,
and tracking cookies are also utilized to track their
movement unless privacy settings are set up. Using their
Street View vehicles for capturing 360-degree
photographs of the streets, Google also has
unintentionally captured data of wireless networks. To
compete with Facebook, Google introduced Google Buzz
but one of the default settings was to publicly display all
the user’s Gmail contacts. Though Google Docs offers a
more accessible platform through online usage, it still has
less features than a full desktop application and it cannot
be accessed without internet.
 SWOT
ANALYSIS
OPPORTUNITIES
• Diversification into a non-ad business model
(page 162, par. 6)
• Increased demand for cloud computing (page
170, par. 6)
• Mobile advertising (page 170, par. 6)
• Huge amount of data and information stored
(page 170, par. 1-2 and page 172, par. 5-6)
• Android’s open-source system (page 173, par. 1
and 3)
THREATS
• Increase in cost with mobile network operators
(p. 170, par. 5)
• Golden Shield Project aka Great Firewall of China
(page 173, par. 11-12)
• Project Aurora (page 174, par. 1)
• Baidu became China’s top search engine by its
conformity with China’s restrictions (page 174,
par. 3)
• Privacy complaints (page 175, par. 1-2)
 SWOT ANALY
SIS
OPPORTUNITIES
Google has a huge amount of data and information stored
then can be used in their research and development of new
products. There is also an increasing demand for cloud
computing as more users store their data over the internet.
With Android’s open-source system, Google can partner with
more mobile hardware manufacturers to utilize android’s
customizable feature. Also, with the rise of people using
mobile devices over desktops and laptops and Google’s
advertising niche, Google can use their advertising strategies
in operating in the mobile devices market. As Google has
high percentage of their revenues from advertising, a more
non-ad business model can be used in order to generate
more diversified line of revenues.
THREATS
As the internet grows and the use of mobile data
increases, the bandwidth that this consumes also increases,
and mobile network operators are seeking ways to monetize
this and this could mean a higher cost of business for
Google. Google has been affected by China’s Golden Shield
Project, also known as the Great Firewall of China, this
entails foreign media companies seeking approval before
distributing pictures, graphics, and news. This escalated to
the point where an operation, called Project Aurora, was
uncovered by Google. Project Aurora’s primary goal was to
access Gmail accounts of Chinese Human Rights Activists.
There are also privacy complaints starting as more users are
starting to take online privacy much more seriously.
 ALTERNATIVE COURSES OF
ACTION Timeline Manpower Budget

Market Penetration
1 year 3,758 USD 4,856 B
Increase sales of existing products in the international market

Market Development
2 years 4,978 USD 6,396 B
Market existing products in emerging markets

Product Development
Invest in R&D in developing new products / services to cater the 1 year 2,928 USD 3,753 B
existing and emerging markets.

Timeline Manpower Budget

Market Penetration / X X
Market Development X X X
Product Development / / /
 Market Market Product
Penetration Development Development
Key Strategic Factor WEIGHT
RATING WT. S RATING WT. S RATING WT. S

