Analysis and evaluation

Describe about the Strategic Management for Ranking Strategies of Search Engine.

This report introduces the detailed research on the future strategic directions of Google. The report is based on the opinions of the author who is the strategic manager of Google. The author has introduced the given strategies in favor of the Board of Directors of Google as they have approached him to get the necessary advice for staying competitive in the industry. Google is a multinational organization based in USA which has made specialization in the products and services related to internet. Such products actually include the technologies in online advertising, cloud computing, search engine and software (Google.co.in. 2016). The report has introduced the company’s past strategies along with the proposed strategy for the next 5 years. The company’s external environment has been elaborated with the help of PESTEL analysis along with its competitive position. The usage of business model canvas has been explained in the subsequent sections to state the company’s servicing of its clients. The report has also introduced the company’s current internal strategic capabilities along with the defense strategies that are required to maintain the competitive position in the market. Some recommendations have been added on the basis of evaluation and analysis of the resource implication to improve the overall business status of the company.

Description of the strategic directions

The company was founded in the year 1998 by Larry Page and Sergey Brin at Googleplex in California. The senior management of the company has made the strategies which has made it to be the leader in the industry of internet and computer software. In the initial level, Google mainly concentrated on funding by the external bodies to increase its financial health. The first contribution was done by the co-founder of Sun Microsystems, Mr. Andy Bechtolsheim of $100,000. It was realized at the time that the search engine developed by Google was quite slow for usage and for that a further funding of $25 million was been planned through the help of the venture capital firms, Kleiner Perkins Caufield & Byers and Sequoia Capital.

Later in the year 2004, the company decided to sale its shares through auction which gave it a capital of $23 billion (Hill, Jones and Schilling 2014). The company always tried to maintain its culture and for such maintenance it designated a Chief Culture Office who will also play the role of the Director of Human Resources. They actually tried to maintain the culture through being true to their core values in which they are built therefore, an organization that is flat having environment of collaboration.

Google’s past strategic directions

To make a start up of Sillicon Valley Technology, the company moved its offices to Palo Alto in California in the year 1999 (Krause and Semadeni 2013). To maintain the competitive position against search engine of Yahoo, the company started to sell advertisements related to the keywords of search. From the immense revenue earned, the company established 70 offices in over 40 countries.  

The company has made strategies to make acquisitions over many companies since 2001 to enhance their financial health (Grant 2016). In the year 2004, it acquired the organization, Keyhole which helped Google to develop a product providing a view of three dimension of the earth. It was termed as Google Earth in 2005. An acquisition on Urchin Software led to creation of Google Analytics in the year 2006. To ensure more publicity, the company acquired You Tube, the video sharing site in the year 2006 (Rothaermel 2015). Therefore the prime concern was to expand business through strategic acquisition with the other small venture capital companies.

The company actually developed their strategies for the purpose of expansion of their business in several segments of the service industry, may be in the search engine or may be the online software products (Summers 2014). They made huge investments in acquisition to strengthen their patent portfolio as their Android operating system came under an industry wide battle of patents. In the year 2011, Google made the largest acquisition through acquiring Motorola Mobility for $12.5 billion. They completed it on 2012 after China’s approval to stay competitive with their rival, Apple and Microsoft who sued the makers of the Android device such as Motorola, HTC and Samsung (Dvid and David 2016). Such thinking was been developed for gaining the portfolio of patents on wireless technologies and mobile phones in order to protect from the patent disputes and free offering of Android systems. The company eventually made strategic moves to restructure the business of the companies it acquired. In 2012, the company made an announcement to lay off 4000 employees of Motorola Mobility. It sold the Motorola’s operations of manufacturing for $75 million to Flextronics and the business division to Aris Group for $2.35 billion (Kuratko, Hornsby and Covin 2014). The aim of such strategy was to gain a good amount of stake in the companies where the transactions have been made.

