Case 12.

Google Inc: ( 2010) The Future of the Internet Search Ingine

Company background
Name

Google Inc.

Industries served

Internet

Geographic areas served

Worldwide

Headquarters

U.S.

Current CEO

Eric Schmidt and Larry Page

Revenue

$ 27.55 billion (2010)

Net income

$ 7,9 billion (2010)

Employees

20,861 (2010)
Apple Inc., Facebook Inc., Microsoft Corporation,

Main Competitors

Samsung Electronics Co., Ltd., International Business

Machines Corporation and many others.

Google Inc. is a multinational public corporation invested in Internet search, cloud

computing, and advertising technologies. Google hosts and develops a number of Internet
based services and products, and generates profit primarily from advertising through its
AdWords program. The company was founded by Larry Page and Sergey Brin, students of
Stanford University as Ph.D. candidates.
Google runs over one million servers in data centers around the world, and processes over
one billion search requests and about twenty-four petabytes of user-generated data every day.
Google's rapid growth since its incorporation has triggered a chain of products, acquisitions,
and partnerships beyond the company's core search engine. The company offers online
productivity software, such as its Gmail e-mail software, and social networking tools,
including Orkut and, more recently, Google Buzz. Google's products extend to the desktop as
well, with applications such as the web browser Google Chrome, the Picasa photo

organization and editing software, and the Google Talk instant messaging application.
Notably, Google leads the development of the Android mobile phone operating system, used
on a number of phones such as the Nexus One and Motorola Droid. Alexa lists the main U.S.focused google.com site as the Internet's most visited website, and numerous international
google sites (google.co.in, google.co.uk etc.) are in the top hundred, as are several other
Google-owned sites such as Youtube, Blogger, and Orkut Google is also BrandZ's most
powerful brand in the world. The dominant market position of Google's services has led to
criticism of the company over issues including privacy, copyright, and censorship.
PRODUCTS OF GOOGLE

Search

Communicate & share

Business solutions

(1) Web Search

(1) Google Docs

(1) Google Adword

(2) Google Chrome

(2) Google Translate

(2) Google AdSense

(3) Google News

(3) Google Talks

(3) Google Analytics

(4) Google Scholar

(4) Google apps

(5) Google checkout

Googles financial status to date

A research on Googles official website revealed that as at end of year 2008, the revenue of
Google have increased by 31.3% to $21.796 billion; the operating income have also increased
by 30.4% to $6.632 billion; net income appreciated by .6% to $4.227 billion. Total assets of
the organisation were up and valued at $31.768 billion; total equity was also valued at
$28.239 billion. Since 2001, Google have made strategic acquisitions to consolidate its
position as the most popular and visited website. Google acquired a firm called Key Hole Inc.
in 2004 and renamed it as Google Earth. It has also acquired You Tube; Double Click; and
Grand Central among others to strategically sustain its business concept. It has also entered
into partnership with NASA Research Centre to work on research projects that involves a
large-scale data management to help improve space technology.
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Strategic Posture
Mission
Googles mission was to organize the worlds information and make it universally accessible
and useful. Management believed that the most effective, and ultimately the most profitable,
way to accomplish their mission was to put the needs of the users first. They found that
offering a highquality user experience led to increased traffic and strong word-of-mouth
promotion. Dedication to putting users first was reflected in three key commitments:
Google will do its best to provide the most relevant and useful search results possible,
independent of financial incentives. Its search results would be objective, and the
company did not accept payment for search result ranking or inclusion.
Google will do its 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 to the management, it will make it clear to our
users.
Google will never stop working to improve the user experience, its search technology,
and other important areas of information organization.
Management believed that their user focus was the foundation of their success to date. They
also believed that this focus was critical for the creation of long-term value. Management
stated they did not intend to compromise their user focus for short-term economic gain.
Business Level Strategey
Googles strategy is built on a strong foundation of broad differentiation of complementary
products. Complimentary products serve to increase the use of the each of the other products
and increase brand awareness. Several of these unique provisions include its Docs &
Spreadsheets productivity suite, Picasa the image organizing and editing program, Earth and
Maps. These products are the key to augmenting the companys advertising business and
expanding the breadth of the brand. Google reinforces its brand image by keeping its name in
nearly all its products. From Googles perspective, the more uses a person has for Google
services, the more opportunity there will be to show them ads.
BUSINESS STRATEGIES OF THE MAJOR COMPETITORS
The leading competitors to Googles work strategy are the technology giants, Yahoo and
Microsoft. All of these companies motivations are simple -- try to draw the most advertising
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dollars from their respective internet properties. Each of the competitors offer many services
on their websites and strategically do so to try to engage users for as long as possible.
CURRENT MARKETING STRATEGY
The core strategy for Google success is not other than Viral Marketing. As Google has never
used any advertisement for its success, it only exploits the social media networks to reach out
to the large number of customers, forwarding power of e-mails & comments of blogspots.
Google still continues to enjoy the number one position in the industry due to Vira Marketing
Itself
PRODUCTION & PURCHASING STRATEGIES
Google is tested a new advertising program that pays site owners based on a Cost- Per-Click
model. The program, called Cost-Per-Action, was revealed via an invitation e-mail from the
Google AdSense team to Web site owners. Google is investing in the new technologies to
keep pace with the changing expectations of the users. As Google's great IT advantage is its
ability to build high-performance systems that are cost efficient and that scale to massive
workloads. Because of that, IT consultant Stephen Arnold argues, Google enjoys huge cost
advantages over competitors such as Amazon, eBay, Microsoft, and Yahoo.
Corporate Governance
Board of Directors
Name

