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Assignment on

Google: An Internet Search Service Company

Submitted to:M NAZMUL AHSAN KHAN

Faculty of BusinessAmerican International University – Bangladesh

Course: Strategic Management

American International University – BangladeshDate: 28 MARCH, 2011

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Submitted by:

RAHBAR MAHMOOD ID# 09-93133-2

Section: B, Program: MBA

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Google Inc.: The Company

Google was founded in 1998 by Larry Page and Sergey Brin, PhD students at Stanford

University who were fed up with the existing Internet search technology companies and their

inability to return accurate search results. Google was basically an online company that

specialized in developing a reliable Internet search engine.

Google Inc. became a global technology leader focused on improving the ways people connect

with information. Their innovations in web search and advertising have made their web site a top

internet property and the brand one of the most recognized in the world. Google maintains a

large index of web sites and other online content, which is freely available via their search

engine to anyone with an internet connection.

Google’s Strategic Position:

Google understands the wealth in diversification. Exploring new opportunities constantly over a

solid base of research could prove profitable with the use of products that can reduce cost – cost

of production, advertisements, etc. These new products are crucial in gaining leverage in the

constantly changing market and providing an alternative industry if need be. Google understands

that valuable profits and minimized risk can be garnered with international operations.

Google’s Vision & Mission:

Google’s mission is ‘’To organize the world’s information and make it universally accessible

and useful.’’

Google’s vision is ‘’To develop a perfect search engine.’’

They believe that the most effective, and ultimately the most profitable, way to accomplish the

mission is to put the needs of the users first. Offering high-quality user experience leads to

increased traffic and strong word-of-mouth promotion. Google’s dedication to putting users first

is reflected in three key commitments:

• Doing the best to provide the most relevant and useful search results possible, independent of

financial incentives. The search results will be objective, and we do not accept payment for

search result ranking or inclusion.

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• Doing the best to provide the most relevant and useful advertising. Advertisements should not

be an annoying interruption. If any element on a search result page is influenced by payment, it

will be made clear to the users.

• Will never stop working to improve user experience, search technology, and other important

areas of information organization.

Believe that user focus is the foundation of success to date and this focus is critical for the

creation of long-term value and not intend to compromise user focus for short-term economic

gain.

Google’s Objectives:

Google’s objective is to provide the users the perfect search engine that would understand

exactly what they mean and give back exactly what they want. Now a day’s Google became

successful precisely because of better and faster at finding the right answer than other search

engines at the time.

As Google keeps looking towards the future, these core principles guide its actions.

1. Focus on the user and all else will follow.

2. It’s best to do one thing really, really well.

3. Fast is better than slow.

4. Democracy on the web works.

5. You don’t need to be at your desk to need an answer.

6. You can make money without doing evil.

7. There’s always more information out there.

8. The need for information crosses all borders.

9. You can be serious without a suit.

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10. Great just isn’t good enough.

These principles were written several years ago, still now it is revisited to see if the principles are

well maintained through Google’s journey or not.

Corporate Governance

Co-founders Larry Page, president of products, and Sergey Brin, president of technology,

brought Google to life in September 1998. Since then, the company has grown to more than

20,000 employees worldwide, with a management team that represents some of the most

experienced technical professionals in the industry. Eric Schmidt joined Google as chairman and

chief executive officer in 2001.

Board of Directors:

Eric Schmidt, Google Inc.

Sergey Brin, Google Inc.

Larry Page, Google Inc.