Opportunities:
• Diversification into a non-ad business model 0.05 3 0.15 3 0.15 2 0.10
• Increased demand for cloud computing 0.17 2 0.34 3 0.51 4 0.68
• Mobile advertising 0.07 4 0.28 3 0.21 2 0.14
• Huge amount of data and information stored 0.08 2 0.16 2 0.16 4 0.32
• Android’s open-source system 0.20 3 0.60 3 0.60 4 0.80
Threats:
• Increase in cost with mobile network operators 0.04 3 0.12 3 0.12 3 0.12
• Golden Shield Project aka Great Firewall of China 0.10 4 0.40 3 0.30 4 0.40
• Project Aurora 0.15 3 0.45 3 0.45 4 0.60
• Baidu became China’s top search engine by its conformity with 0.05 4 0.20 3 0.15 4 0.20
China’s restrictions
• Privacy complaints 0.09 4 0.36 3 0.27 4 0.36
Sub-Total 1.00 - 3.06 - 2.92 - 3.72
 Market Market Product
Penetration Development Development
Key Strategic Factor WEIGHT
RATING WT. S RATING WT. S RATING WT. S
Strengths:
• Market leader in search engines 0.20 4 0.80 3 0.60 2 0.40
• OHA Lead Creator 0.17 3 0.51 3 0.51 4 0.68
• Spends majority of operating expense on R&D 0.09 2 0.18 3 0.27 4 0.36
• Provides google apps at little to no cost 0.07 3 0.21 3 0.21 3 0.21
• Builds own server hardware and storage 0.10 3 0.30 3 0.30 4 0.40
Weaknesses:
• Overdependence on advertising 0.15 4 0.60 4 0.60 3 0.45
• Google Docs has less features than full desktop applications 0.04 2 0.08 2 0.08 4 0.16
• Google search engine saves user’s information which poses 0.08 3 0.24 3 0.24 4 0.32
privacy issues
• Google Buzz 0.05 3 0.15 3 0.15 4 0.20
• Wi-fi eavesdropping 0.05 3 0.15 3 0.15 4 0.20
Sub-Total 1.00 - 3.22 - 3.11 - 3.38
Overall Score - - 6.28 - 6.03 - 7.10
 RECOMMENDATION
I recommend ACA 3 (Product Development).
Strengths:
Perhaps the biggest strength of Google is that it is the undisputed leader in search engines, which means that
it has a domineering and lion’s share of the internet searches worldwide. Google host 70% of the worldwide
internet search market and the competitors do not even come close to anywhere that Google does. Its strong
search technology has been its core competence. Partnering with wide range of industries like mobile device
manufacturers, semiconductor companies, software companies, and commercialization companies have
revolutionized technology through its creation of Android, especially in the mobile sector which gave an
opportunity for users to have a wide range of OS systems to choose from other than Apple’s iOS and
Microsoft's Windows Phone OS. Other than that, Google was some kind of a visionary in the sense that while
its competitors are buying its infrastructures like server hardware, storage, and bandwidth, Google has been
building its own. This is the reason why most of Google's resources were utilized in research and technology
which really benefitted the company so much since it does not allow itself to be complacent on where they
are in terms of standing in the industry, but it continues to seek ways to make its search engine much more
accurate, relevant and dependable which is most important thing as far as the user's objective is concerned,
thus enabling them to strengthen and maintain their core competency.
 RECOMMENDATION
Weaknesses:
Google’s business model relies heavily on advertising and the numbers reveal that it gets more than 97% of its
revenues from ads alone. This means that any potential dip in revenues would cost the company dearly (literally
as well as metaphorically). The point here is that Google must devise a more robust business model that
embraces e-commerce and mobile commerce along with its current business model that is based on ad
revenues alone. It needs to present its other products in a more price competitive way so that it does not only
rely on its advertising revenue streams, which will make their revenue streams more diversified. Google has
faced a lot of controversy related to user privacy when it comes to their products and services. One was their
failure in the social media revolution since prior launching Google Buzz, the market was already saturated by
Facebook and Twitter and to make matters worse a privacy issue was also raised by privacy experts since Google
made the default setting of this app to publicly display all of user's Gmail contacts. Another thing was when they
sent its street view vehicles to take 360-degree photographs of streets around the world for Google Maps,
which end up indexing & cataloging the wireless networks within range of their routes which they admittedly
said that this was a failure in their part. With so much of their resources pooled in R& D, Google should work on
updating their privacy policy, options or settings on their offerings to better comply with what the users want
when it comes to their private information as well as to be able to show the public that they also value privacy
since they were also a victim of hacking themselves. With this in mind, Google will be able to move forward on
turning this as an opportunity to better improve its offerings in the process.
 RECOMMENDATION
Opportunities:
Perhaps the biggest opportunity for Google lies in its pioneering effort in providing the Android OS (Operating
System) which has resulted in it becoming a direct competitor to Apple and Microsoft. However, to stay
always at the forefront, it must always innovate and create something that its other competitors do not offer.
It has also concentrated its R&D efforts in cloud computing which enables users to basically put all their
information on servers and have fast networks and lots of different kinds of PCS and mobile phones that can
use the applications. The increased use of cloud-based technology products globally has shown that the
cloud industry is poised for faster growth, which Google has to make more accessible and price competitive
to grow its revenue from them. With Google's shift to the mobile industry, it must also strike while the iron is
hot when it comes to mobile advertising, since Google pride itself when it comes to online advertising Google
should also consider this as an opportunity to earn a revenue on. The company has also to diversify into non-
ad revenues if it has to remain profitable and current indications are that it is adapting itself to this as can be
seen from the push towards commercial transactions using its numerous sites like Google Books and Google
Maps. With all of this in mind, Google has always been a visionary of some sorts when it comes to their
products and services ventures, and with their dedicated effort of always innovate and find more ways with
the use of their R&D resources they have turn this opportunities to their strengths.
 RECOMMENDATION
Threats:
As Google continues to grow and improve itself in its industry, we cannot deny the fact that there were also
threats that it encountered. First was the looming threat of mobile operators increasing its cost for access to
their networks which google utilizes in its mobile computing device (Android-based device). This wireless
providers offer their services at a flat rate to initially entice wary users and with the entry of Google and other
big internet firms, they are considering of increasing their rates since it was expected mobile data traffic will
increase by 39 times its present rate within 5 years. Laws and regulations as well as, regulatory threats
continue to remain an important obstruction in the way of faster growth of technology brands like Google
especially in their venture in China wherein censorship became an issue with their offerings which made the
Chinese Government make a bill that they call Golden Shield Project / The Great Firewall of China. They were
also a subject of hacking called "Operation Aurora” which was traced back to China. Due to the growing
tension of Google and the Chinese Government, this resulted to Baidu getting the larger share of market in
China. With that in mind, Google should take the above-mentioned threats as an opportunity to better itself
by ensuring full compliance along with continuous improvement of products to enrich user experience.
Moreover, ensuring that users know that the company is serious in its privacy regulation compliance
strengthens the brand and corporate image.
ACTION PLAN – Product Development
 ACTION PLAN
ACTION PLAN – Product Development
ACTION PLAN – Product Development
FINANCIAL PROJECTION
Please include the ff. before the Assumptions:
Please include the ff:
ENVIRONMENTAL ANALYSIS A. Tows Matrix
B. Internal-External Matrix
A. General Environment
B. Operating Environment C. Grand Strategy Matrix
C. Internal Environment ) D. Summary of Strategies
D. External Factor Evaluation Matrix
E. Internal Factor Evaluation Matrix
F. Competitive Profile Matrix