In short, you will perform a comprehensive strategic analysis and implementation plan of the
firm’s general strategy to achieve its short and long-term goals and objectives. We will use the
Strategic Audit as a guide to build your grand strategy. Remember, you will be performing the
assignment from the perspective of the CEO and you will design a strategy that takes into account every aspect of the firm’s history, vision and mission, market and financial positions, culture, and values.
The following is part of this assignment which you need to do (about 10 pages):
The whole document is also uploaded, but you only to do this part.
VII. Implementation
7.1 - Implementation program
7.2 - What must be done
7.2.1 - Program activities
7.2.2 - Action Steps
7.2.3 - Who implements strategy
7.2.4 - Matrix of change
7.3 - Organizing for action
7.3.1 - Corporates structure
7.3.2 - Job Creation
7.4 - Action Plan
CEO Project (Apple)
Table of Content
I. Current Situation
1.1-History
1.2-Current Performance
1.2.1- Ratio Analysis
1.2.2- Competitor Comparison
1.2.3- Industry Comparison
1.3-Mission
1.4-Objectives
1.5-Strategic Posture
1.5.1- Corporate Strategy
1.5.1.1- Directional
1.5.1.2- Portfolio Analysis
1.5.1.3- Parenting Strategy
1.5.2- Business Strategy
1.5.3.- Functional Strategy
1.6- Policies
1.7- Alignment
5
5
5
5
6
7
7
7
8
8
8
9
9
9
9
10
10
II. Corporate Governance (Tianran)
2.1 - Board of directors
2.2 - Top management
12
12
13
III. External Environment: Opportunities and threats (SWOT) (Tianran Lin/Yiyun)
3.1 - Natural Physical Environment: sustainability issues
3.2 - societal environment
3.2.1 - Economic
3.2.2 - Technological
3.2.3 - Political Legal
3.2.4 - socio cultural
3.3 - Task Environment
3.3.1 - Threat of new entrants
3.3.2 - Bargaining power of suppliers
3.3.3 - Threat of substitute products or services
3.3.4 - Bargaining power of buyers
3.3.4 - Rivalry among existing firms
3.3.6 - The 6th force
3.4 - EFAS Table
14
14
14
14
14
14
14
14
15
16
16
16
16
16
16
IV: Internal Environment: Strengths and Weakness (SWOT) (Roy & Henry)
4.1 Core Competencies (Roy)
4.2 VROI Analysis (Roy)
4.3 Business Model (Henry)
16
16
16
16
4.5 Corporate Structure (Henry)
4.6 Corporate Culture (Roy)
4.7 Corporate Resources (Henry)
4.7.1 Marketing
4.7.2 Finance
4.7.3 Research and Development
4.7.4 Operations and Logistics
4.7.5 Human Resources
4.7.6 Information System
4.8 IFAS Table (Roy)
V. Analysis of Strategic Factors (SWOT)
18
18
18
18
18
18
18
18
18
18
(_Heidi)
5.1 Situational analysis (SFAS Table)
5.2 Review of Mission and Objectives
18
19
19
VI.Strategic Alternatives and Recommended Strategy (Amina, Rosario)
6.1 Tows Matrix
6.2 Strategic Alternatives
6.2.1 Pros and Cons
6.3 Recommended Strategy
6.3.1 Corporate Strategy
6.3.2 Business Strategy
6.3.3 Functional Strategy
6.3.4 Policies
19
19
19
19
19
19
19
19
19
VII. Implementation (Shiyu, Xiaoxi)
7.1 - Implementation program
7.2 - What must be done
7.2.1 - Program activities
7.2.2 - Action Steps
7.2.3 - Who implements strategy
7.2.4 - Matrix of change
7.3 - Organizing for action
7.3.1 - Corporates structure
7.3.2 - Job Creation
7.4 - Action Plan
20
20
20
20
20
20
20
20
20
20
20
VIII. Evaluation and Control (______)
8.1 - Measuring performance (Reecha)
8.2 - Balanced scorecard (Nadja,
8.2.1 - Financial
8.2.2 - Customer
8.2.3 - Internal Business process
8.2.4 - Learning and Growth
20
21
21
21
21
21
21
IX. Appendix
21
X. Works cited
21
I. Current Situation
1.1-History
Apple Inc., formerly known as Apple Computers, is a multinational corporation founded by
Steve Job and Steve Wozniak on January 3, 1977, in Cupertino California. For over three
decades Apple computers was solely manufacturing personal computers until Jobs installed a
new corporate philosophy of “recognizable products and simple design” which initiated with the
first iMac in 1998. It did not take long for Apple to establish itself as the top seller in a variety of
electronic products.
1.2-Current Performance
Apple’s current company performance is fairly solid as their stock prices keep rising. The current
stock price of Apple is $144.18, which is about a 1.02 percent increase from the previous price.
Logically, in order for a company’s stock price to rise, their overall performance has to also rise.
Hence, we can see that Apple’s performance is increasing due to its rising stock prices.