L. John Doerr, Kleiner Perkins Caufield & Byers

John L. Hennessy, Stanford University

Ann Mather

Paul S. Otellini, Intel

K. Ram Shriram, Sherpalo

Shirley M. Tilghman, Princeton University

Top Management:

Eric Schmidt, Chairman of the Board and Chief Executive Officer

Sergey Brin, Co-Founder and President, Technology

Larry Page, Co-Founder and President, Products

Nikesh Arora, President, Global Sales Operations and Business Development

Shona L. Brown, Senior Vice President, Business Operations

David C. Drummond, Senior Vice President, Corporate Development and Chief Legal

Officer

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Alan Eustace, Senior Vice President, Engineering and Research

Patrick Pichette, Senior Vice President and Chief Financial Officer

Jonathan Rosenberg, Senior Vice President, Product Management

Societal Environment

Google is well positioned in demographics because it has a relatively young user base. This is a

good side as the use of internet increases the use of search engines also increase. Internet search

doesn’t depend on factors like gender, religion etc. therefore Google has an advantage over other

businesses.

a. Economy

IT related companies like Google are relatively isolated because search and consequently

internet-based advertisements has become a staple to the world society and economy. Google’s

focus on highly targeted, measurable advertising makes it more recession-proof than many other

businesses in the technical sector. The crucial need to stay informed and constantly connected

keeps such services vibrant despite the parched surroundings.

b. Technology

Technology is obviously always improving and Google has taken specific measures to make sure

it does not fall behind. Google can use commodity computer parts (cheap components) knowing

they will fail by ensuring that every component always has a duplicate. The components are

attached to the computer with Velcro rather than screws which allows for quick swapping and

upgrading.

c. Socio-Cultural

The world is increasingly becoming more connected due to the means of communication

available through the internet. And, for many people, the search giants like Google make the

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internet navigable. As internet use increases among all age groups and across all cultures, we

will become increasingly more dependent on internet search.

Task Environment: Porter’s 6 forces (Forces Driving Industry Competition)

Porter’s 6 Forces analysis is a framework for industry analysis and business strategy

development relative to the competitors of a firm.

Threat of New Entrants

The barriers to entry in the internet search market are high. There are many competitors in

different industries, including traditional search engines, vertical search engines and e-commerce

sites, social networking sites, traditional media companies, and providers of online products and

services. Google’s current and potential competitors range from large and established companies

to emerging start-ups. The market now, however, is more mature with a necessary path

dependency to gather data on both the content of web pages and the search history of users.

Therefore, the threat of new entrants in the internet search market is relatively low.

Rivalry among Existing Firms

Google’s main competitors are Yahoo, AOL and MSN. Presently, Google has nearly 60% of US

market against their search engine. This large market share helps them to improve the quality of

their search results and get ads more quickly than their competitors. The competitive rivalry is

strong and ongoing in this industry because large amounts of advertising dollars flow to the

website that has captured the largest volume of searches.

Threat of Substitute Products

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In 2008, the internet has become the most chosen by millions of people all over the world to

request and retrieve information. Information can be organized in different ways including

categories and sorted by date, but Google provides tools to complete these tasks as well as

conduct searches. A substitute product may be invented in the future, but there are no obvious

substitutes to organizing information on the internet.

Bargaining Power of buyers

The customers of Google are mainly the ad providers. Ad providers are continuously looking for

the search engines which the people use the most to attract the target customers. In this case

Google is number one as the usage of this search engine is the most depending on its fast and

reliable search results and simplicity of the website. Brand value is also a reason for Google

current success. The users play a vital role for Google’s revenue as the popularity of search

engine depends on it.

Bargaining Power of Suppliers

Google’s ad system is a reliable source of income because both the ad-making partner and ad-

receiving individual are both customers of Google’s. So as long as Google maintains its market

dominance with the search product, supplier bargaining power will remain low.

Relative-power of Stake-holders

In Google’s case the main power is on the hand of the investors and other partners. As Google is

a public company its financial stability is very important for the investors. The increase in stock

price proves that the company has a very good reputation and the financial condition is sound.

The company’s expenses are minimal because it had no inventory. But any kind of rules and

regulations in the search industry might affect the company as it may affect the world.

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Internal Environment Analysis:

The internal environment analysis mainly involves the strength and weaknesses of an

organization. Here the strength and weaknesses are found according to Google Inc.’s current

situation.

Strength:

Google has a lot of strengths, below is given the main key points for Google’s success.

Structured business model (S1):

Google has a very profitable business model. Its diversification in business helps to expand in

different areas of search. Google’s search engine has a huge database which helps to generate the

accurate search results.