Position

Eric Schmidt

Chief executive officer

Sergey Brin

President of Technology

Larry Page

President of Products

L. John Doerr

Board Member

John. L Hennessy

Independent Director

Ann Mather

Executive Vice President

Paul. S Otelinni

Ceo, board member, President of Intel

corporation

K. Ram. Shriram

Board member

Top Management
N Nama

Jabatan

Eric Schmidt

Chief executive officer

Sergey Brin

President of Technology

Larry Page

President of Products

Nikesh Arora

President, Global Sales Operations

David. C Drummond

Senior Vice President

BUSINESS MODEL OF GOOGLE

Google Inc. has a unique business model that sets it apart from its major competitors.
According to Chaffey, Googles business model is encapsulated in the SEC filing statement,
to organize the worlds information and makes it universally accessible and useful.
Googles major task is to make information easily accessible to its major stakeholders namely
the people who seek for information on the internet. In support, Chaffey insists that Googles
model is highly geared to offer the best and quality service to the users so that their
experience will lead to a strong word of mouth promotion and strong traffic growth.
According to Dwivedi Google have move further from its initial core business model into
different business concepts by expanding into different marketing offerings to its numerous
clients such as Picasa; Blogger; Keyhole; Gmail; and Google News etc. Dwivedi (2008)
claims that Google is primarily advertising firm, because 90% of its revenue and income
comes from online advertisement for various other websites. Google allows any new business
to start advertising online without any need to hire the services of professional graphic
designers; or advertisement consultants. Googles business model is to advertise and provide
services to all online users. Google has become the most identified and recognized brands
outperforming Coca Cola and McDonalds because of its vastly search engine. Any online
market or firm that attracts a lot of users is a business target for Google. That is why Google
have either acquired or have some strategic alliance with firms like You Tube; Amazon; and
My Space.

External Factor Analysis Summary (EFAS Table)

Ixternal Factors (1)

Wei

Ra

Weig

ght

tin

hted

(2)

score

(3)

(4)

.50

Comments (5)

Opportunity
O1 Growing number of

.10

Google has an opportunity to create a

mobile internet users

platform that could be used to better display

ads for mobile device users and increase
firms income

O2Culture of

.15

.75

Many unique products are offered by

innovation

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.

O3 Worldwide internet .15

60

Internet usage growing is too fast in the

growth usage

O4

Growing

world.

into .5

.15

Google has already launched a few new

electronics industry

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
6

O5 Google fiber cables

.5

,15

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

Threat
T1 Growing number of .15

.60

Google finds it hard to monetize mobile

mobile internet users

internet users as there is less space to place

ads on a mobile device and the 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

T2

Unprofitable .15

.45

Google has introduced many products and

products

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.
People now prefer to get information from

T3

Replacement

of .10

60

Facebook, twitter and etc

60

Microsoft , yahoo an apple is gaining a

web search by social

media search
T4 Competition from .10
Microsoft,

Yahoo,

market share in internet searches and is

Apple

smaller

playing an important role against Google.

and

competitors

The company has also introduced Windows

8, the OS aimed for mobile devices, to carve
7

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.

