Google Inc.

Case Instructions:
In the real world, all relevant case facts and information will not be handed to you. Analysis of
this case requires the collection of data and information from public sources. In doing research,
you will cultivate your skill in making sense out of a tremendous amount of informationor lack
of itand determining what is relevant data that ought to guide your strategic analysis. The
ultimate test of your skill as a strategic analyst is whether you have the tools and judgment to
make sense of the information available and to make strategic decisions in the face of a great
deal of uncertainty.
So, go to www.google.com and browse through to relevant pages. Analyze Googles current
situationthe state of company today. What can you discern about Googles strategy? Learn
internal and external environments of Google, its competitive position, its prospects for the
future, etc.
Tasks:
1. Find out if Google performs a formal strategic management process? If yes, how you think
it helps/helped Google grow and establish its direction?
Strategic Planning Processes - Google
Step1. Evaluation of the organizations current mission and purpose
Mission: Organize the world's information and make it universally accessible and useful.
Purpose: Allow users to be able to find information in many different languages; check stock quotes, maps, and
news headlines; lookup phonebook listings for every city in the United States; search billions of images and
peruse the world's largest archive of Usenet messages. In addition, support thousands of advertisers to use
Googles AdWords program to promote their products and services on the web with targeted advertising.
Vision:
Short-term objectives: are to expand the workforce for anticipated growth, expand further into international
markets, and continue developing new products.
Long-term objective: delivering new advertising technology. Expanding the workforce will help achieve the longterm goals. Google's organization structure is primarily functional but also includes a few geographical
organizations.
Philosophy:
Google does not document a Vision or Values on the Google website. They do state a philosophy on the Google
website, some are listed below:
Focus on the user and all else will follow
It's best to do one thing really, really well.
Fast is better than slow

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

No pop-ups
Step 2. Assessment of the External Environment
This section identifies the threats and opportunities the company faces.
Threats:
Remote (Remote concerns for Google are new laws and regulations, increasing intellectual property claims, and
access to more information.) (Weak position in China- strict govt regulations and cultural differences)
Industry (Industry concerns for Google are competitive threats from Yahoo and Microsoft and new unknown
competitors that may be international. Agreements with advertisers could potentially become competitive as well,
as a result, reducing operating margin)
Operating (Operating issues are the current ad base, design of the ads, and shrinking advertising budgets of
customers. The quality of service provided by the Google organization and retaining qualified help is also an
operating issue.)
Opportunities:
Unmapped countries expanding services (potential for unknown regions)
New advertisement format and tracking mechanisms (new innovation of technology)
Size of current customer base and market share is small (potential growth and new advertising agreements)
Step 3. Assessment of the Internal Environment.
This section of the strategic environment is a realistic analysis of Google's internal resources.
Strengths:
Search engine differentiation (Googles strategic are innovation and concentric diversification)
Employee focus (Google has a unique culture and policies to promote innovation. The company strives to employ
the most qualified applicants and reward the greatest contributors, in order to promote good performance and
facilitate hiring and retention)
Strong brand name (well-known by all users as the best search engine)
The advertisers' return on investment from advertising campaigns on our web sites outweighs other forms of
advertisements like radio, television or new papers.
Weaknesses:
Strategic controls can be largely affected by environmental factors (negative consequences of a significant power
outage). Google systems are vulnerable to any electrical service disruptions resulting in service being impacted.
New technologies that do not compliment Google's current operating systems
Nearly all revenue is from advertising source