1.2.1- Ratio Analysis
Based on the three ratios chart, we can principally realize Apple company’s financial health has
been variation. In 2014, the current ratio has been dropped 63.34%, which refers to a sign that
there might have a problem occurred inside of the capital management. By comparing all fiveyear’s asset turnover rate and return on assets, we discover that Apple possesses the highest value
on both of ratios in 2016. Within the asset turnover rate, it presents Apple’s capability of
efficiency with lowest profit margin because every dollar Apple sales will reflect 134% turnover.
In addition, Apple also owns 28% of Return on Assets, and it has been increasing continuously
during the period of 2014-2016. Therefore, we could know that Apple has been improving its
total assets, and make the company more manageable and profitable.
1.2.2- Competitor Comparison
Apple, Inc. Holding 6.8% of the market share, the company is famous for its Mac line which
includes Macbooks, iPhones, iPods, and iPads. Apple’s products are known for
being easy to use, along with proprietary software and applications.
Dell, Inc.
Dell holds 12.1% of market share and designs, develops, and manufactures
computer systems. Dell also provides IT consulting and other services, while
earning its reputation in supply chain management and e-commerce.
HP, Inc.
Holding 9.5% of market share, HP provides desktop and notebook PCs,
workstations, smartphones, and tablets.
1.2.3- Industry Comparison
In an era governed by technology, products such as computers, smartphone, etc., have become
essential in most households. As these products are becoming more and more standardized, with
portability a primary choice for consumers, price competition is fierce in the industry. In recent
decades, production has gradually shifted from the United States, Japan, and Taiwan, to China
and Southeast Asia.
1.3-Mission
Apple's current mission is to provide "the best personal computers in the world, along with OS
X, iLife, iWork and professional software and leads the digital music revolution with its iPods
and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone
and App store, and is defining the future of mobile media and computing devices with iPad." By
this statement Apple describes their purpose of the company's existence and their focus on
producing high-quality products.
1.4-Objectives
The objectives of Apple Inc. are made known to employees instantly and business objectives are
set. However, individuals are measured by their contribution to the success of the objectives of
the company. The primary objective of Apple is to create groundbreaking products and make its
name to become a trendsetter in the global market, and Apple also plan to expand its business
chain of stores worldwide in order to make the product available to every retailer and customer.
(Paczkowski) As an premium branded company, Apple continues to sustain its premium pricing
while gaining market share as well as increasing profit margins. In addition, the company has
build the biggest name in the tech world; maintaining and expanding its branded name is also the
objectives for Apple to dominate in the competition.
1.5-Strategic Posture
Apple pursued many differentiation tactics in its strategy by its innovation on design, quality and
customer service, and targeted customers from all market. Consumers are less sensitive to price
due to their brand loyalty.
1.5.1- Corporate Strategy
Apple Inc. creates value for it’s consumers, team, and investors by creating a long-term vision to
create and provide innovative products to consumers. They provide easy to use products
designed to create a lifestyle brand that create value and comfortability. The company focuses on
the growth of their iPhone by continuing to compete with companies like Samsung and LG in the
smartphone industry. They focus on being one step ahead of other companies as it reflects upon
their corporation as the leading technological global company.
1.5.1.1- Directional
Apple’s directional plan is to keep up with consumer
demands and implement the latest technology into
their products to essentially grow their business and
increase profits.
1.5.1.2- Portfolio Analysis
The BCG Matrix of Apple inc. shows the diversity of products Apple introduced into the
electronic market. Apple Inc. generates a little profit from Apple TV product, and iPhone and
iPad are rising stars. The Mac air and Mac pro are in cash cow place, but they have shifted to
portable and mobile so makes them in the dog section. The big multi-part desktop which is
fading away could be also considered in the dog category.
1.5.1.3- Parenting Strategy
Apple’s parenting strategy is essentially making a decision on its mergers and acquisitions. Apple
makes a decision on which companies to buy or not buy to increase its portfolio and market
share. A prime example of one of Apple’s parenting strategies is when they bought the company
Beats by Dre and incorporated it into their products.
1.5.2- Business Strategy
Business strategy of Apple Inc. attempts to secure competitive advantage in existing produce,
and Apple Inc. incorporates various business strategies in order to secure competitive advantage
in mobile communication and computer segment. They provide product differentiation by having
a unique design and operational functionalities.
1.5.3.- Functional Strategy
Apple Inc. began the launch of iPhone since 2007 and redefined the appearance and function of
smart phone. In 2010, the company introduced its ipad which is a revolution of the computer
industry. Iphone and ipad runs iOS operating system allow the product to have touch screen,
keyboard and Wi-Fi all in one device. The invention of ipad established an new image of
computer and drove many competitors to the market, but the functional strategies save Apple
from its declining and lead the business to higher level of success.
1.6- Policies
Apple Inc. has certain policies in order to guide and provide its consumers with proper service.