Total Scores

1.00

4.40

Natural Environment
Built the largest solar panel
Investment in Wind energy
Investment in enhanced geothermal system
Operates on 50% less energy
Recycle 100% of the electronic waste leaving Google
Buy food from local farmers
Donations for bike riding
Societal Environment
POLITICAL/LEGAL FORCES
Formal institutions have not significantly affected Googles operations, although
Google has faced pressure from the Department of Justice to relinquish archived
search termsm (Buncombe, 2006) and from the Chinese government to censor search
results (Liedtke, 2005).
Googles Dont be evil mantra has been put to the test as users ask whether
cooperation with governments undermines their privacy and freedoms. In 2008,
Google responded to customer concerns when it added a privacy link to its home
page. This link took users to a Privacy Center where they could learn about Googles
policies in regard to political and legal issues (Google, 2008).
Google has also faced concern on copyright issues because the company stores
copies of third party web pages and images on their servers. They have responded to

this criticism by releasing a copyright information page. The page provides the
relevant information regarding digital information and provides links to notify both
Google and the U.S. Copyright Office of suspected infringement (Google, 2008).
ECONOMIC FORCES
The United States was in a period of recession and stocks were trading at 52-week
lows. However, technology companies like Google are relatively isolated because
search and consequently internet-based advertisements has become a stable to the
world society and economy. In fact, a recent wired magazine article says that Google
looks particularly wellpositioned to weather the downturn. Google's focus on highly
targeted, measurable advertising makes it more recession-proof than many other
businesses in tech. (Schiffman, 2008) The crucial need to stay informed and
constantly connected keeps such services vibrant despite the parched surroundings.
SOCIAL FORCES
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 internet navigable. As internet use increases among all age
groups and across all cultures, we will become increasingly more dependent on
internet search.
In addition, most new cell phones are internet capable devices. People will use these
devices for driving directions, tolocate restaurants, check sports scores, download
music, and even quick research. Google stands to benefit from this with an increased
number of search queries.
To enable more people to access Googles services from their mobile devices, the
company has released its Android Mobile Phone Platform and Operating System as
well as the Google Mobile App that can be downloaded on other platforms such as the
Apple iPhone. Google is well positioned in demographics because it has a relatively
young userbase. This means that it will be less affected as the Baby Boomers age in
comparison to other companies that depend on the 50 to 60 year-old demographic
group. Internet search is also not a gender-specific issue, and would not be hurt by
changes in the ratio of female to males. The company will however benefit when
some traditional and paternalistic societies begin using the internet more frequently.
TECHNOLOGICAL FORCES
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Technology is obviously always improving and Google has taken specific measures to
makesure 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 forquick
swapping and upgrading (May, 2007).
Internet search is applicable to most cultures all over the world freeing Google from
geographic dependence. In fact, the company now has 20offices in the U.S. and
international locations in over 30 countries working on research, sales,and marketing
(Google, 2008).
Google offers a personalized search engine for more than 115 countries, and as
language support improves, the company is likely to gain market share. As computers
become more affordable, many people in economically disadvantaged countries are
gaining access to the internet for the first time and Google would like to route them
through its search and productivity products, like Gmail, Docs, and Sites. Googles
web applications are now bundled into the operating system on low-cost Linux- based
computers (Blankenhorn, 2008).

Internal Factor Analysis Summary (IFAS Table)

Internal Factors (1)

Wei

Ra

Weig

ght

tin

hted

(2)

score

(3)

(4)

.50

Comments (5)

Strength
S1

Open

source .10

To organize the worlds information and

products and services

make it universally accessible. 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
10

services.
S2

Quality

customer

and .10

.50

experience

Everything that Google offers is of premium

are the primary objects

quality. The products are aimed at solving

customer needs and problems by providing
excellent customer experience.

S3 Financial situation

.10

.50
Google is one of the most profitable
companies in the world with earnings nearly
$ 27.55 billion revenue $ 7,9 billion net
income. Few other companies are so strong
financially to compete with Google.

S4 Access to the largest .10

.40

group of internet users

Google has an access to 79% of the world

worldwide

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
S5

Strong

patents .10

.50

services.

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

competitors.

11

strong

advantage

over

its

Weaknesses
W1 Lack of product .20

,40

Many products can not success in many

integration

W2

countries

Unprofitable .15

2,5

,37

Google has many products and services that

products

add little value for the business and make

only losses, thus decreasing firms profits.