Finding new key employees and infrastructure could be challenging

Step 4. Re-evaluation of the organizations mission and goals/objectives.
Based on the SWOT analysis of internal and external factors, the next 10 years will define the longevity and
sustainability of Google as a company. Quick and dramatic changes characterize the technological environment.
To keep up with the market Google plans to focus on
Enabling users to search a larger base of information
Developing tracking mechanisms and new advertising technology
Creating patents and intellectual property - will hold the keys to gaining competitive advantages in the market
Retaining and recruiting the best human resources (a critical factor for Google in order to reach the changing
needs of consumers and advertising clients.)
Step 5&6. Formulation, Development and Implementation of strategic plans.
Strategic Planning
In order to compete with other media titans such as Microsoft and Yahoo!, Google has sought to employ the
power of differentiation to create a competitive advantage. (understands exactly what you mean and gives you
back exactly what you want)
Applying concentric diversification focus on the core product of search services the company has also been able
to benefit from a competitive advantage in "faster response times, greater scalability and lower costs" Hence, not
only does Google have a high advantage in the differentiation arena, but a cost and speed advantage as well.
Google offers generous stock options and provide relaxed working atmosphere to retain the best talent and align
employee interests with shareholder interests. (Google provides free lunches every day for employees and
encourages participation in the weekly roller hockey games. The company regularly sponsors employee outings
such as picnics and skiing trips)
Monitoring strategic projects must involve contingency planning in the event that Google's present product
offerings become obsolete with the invention of new Internet devices and in case of a competitive threat. (This can
be done by continuous monitoring of competition and expanding current product offerings. Gathering of data
detailing consumer needs and search preferences will ensure that Google continues to be an industry leader
among search engines.)

http://www.123helpme.com/strategic-planning-process-google-view.asp?id=167474

Company Background
Name

Google Inc.

Logo

Industries served

Internet

Geographic areas served

Worldwide

Headquarters

U.S.

Current CEO

Eric Schmidt

Revenue

$ 50.17 billion (2012)

Profit

$ 10.7 billion (2012)

Employees

53,861 (2012)

Main Competitors

Apple Inc., Facebook Inc., Microsoft Corporation, Samsung Electronics Co.,

Ltd., International Business Machines Corporation and many others.

Google Inc. is a multinational corporation that provides Internet-related products and services, including internet search, cloud computing, software and advertising
technologies. Advertising revenues from Ad Words generate almost all of the company's profits.
You can find more information about the business in its official website or Wikipedias article.

SWOT
Google SWOT analysis 2013
Strengths
Open source products and services
Quality and customer experience are
the primary objects
Financial situation
Access to the widest group of internet
users worldwide
Strong patents portfolio

Weaknesses
Relies on one source of income
Unprofitable products
Patent litigations

Product integration
Culture of innovation

Opportunities
Growing number of mobile internet
users

Threats
Growing number of mobile internet users
Unprofitable products

Obtaining patents through acquisitions

EU antitrust laws

Driverless electronic cars

Growing into electronics industry

Competition from Microsoft

Google fiber cables

Strengths
1.

2.

Open source products and services. As the company states: Googles mission is to organize the worlds information and make it universally accessible and
useful. The same is with almost any of Google products. Let it be Google maps, calendars, drive, OS or the advices how to rank better in a search index. Googles products
can also be used with any OS or mobile device without a charge. Google openness is the key why Google is the number one in many products and services.
Quality and customer experience are the primary objects. Everything that Google offers is of premium quality. The products are aimed at solving customer
needs and problems by providing excellent customer experience.

3.

Financial situation. Google is one of the most profitable companies in the world with earnings nearly $50 billion and $11 billion profits (22%). The company also
holds $48 billion in cash and just $7 billion of debt. Few other companies are so strong financially to compete with Google.

4.

Access to the largest group of internet users worldwide. Google has an access to 79% of the world desktop search market users and 89% of the world mobile
search market users. Combined, these internet users represent an extremely large market that Google can use to promote and sell its products and services.

5.

Strong patents portfolio. In 2012, Google added 1,151 patents and was the 21st business worldwide in terms of number of patents. Intellectual property is the
key in competing against competitors and Google with Motorolas acquisition gained a strong advantage over its competitors.

6.

Product integration. Nearly all Google products are integrated with each other forming an ecosystem that enriches customers experience and encourages using
more of companys products and services. Besides, Google products can be used on any OS or any device without a trouble or can be integrated with other companies
applications. No other major tech organization offers the same level of integration.

7.

Culture of innovation. Many unique products are offered by Google every year, with so many in development stages. According to Boston Consulting Group
(BCG) Google is the 2nd most innovative business in the world. The company was also the second patent creator in the worle in 2012. Google emphasizes its innovative work
culture as one of its main competitive advantages.

Weaknesses
1.

2.
3.