The company made an acquisition over Channel Intelligence for $125 million for utilizing their technology for enhancement of their e-commerce business (Nah and Saxton 2012). To make a growth in the community of artificial intelligence and robotics, the company made an agreement to acquire DeepMind Technologies, an artificial intelligence organization in London in the year 2014. To have a better grab in the patent collection for development of Android products, the company sold Motorola Mobility to China based company, Lenovo for $2.91 billion (Bharadwaj et al. 2013). Throughout the year, it made purchasing of satellite imaging, online music service for providing more entertainment facilities to its audience. For enhancement of the core Artificial Intelligence technologies, Google made investment on Mobvoi, a Chinese company.

Prevalent proposed strategies for next 5 years

Development of strategic thinking in the last 5 years

The company’s proposed strategy for the coming 5 years are as follows,

• The company wants to become the primary interface to the world. Their strategy is to become the ultimate life tool to shape the entire world (Drori and Honig 2013). They actually want to tighten their hold on making search in the internet along with introducing new revenue models.
• The company wants improvement in the reach and quality of internet. They have induced experts to implement Google Fibre for delivering faster and cheaper services in the wireless industry (Rieder and Sire 2013). It will be done for driving the demands of the customer keeping away from the government watch.
• Google has a multi-prong strategy associated with connectivity, automation and content to tackle over the user’s home. They are concentrating to produce Television to give an essence of entertainment for its target audience.
• The company wants to have more control of the purchase cycle of the customers (Haucap and Heimeshoff 2014). They have planned to make innovative product comparison tools to provide better flexibility to the customers.
• The company has also made investments in the projects regarding genome mapping for the support of human health. They have made the strategy to contribute in a major way for mankind.

PESTLE analysis for reviewing external environment of Google

Political

The political factors in the external environment of Google are normally the opportunities. It has been seen that the globalization makes the increase of the demand regarding online advertising. The political climate having stability in the majority of the markets makes a minimization of the obstacles that come against the expansion of the company (Kwon, Lee and Shin 2014). The online companies sponsored by the state are the threats for Google such as the firms in China.

Economic

The external economic factors are the opportunities for Google. The major market’s economic stability and the developing countries rapid growth make a new momentum for the company. Such opportunities can be utilized for global expansion.

Social

The increased usage of social media is definitely a threat as it empowers companies like Facebook who are also involved in offering online services for advertising (Bjorkdahl and Holmen 2013). The increased number of diversified users is also an opportunity to Google for improvement of its services for matching the preferences of the individual.

Technological

The company has realized a significant opportunity in the factors related to technology. They can have the expectations to earn higher revenues from advertising through the development of the online markets (Durand et al. 2013). They can also make improvement in the mobile friendliness of their online products for exploitation of the mobile trend.

Environmental

Google has the opportunities for addressing the environmental factors. The main concept that lies behind is improving the impact of the company’s environment (Reeves, Love and Tillmanns 2012). Google can have the expectations for the improvement of customer responses that are based on the positive perceptions of the company’s contributions towards the environment.

 Legal

Google can make the exploitation of the opportunities on the basis of the legal factors. The company can make the improvement regarding the measures of privacy for protecting the individual users (Skarzynski and Gibson 2013). They can make a development of the innovative measures for discouraging the people from the violation of the intellectual property rights.

Google’s competitive position can be analyzed through Porter’s 5 forces analysis of competition.

Strong competitive rivalry

The company has several competitors in the market, such as Yahoo, Apple and Bing who have strong share in the market. As Google possess diversified products, it has diversified competitors (Steiber and Alange 2013). The condition actually makes an exertion of strong force in the company’s business. The experience of low switching costs actually makes the customers for moving from Google to other rival companies.

Detailed analysis of the industry

Weak bargaining power of the buyers

The buyers actually make a small contribution for Google’s revenue through exertion of weak force on the company. Due to the increasing demand for Google and the other firms, the buyers can have a minimal influence in the company (Wernerfelt 2014). Here the moderate information quality refers to customer’s limited knowledge.