W3 Patent litigations

.15

0,45

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

Total Scores

1.00

3,62

Corporate Structure

Corporate Culture
Its really the people that make Google the kind of company it is. They hire people who are
smart and determined, and we favor ability over experience. Although Googlers share
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common goals and visions for the company, we hail from all walks of life and speak dozens
of languages, reflecting the global audience that we serve. Google strive to maintain the open
culture often associated with startups, in which everyone is a hands-on contributor and feels
comfortable sharing ideas and opinions. In our weekly all-hands (TGIF) meetingsnot to
mention over email or in the cafeGooglers ask questions directly to Larry, Sergey and other
execs about any number of company issues. Google`s offices and cafes are designed to
encourage interactions between Googlers within and across teams, and to spark conversation
about work as well as play.

Strategic Factor Analysis Summary (SFAS) Matrix

13

4 duddu

5
Strategic
(select

factors
the

most

important

opportunities/

threats from EFAS

and

the

most W

important strength eig

Weig

rati

hted

ng

scores

& weaknesses from ht

IFAS)

S1

Open source .15

products

Duration

.75

and

Comments

To organize the worlds

information and make it

services

universally

accessible.

Let it be Google maps,

calendars, drive, OS or
the advices how to rank
better in a search index
.10
S3

.50

Financial

Google is one of the most

profitable companies in

situation

the world with earnings

nearly $ 27.55 billion
revenue $ 7,9 billion net
income.
.15

.37

X
Google

W2

Unprofitable

has

many

products and services that

products

add little value for the

14

business and make only

losses, thus

.10

50

decreasing

firms profits.

W3 Patent litigations

Google is often involved

in litigations over the
.10

.50

breached

patents

and

other intellectual property.

O1 Growing number

Google has an

of mobile internet

opportunity to create a

users

platform that could be

used to better display ads
for mobile device users
.10

.50

and increase firms

income

O2

Culture of

innovation

According

to

Boston

Consulting Group (BCG)

Google is the 2nd most
.15

.40

innovative business in the

world.

T2

Unprofitable

products

If Google continues to
introduce new products
that add little value and
.10

.40

only make losses, the

companys

T4
from

Competition

profits

will

fall.

Microsoft,

Yahoo, Apple and

Microsoft , yahoo an

smaller competitors

apple is gaining a market

share in internet searches
and

15

is

playing

an

important

role

against

Google.

Total scores

1.0

3,92

Total Scores

Generating a TOWS Matrix

Internal
Factors

Strengths (S))

Weakness (W)

S1 Open source products and services

W1 Lack of product

S2 Quality and customer experience integration

(IFAS)

are the primary objects

S3 Financial situations

W2

Unprofitable

S4 Access to the largest group of products

internet users worldwide
S5 Strong patents portfolio

W3

Patent

litigations
External

S6 Culture of innovation

Factors

S7Product integration

(EFAS)

Opportunities (O)
O1

Growing

number

O+S
of

Move

into

O+W
non-internet -Make new

mobile internet users

markets (i.e. Magazines, TV, programs and

O2 Culture of innovation

Travel) (O3+S6)
improve them on
Investing to non developed
social networking
countries by using low cost
space (O2+W2)
strategy (S7+O1)
-Invest to increasing
Focus on mobile advertisement
worlwide online
market (S6+O1)
systems (O5+W1)

O3

Worldwide internet

growth usage
O4 Growing into electronics
industry

O5 Google fiber cables

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Threats (T)
T1

Growing

T+S
number

of

mobile internet users

T2 Unprofitable products
T3

Replacement of web

T+W
Make

competetive

mobile Innovate new

google applications (T1+S6)

product and service
Adapt to Asian market
more integrated
(T1=S7)
(T2+W1)

search by social media search

Adopt to mobile
market (T1+W2)

Porters generic competitive strategy

Low Cost Strategy
-

Low operating costs

Same technology used

Differentiation Strategy
for all

Development of customer loyalty

No payment required creating and

managing online advertising accounts

Unique formula
High customer utilty
Strong brand value
Using a patented system PageRank

aspects of the business

Google currently pursues the generic business level strategy of differentiation by offering
many unique products and services to many different kinds of customers. The web search
engine is the most popular service offered by Google as it provides user the most reliable way
to search.
Google web search engine has differentiated itself from its competitors by using a patented
system PageRank. PageRank comes across search inquiries by computing a recursive score of
web pages based on the weighted sum of the PageRanks of the pages linking to them (Levy,
2010). This means that related web pages can be accessed based on a users search interest
instead of based on how many times a search term occur on a webpage which is how
competing search engines work.
Google claims that PageRank is one of its search engines main competitive advantages due
to the several features.