Relies on one source of income. More than 90% of Googles revenue comes from online advertising. Online advertising is expected to grow in double digits in
2013 and will grow Googles income in the short term. But in the long run, Google may experience slow income growth or even the decline due to a few reasons. First, the
market for personal computers is growing slowly and the Google experiences the overall decline in its desktop search engine market. If Google wont push the competition
back it will lose not only the market share but the main source of its income as well. Second, Google as many other firms, find it hard to monetize mobile device users, who will
represent the highest growing group in online advertising. Third, online advertising growth is driven by emerging economies where an average price for an advertisement is
considerably lower than in the developed economies, so the growth of online advertising will only grow the income of companies insignificantly.
Unprofitable products. Google has many products and services that add little value for the business and make only losses, thus decreasing firms profits.
Patent litigations. Google is often involved in litigations over the breached patents and other intellectual property. These litigations are costly and time consuming
and distract the company from innovating rather than litigating.

Opportunities
1.
2.

Growing number of mobile internet users. Google has an opportunity to create a platform that could be used to better display ads for mobile device users and
increase firms income.
Obtaining patents through acquisitions. For Google to grow and to compete successfully, it has to obtain more new patents. One way of doing that is to acquire
companies that have strong patents portfolio. Google has acquired Motorola in 2012, obtaining more than 17,000 patents from the business.

3.

Driverless electronic cars. Google has introduced and successfully tested driverless cars in Nevada, U.S. The technology of these cars could easily be installed
in any future model and would be a huge technological step. Although, Google has no intentions of manufacturing such cars itself, the company could sell licenses for car
manufactures for using their technology and IP.

4.

Growing into electronics industry. Google has already launched a few new models of notebooks, tablets and smartphones into the market but these were only
introduction models. Google could strengthen its entry into electronic devices industry by introducing more products for more customer groups and cut out its market share.
This would result in tighter integration of its software products and diversified income.

5.

Google fiber cables. Google is currently testing their new fiber cables that can deliver internet content at astonishing 100 times as fast as current providers. It is
wise for Google to invest in such infrastructure that virtually would have no competition and would integrate the company vertically.

Threats
1.

Growing number of mobile internet users. Google finds it hard to monetize mobile internet users as there is less space to place ads on a mobile device and the

2.

ads costs less than usual. The growing number of mobile users means fewer searches made on the personal computers and lower income growth or even decline for Google.
Unprofitable products. Google has introduced many products and services but few of them earn profits for the business. Most of the services are the burden for
Google and only makes losses. If Google continues to introduce new products that add little value and only make losses, the companys profits will fall.

3.

EU antitrust laws. Google is currently accused by EU of using its dominating position in internet search engine market to display its own services higher than
competitors in search results. If proved guilty, Google would have to pay fines that would significantly lower firms profits.

4.

Competition from Microsoft. Microsoft is gaining a market share in internet searches and is playing an important role against Google. The company has also
introduced Windows 8, the OS aimed for mobile devices, to carve out its market share in mobile OS market. In both fronts, internet search and mobile OS, Microsoft is
challenging Google and is taking away the potential revenues.

http://www.strategicmanagementinsight.com/swot-analyses/google-swot-analysis.html

2. What are vision, mission, and objectives of Google Inc.? Are these effective?
Googles mission is to organize the worlds information and make it universally accessible
and useful.

3. Do a thorough external scanning by:

a. STEEP Analysis
b. Issues Priority Matrix
c. Five Forces Analysis
d. Mapping Strategic Groups
e. Industry Matrix
f. Competitive Intelligence gathering
g. Drawing External Factors Analysis Summary (EFAS)
4. Do a thorough internal scanning (organizational analysis) by:
a. Identifying Googles core and distinctive competencies
b. Identifying its competitive advantage and commenting if it is sustainable?
c. Learning business model(s) Google follows and its advantage/disadvantages?
d. Commenting on industry and corporate Value Chain Analysis of Google
e. Stating what organizational structure Google follows and is it effective?
f. Finding and commenting on strategic marketing issues
g. Finding and commenting on strategic financial issues
h. Finding and commenting on strategic R&D issues
i. Finding and commenting on strategic operations issues
j. Finding and commenting on strategic HRM issues
k. Finding and commenting on strategic information system/technology issues
l. Drawing Internal Factors Analysis Summary (IFAS)
Do as much as possible for item 4. Once we finish our discussion on Internal Scanning in class,
you will be required to submit a detailed report on this.
You are required to submit your work individually at least by Item 3 in the next class.

Happy learning!
Mohsin Rauf