Business Model: Google, Inc.

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IFAS Table (S1):

User friendliness and fast search (S2):

The simplicity of the search engine helps the users to be more dependable. Most of the time if a

topic is searched the results also are related in a higher rate than Yahoo, AOL or MSN. This is

mainly because of the data relativity and usage rate of the users.

IFAS Table (S2):

Brand value

Google’s brand value is very high comparing other the search engines. Therefore the brand equity

helps the company to gain more market share now and onwards. The brand identity that Google has

developed has significantly contributed to the success of the business.

IFAS Table (S3):

Innovative initiatives

Google introduced new concepts in the field of information technology. Its innovativeness helps

people realize some product that they didn’t know they were missing. For example, Google Search

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Personalization, Google in different languages, Google News, Google Earth etc. Therefore

Google’s way of introduce of new ideas.

IFAS Table (S4):

Corporate culture

The culture of Google is an important factor for its organization. All innovativeness comes from

this work-force and every employee helps the organization to grow in a unique way. This culture

helps everyone to think out of the box once a while so the creativeness increases giving them

brilliant ideas that might be the next revenue earning project for Google.

IFAS Table (S5):

Weakness:

Dependency of advertising business:

The revenue comes from advertisement. Advertising completely depends on the popularity of the

search engine and its related products. If Google’s popularity decreases the ad providers might

switch to others search engines to make their organization visible to the people.

IFAS Table (W1):

Has products customers don’t know that it even exists:

Google has a wide variety of products and services. Some of these products are still unknown to

the people. This is a weakness as Google in unable to make the users know about products such

as Google catalogue, Google translate, Google wireless etc.

IFAS Table (W2):

IFAS TABLE:

Internal Strategic Factors Weight Rating Weighted Score

Comments

  1  2 3 4 5Strengths        S1 Structured business model 0.15 3 0.45 Search service customers,

business solutions, marketing & promotion etc.

S2 User friendliness, reliable and fast search.

0.25 4 1 Related search results

S3 Brand equity0.1 4 0.4 Large number of users.

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S4 Innovative initiatives 0.15 3.5 0.525 Google earth, Google news etc.

S5 Work-force & corporate culture 0.1 3 0.3 Innovative business ideas.         

Weaknesses        W1 Dependency on advertising business 0.15 4 0.6 Most revenue comes from

Google Ad Works, based on an auction system.

W2 Has products customers don’t know that it even exists

0.1 2.5 0.25 Google catalogue, Google translate, Google wireless etc.

         

Total Scores 1   3.525  

External Environment Analysis

The external environment analysis involves the opportunity and threats of an organization. Here

the opportunities and threats are chosen according to Google Inc.’s current situation and future

possibilities.

Opportunity:

Increasing internet users

The usage of internet is increasing day by day. Since the use of internet is spreading to developing

countries Google is taking the chance of increasing its market share as well. This opportunity is a

plus point for internet search engine providers because the industry is still in a growth stage in

these countries.

EFAS Table (O1):

Technological change

The technological changes helping Google to expand its users day by day. Google is the leader of 12

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such an industry that most of the advancement creates a new level for Google to make things more

users friendly and simpler. The increase in usage of mobile phones helped Google introduce

Google applications in the mobile phones. Technological advancement creates new areas for

Google to expand its tools.

EFAS Table (O2):

Expanding to profit making opportunities

Google always seek new arenas for profit making opportunities. Different and innovative

internet devices and advertising platforms may create the opportunity for Google to increase its

revenue.

EFAS Table (O3):

Threats:

EFAS Table (T1):

Increased competition in the search engine market

The search engine industry full of competition. There are many competitors in different industries,

including traditional search engines, vertical search engines and e-commerce sites, social networking

sites. Established companies have longer operating histories, and they can use their experience and

resources against Google in a variety of competitive ways. If the competitors are more successful than

developing compelling products or in attracting and retaining users, advertisers, and content

providers, Google’s revenues and growth rates could decline.