Weak bargaining power of the suppliers

The large supply availability in combination with the large supplier population actually makes a minimization of the bargaining power’s effect of any single supplier in Google’s business. It means that there is a relative ease for the company for moving from one supplier to other (Gunzel and Holm 2013). The supplier base of Google is diversified as the company deals with diversified online products, such as Google Fiber, Google Search, Google Glass etc.

Moderate threats of substitution

The cost of low switching makes an ease for the customers for moving from advertising services of Google to the services of substitutes. In the case of Porter’s Five Forces analysis, the condition makes an exertion of the moderate force on the business of the company (Bocken et al. 2013). Apart from that, substitutes from moderate to high availability have the meaning that the customers are having sufficient options in case they plan for moving away from Google.

Moderate threats of new entry

The business running at a moderate cost has the meaning that considerable number of companies can make entry in the market and have a direct competition against Google. It is actually easy for satisfying the requirements that are regulatory. Therefore, it is quite easy for the new entrants for getting an established position against Google (Dermol 2012). As the brand development cost is quite high, there are many new companies who will find it tough for sustaining their operations in the long run. It is as because Google is already having several valuable brands in hand.

Description of Google’s core logic and rationale through Business Model Canvas

Google has brought a revolution to its customers and clients in the segment of online product and services (Geis 2015). The core logic and rationale they follow is to create, deliver and capture a high value in the industry of online services that its clients will have a general preference on its products for a long term.

Through the usage of the Business Model Canvas, the company’s entire business functions can be divided into several segments (Tung and Wu 2013). Those segments include Key Partners, Key Activities, Key Resources, Value Propositions, Channels, Customer Relationships, Customer Segments, Revenue Streams and Cost Structure.

PESTLE analysis for reviewing external environment of Google

The key partners include the partners of distribution along with the mobile communications such as Nokia, Ericson, development of software and operating system such as Microsoft, distribution of technology such as Sun Microsystems (Adams 2014). Those companies actually provide support to Google for providing better solutions to its clients. The key activities that are done to provide such solutions include innovation of newer technology, distribution, solving problems and networking. The resources that are been utilized for performing the activities include human resources, physical resources, intellectual resources and programs for research and development.

To enhance the value propositions the company concentrates on user friendly platforms, recognition of brand, multitude of free services that are integrated in a single location, advertising services and perpetual innovations (Lu et al. 2013). It builds the customer relationships on the basis of end users, user communities along with business and advertising. The channels that are used for business functions are presence of web, integration of web, Google accounts and advertisements. The customer segments that are targeted for launching products are the subscribers of Google accounts, larger and smaller niche businesses.

The company has made its position in the industry through preparation of appropriate cost structure which majorly depends on selling and advertising, research and development, economies of scope along with promotion of products and services (Rindova et al. 2012). Thus, the revenues are been generated from international operations, fixed fees of subscription, advertising, licensing along with foreign and domestic sales.

The company’s internal strategic capabilities can be explained through the help of SWOT analysis.

Strengths

• The company has a strong image of its brand.
• It has proprietary products which are patented.
• Google has business, which are of diversified channels and products.
• The company is of large size (Calder et al. 2013).

The following strengths provide the indication that Google has the internal capability to grow at a rapid rate and become superior over time. The diversified level of products actually shows that its business is growing very fast. The high image of the brand, large organizational size and patents supports the company to compete with the rivals.

Weaknesses

• Google is highly dependent on the internet.
• It has a minimal presence in the physical terms (Halevy et al. 2016).

Dependence on the internet provides the meaning that Google continues waiting to cover internet in the developing nations before expanding its process such as online advertising in the nations. The company being an enterprise dealing with online business has the weakness to compete with Apple, firms having high physical presence.