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Google`s product that supports its differentiation strategy is Google`s internet search- driven
advertising. GoogleAdWords specialized for advertisers who want to reach a qualified
audience as efficiently as possible. The ease of creating ad text and manage online advertising
accounts with no large upfront payment required is also differentiates. Google product from
its competitors as well as the ads appearing across Google`s growing roster of partners.
Advertisers can even target customers in specific geographical locations. (Google, Advertise
your business on Google 2010)
The biggest advantage of Google`s differentiation business strategy is the development of
customer loyalty. Google`s web search engine currently holds 66 percent of global internet
searches. (Brandt 2009).
In 2010. Google announced completion of new web indexing system called Caffeine (Grimes
2010) . Caffeine proides 50% fresher results for web searcher than previous index, which
makes Google search engine more competitive.
Additionally, Google launched Google Instant, which reduce the time needed for the search,
provide predictions and more dynamic results. This option previously was the competitive
advantage of Bing, however currently Google time needed for the search is much less
than Bing (Wanger, 2010). Moreover, instant impacting the price of paid search campaigns
and AdWords, which previously was higher than competitors. Currently the pricing range for
Google search engine can be viewed as moderate comparing to the competitors (Copeland,
2010), which provide company with extra competitive advantage.
At the same time Google was using product development strategy by improving their search
ingine technology exponentially., adding host of new features within just five years of time
span which help them dominating the world market.
Conclusion
For over a decade, Google Inc. has been a leader in technological innovations, providing
quality products and services to both consumers and other business entities. A review of the
corporations 2010 Annual Report, as well as analyses of financial data from prior years,
reveals that Google has continued to prosper and expand immensely as a result of its
successes. Examinations of the companys current financial position using ratios and
comparisons to competitors suggest that Google is currently in a secure financial position in

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many respects and is likely to maintain this position in the immediate future. The corporation
that continues to enhance internet technology everyday can be expected to remain a
household name for many years to come.
There is evidence to show that Googles business strategy is indeed realistic, rationale, and
viable and not as insane as claimed by Microsoft CEO, Steve Ballmer. The company have
shown that they are capable of dominating all the associated businesses and activities on the
internet. They have so far being aggressive in the search engine industry and for now there is
no formidable challenger. They have also added more value to their brand name with all the
strategic acquisitions they embarked upon since 2001. Truly speaking, unless something
dramatic occurs in the realm of information technology; there is least probability that Google
will collapse or fail. Even if they were to fail, it will create a big catastrophe in the
information technology industry market which will be difficult to fulfil by any company.
Googles business strategy has been accepted worldwide by the masses through the patronage
of their services. The top management of the company headed by CEO Eric Schmidt needs to
be more proactive in their recruitment and retention strategies so that expertise staff do not
leave the firm to other arch rivals such as Yahoo, Microsoft, and AOL. Gather (2009) sums up
that Microsoft and Yahoo can try everything, but the large majority of people around the
world will always "google" things, not "yahoo" or "bing" them, as Google has become a part
of the language and culture more than any other internet search engine. And this will always
give Google an upper hand in business because its strategy is indeed not insane.

Question :

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Google, an online company that provide a riliable internet search ingine, was founded in
1998 and soon replaced Yahoo as the market leader in Internet Search ingines, By 2010
Google was one of the strongest brands in the world. Nevertheless, its grows by acquisition
strategy was showing signs of weakness. Its 2006 acquisition of Youtube had thus far not
generated significant revenue growth. Groupon, a shopping website, rebuffed Google`s
acquisition attempt in 2010. Is it time for a strategic change?
In my opinion, Google inc still should keep its strategy. Because, a

review of the

corporations 2010 Annual Report, as well as analyses of financial data from prior years,
reveals that Google has continued to prosper and expand immensely as a result of its
successes. Examinations of the companys current financial position using ratios and
comparisons to competitors suggest that Google is currently in a secure financial position in
many respects and is likely to maintain this position in the immediate future. The corporation
that continues to enhance internet technology everyday can be expected to remain a
household name for many years to come.
Hovewer, Google has to make some changes in its current strategy. For example Google
should invest to developing countries by using low cost strategy. Now mostly people is
using mobile phones and tablets instead of using laptop or computer. So It is recommended
for google to make some easy working applications for mobile phones.
In addition., Google should bring cheap internet for all over the world. We know that in some
countries internet providers are still expensive. If Google invest in this sphere, it will be
profitable.
Futhermore, There are still some small changes is needed for Google inc such as :
-

Move into non-internet markets (i.e. Magazines, TV, Travel)

Adapt more to Asean market
Make new programs and improve them on social networking space

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