EFAS Table (T2):

Business model imitators

Google has a very profitable business model and there are companies who follow it. Google can face

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threat if the followers create a huge data relevancy and create a faster and more reliable search engine.

EFAS Table (T3):

New media of advertising

Google Inc. generated 97% of their revenues in both 2008 and 2009 from their advertisers. The

advertisers can generally terminate their contracts with at any time. Advertisers will not continue to

do business with us if their investment in advertising with does not generate sales leads, and

ultimately customers. If Google is unable to remain competitive and provide value to the advertisers,

they may stop placing ads, which would negatively harm overall revenues and business.

EFAS Table (T4):

Data privacy

The Google brand may be negatively impacted by a number of factors like data privacy and

security issues. Government might create rules and regulations if Google cannot secure data and

provide services to the users.

EFAS TABLE:

External Strategic Factors Weight Rating Weighted Score

Comments

1 2 3 4 5Opportunities        

O1 Increasing internet users 0.25 4 1 Internet dependency

O2 Technological change 0.1 2 0.2 increase in use of mobile- Google Launches Nexus

O3 Expanding to profit making opportunities

0.15 3.5 0.525 New internet devices and advertising platforms

         

Threats        

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T1 Increased competition in the search engine market

0.2 5 1 Local search engines are more popular in markets like China

T2 Business model imitators 0.05 1.2 0.06 Doesn’t impact much

T3 New media of advertising 0.15 2 0.3 Might create threat initially if its not internet related

T4 Data privacy 0.1 1.5 0.15 Government regulations

         

Total Scores 1   3.235  

SFAS (Strategic Factor Analysis Summary) Matrix:

Strategic Factors Weight Rate Weighted Score

Shor

t

Inte

rmed

iate

Lon

g

Comments

   

S1 Profitable business model 0.15 3 0.45     √ Will keep Google successful in the long run

S3 Brand equity 0.1 4 0.4   √ √ Helpful for intermediate and long run.

W1 Dependency on advertising business 0.15 4 0.6 √ √   Only focus for revenue

O1 Increasing internet users 0.25 4 1   √ √ Ongoing process as technology is becoming more popular

O3 Expanding to profit making opportunities

0.1 3.5 0.35   √ New internet devices and advertising platforms

T1 Increased competition in the search engine market

0.2 5 1   √ √ Local search engines are more popular in markets like China

T3 New media of advertising 0.05 2 0.1   √ Might effect in the long run

Total Scores 1   3.9        

Notes:

1. List each of the most important factors developed in the IFAS and EFAS tables in Column1.

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2. Weight each factor from 1.0 (Most Important) to 0.0 (Not Important) in Column 2 based on that factor’s

probable impact on the company’s strategic position. The total weights must sum to 1.00.

3. Each factor rates from 5.0 (Outstanding) to 1.0 (Poor) in Column 3 based on the company’s response to

that factor.

4. Column 4 is the factor’s weighted score obtained by each factors weight times its rating.

5. For duration in Column 5, short term- less than 1 year; intermediate- 1 to 3 years, long term- over 3 years.

6. Column 6 is the rationale used for each factor

Recommendation:The company should take upon strategies to maintain its strengths, overcome the weaknesses and threats and create opportunities to be competitive in the search industry. Google can take the following `

Implementation Evaluation Control

Maintaining the quality of the search engine and create new ways to satisfy the users and relate to them.

Continuous process- possible

Long Term control on company's strategic position.

It can also create products like anti-virus software’s etc.

possible Short Term control on company's strategic position.

Create car tracking software’s by the help of Google Earth.

Might require permission

Short Term control on company's strategic position.

Create social networking website to compete with most popular website Face book.

possible

External factors cannot be controlled

R & D for new ways of advertising. possible

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Conclusion:

Now a day’s Google is the most popular global search engine. Its reliability and user friendliness

attract users from all over the world. The brand value of Google is higher than its competitors,

but it doesn’t mean that this will remain always. Google needs to take strategies to be the market

leader as there are always new competitors in the search industry. These strategies need to be

updated due to frequent technological change.

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