Opportunities

• Google can make tapping for users of mobile.
• It can make an expansion of the Google Fiber.
• It has the opportunity for penetration of the market through the help of consumer electronics (Wouters 2014).

The company can make the exploitation of the current trend through the increased usage of mobile through producing user friendly products. It can also make an expansion of its Fiber Coverage for generating more business revenues. It can also offer consumer electronics such as Nexus devices.

  Threats

• The company is facing a tough competition in the market (Perlin et al. 2014).
• Some of the company’s products have been imitated which has made a serious issue.

The company is currently facing a high competition from Yahoo and Apple, as well as the new entrants who are providing products of similar nature to Google. There are fair chances that its products such as Nexus electronics will be imitated by the rival companies.

The company’s mission statement provides the definition of their business strategies which includes new product development. On the other hand, its vision statement drives it for achieving new heights through innovation in a rapid manner (Wouters 2014). The company’s mission statement says about organizing the information of the world and making useful and accessible universally. The demand that prevails in the market is to get instant information as per query. The company makes a fulfillment of such query through crawling web pages. It arranges the required information through proprietary programs. It actually makes the fulfillment of the universal accessibility through providing services throughout the world (Halevy et al. 2016). The fetching of the information makes the search query to be effective. Thus, it can be said that the mission statement is aligned with the market demand.

Google’s vision statement says about providing access to the information of the world in a single click. The company makes a fulfillment of the information of the world through crawling of the web pages along with maintaining the databases with indexes of the websites that are been searched (Calder et al. 2013). It also serves the component of accessibility through offering the service of search engine for every single user throughout the globe. The vision statement’s one click component signifies ease of information access. The following component is fulfilled through offer of innovative products such as Google Search which is easy to use. The users actually demand of such search engine which can be effectively used for the purpose getting information (Rindova et al. 2012). Thus, it can be stated that the vision statement of the company has a proper alignment with the market demand.

The success of the company has a direct connection with the efforts for fulfilling its mission and vision statement. As the company has reached a significant position in the market, it implies that it has met the market demands (Lu et al. 2013). Therefore, it gives the support of the statement that a proper alignment is there between the market demand and the company’s mission and vision statement.

Possible strategies with selection of the most viable one to defend the competitors

The possible strategies to be prepared in defense of Google’s business can be elaborated through the help of Google’s 4E concept. The 4Es consist of Earn, Entice and Defend, Expanding the pie and Experiment (Adams 2014). The strategies that are required for defending the business are as follows,

Strategy 1 – Marketing through digital media.

Strategy 2 – Marketing through internet.

Strategy 3 – Providing online newsletters on monthly basis.

Strategy 4 – Marketing of Search and contents.

Strategy 5 – Making public relations and marketing through social media.

Strategy 6 – Providing diversified options to search websites.

The 4E concept of a particular strategy

Earn                       

Whatever the strategy should be opted for defense, the aim should be to concentrate on continuous earning. It has been noticed that around 95 per cent of the revenue of Google comes from the section of advertising. The company can create a B2B network through ads which will result to the formation of a closed loop of business customers (Tung and Wu 2013). The company should never stop trying from making diversification of its revenue streams through imposing charge on the business applications, storage and You Tube channels.

Entice and Defend

The magic of the company comes from the non-stop inventiveness it actually has. The utilities actually make an accomplishment of the primary goal that is creating the biggest possible market for delivering the ads (Geis 2015). It implies increased number of users and frequent visits in the property of Google. The most viable strategy will bolster the earnings through the enhancement of the products such as improvement and targeting. As the dimension of the search engine grows, the potential for making new revenues gets multiplied eventually.

The strategy should also include defending Google and its properties against the rivals that may get the chance for stealing the usage time (Dermol 2012). Various companies like Facebook, iPhone, Twitter have created force on the Android and the Google Plus resulting to make Google defend for its share of time in the internet.

Expanding the Pie

The company has the realization that finding new customers and competing with every new service is very hard. Due to such reason, they should opt a strategy which will make the expansion of the leisure time (Bocken et al. 20013). The two examples regarding the matter are Glass and the self driving cars. The company’s glass has the potential to deliver digital stimulation in the times which are been wasted previously through the pretention of care regarding the people staying around. The self driving cars remove the fear from crushing skunks.

Experiment

The company’s defensive strategy will also be developed on the basis of experimentation that include research and development projects in the Google X labs where all the employees are been encouraged for utilizing 20 per cent of their work time on their preference.

Google has gained the most popularity for their search engine. Whatever the user requires, he gets the result through the processing of his query in the search engine (Gunzel and Holm 2013). Therefore, if diversified options is been implemented in the search engine, then the overall search process will be refined due to addition of parameters imposed in the search process. The users will then get the exact result what they are looking for. Among the given strategies, Strategy 6 is covering all the aspects of an appropriate defensive strategy. Through the implementation of diversified options in the search websites, they will be able to attract more audiences (Wernerfelt 2014). As a result the company will be there to earn more money. Such strategy will definitely require more inventiveness from the research experts. The strategy will definitely help the company to find new customers. Addition of functionalities in the search websites will also serve the users to process their customized queries during leisure time. Such functionalities can be implemented through rigorous experimentation by the employees of the company.

The strategies from 1 to 5 are basically based on marketing which aims for company’s publicity (Steiber and Alange 2013). Therefore, if the company concentrates any of the strategies then it will ensure increased popularity. But strategy 6 implies addition of innovative features which the users will feel while doing the search process. Therefore, this strategy will be the most effective in defending the rivals as addition of features will provide the leading position to the company in the market.

Recommendations on the basis of analysis and evaluation of the resource implications

On the basis of the analysis and evaluation, the following recommendations can be made to the Board of Directors of the company,

1. i) Addition of more expertise in research and development – The company should hire professionals of more expertise and experience in the domain of online services to ensure more innovation in the near future. To maintain the competitive advantage, it should make attractions to the topmost talents in the industry of Information Technology.
2. ii) Investing more on acquiring the companies for business enhancement – The company should utilize its fund in more number to acquire those companies whose departments will add value to make quality products for them.

iii) Investing more time in online marketing – On the basis of the available manpower and money, the company should concentrate more on online marketing activities such as online promotions in different websites along with social networking site to build an effective business network. Such network will help to grow its business in a fast pace.

1. iv) Opening of several physical stores for improving physical presence – As Google has sufficient monetary resource in hand, to fix the weaknesses such as minimal physical presence, they should open more physical stores. The company has taken initiatives to establish physical stores in United Kingdom but has not continued the effort in the present.
2. v) Maintaining the competitive advantage through diversification of products – The company should make more diversification of its product portfolio on the basis of the available resources in the industry of search engine to reach a wider number of audience. Through such portfolio, the company will be able to expand its customer base resulting to better financial position.

Conclusion

It has been analyzed throughout the report that Google has become a worldwide brand, a market leader since its establishment. It has established several offices in different nations which indicated the expansion of its business. The company has given constant efforts for continuous innovation to satisfy its customer needs. For maintaining the leadership in the market, they have acquired several companies for utilizing their core business functionalities relevant to their objectives. The company has imposed charges for the purpose of subscription to its users from where they have accumulated a large number of revenue. Though they have undergone through a huge level of success in the industry of search engine, there is a constant threat that exists from minimal physical presence along with tough competition from the new entrants who are involved in continuous imitation of Google’s products. The company’s major rivals such as Microsoft, Apple are also involved in extensive research to provide solutions which can beat Google in competition. Therefore, it can be concluded that if Google improvises itself according to the changing demands and trends through continuous innovation then it can be able to cope up with the competition it has faced so far. Being the instant solution readily available in the user’s hand, it will excel to reach the topmost level in the industry, it has dreamt so far.

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