Its policies associate with customer-care, security, sales and refunds, hardware warranties, and
legal information and notices. Apple Inc., a thriving and successful company that is known
worldwide, sells thousands of its products to its consumers every day; therefore, as a customeroriented company, it seeks to maximize customer-satisfaction by providing wonderful service to
its consumers. For instance, Apple created the Genius Bar, which is located in every retail store,
in order to assist its customers with their purchased products and answer any questions or
concerns regarding the items. Most importantly, as one of the largest tech companies in the
world, it prioritizes to protect its consumers’ personal information online and to respect their
privacy by upholding these policies.
1.7- Alignment
Apple has a skilled workforce that is willing to deliver the best services and follow through with
the vision set by the managers and top CEOs of the corporation. According to Forbes magazine,
even after many failed innovations, Apple has always stuck to the practice of doing everything
itself, thus, creating cutting-edge hardware. Apple has instilled the drive to achieve greatness
with every service and every new innovation into their employees. Apple has tried to focus on
the unique aspect of what it stands for and that is “creating something different”. For example,
Apple was the first corporation that took a risk in creating an intuitive user interface and new
sleek designs. With every other corporation following similar trends, Apple stood out in offering
something different in the shape of new iPhone models every year and at the same time
introducing new and catchy gadgets such as the Apple watch.
II. Corporate Governance (Tianran)
2.1 - Board of directors
Source: http://quotes.wsj.com/AAPL/company-people
For Apple Inc., there are eight members on the Board of Directors. Former Chief Operating
Officer of the company Timothy Donald Cook has served as currently Chief Executive Officer,
and Arthur D. Levinson is the chairman of the Board of directors. Most members of BOD are
prestigious and have been involved with Apple for at least seven years with experience of top
executive position such as Duke University and Nike Inc.
2.2 - Top management
All executive list
The Apple management hierarchy as shown above refers to the management structure of the
company. Co-founder Steve Jobs established this hierarchy management system and used to be at
the top of the management hierarchy until 2011. According to the management system, at the top
of the management is the board of directors who have the highest amount of power and most on
the line over the success of the company. The board includes the CEO of the company, the
Chairman of the board and other eminent corporate individuals with considerable share in the
company’s equity. The next in the list of Apple management hierarchy are the Vice President
positions. The individual VPs have considerable freedom but are all ultimately required to report
to the senior VPs and the CEO. The teams which assist the above mentioned VPs consist of the
positions which make the third tier of the Apple management hierarchy. The number and the kind
of managers/ executive which make up the teams of these VPs depend on the nature of the
respective department they are heading and the requirements within. The hierarchical division at
this level is done on the basis of the products in the Apple rooster.
All in all, the apple management hierarchy is said to be based on the spoke and wheel approach,
where the CEO is at the center of all operations.
III. External Environment: Opportunities and
threats (SWOT) (Tianran Lin/Yiyun)
3.1 - Natural Physical Environment: sustainability issues
3.2 - societal environment
3.2.1 - Economic
3.2.2 - Technological
3.2.3 - Political Legal
3.2.4 - socio cultural
3.3 - Task Environment
External environment of an organization which influences its capacity to achieve business
objective. Any business or purchaser with coordinate contribution with an association might be a
piece of the task environment. Therefore, the presence of Apple relies upon the outer factors, for
example, competitors, customers and suppliers. By analyzing those variables, which is based on
Porter’s five force, will make the company association.
1. Competitors
In economics, competition is not only a situation that people are seeking a restricted resources in
a similar zone endeavor with others, it is also the action of game in which each of the general
population or groups is endeavoring to win, or a specific occasion at which this action happens.
According to the diversity of Apple products, it implies that Apple products contends in a wide
range of business sectors, and each of which might have different mar
2. Customers:
3. Suppliers:
3.3.1 - Threat of new entrants
Since Apple has a solid brand picture, advancement, and administration, it improves troublesome
level for new participants to go up against. In addition, because of Tim Cook’s generation
organize expertise, it is a staggering resistance against low-end unsettling influence from new
members. New contestants will encounter issues planning or beating the creation arrange cost
structure. Therefore, the threat of new entrants that could debilitate the piece of the overall
industry of Apple is direct. As Maverick (2005) state, “This is primarily due to two factors: the
extremely high cost of establishing brand name recognition.” Apple has a creative group that
grasps innovation. Due to this reality, they will stay focused in the market.Adversary associations
are distributing colossal adds up to showcase their items to the shoppers. For instance, HTC,
Huawei, Lenovo, ZTE, and BenQ are the new contestants that stances tremendous rivalry in the
business. Enormous measures of capital their items the market. This will at last prompt rivalry
from the adversaries.
3.3.2 - Bargaining power of suppliers
3.3.3 - Threat of substitute products or services
3.3.4 - Bargaining power of buyers
3.3.4 - Rivalry among existing firms
3.3.6 - The 6th force
3.4 - EFAS Table
IV: Internal Environment: Strengths and
Weakness (SWOT) (Roy & Henry)
4.1 Core Competencies (Roy)
4.2 VROI Analysis (Roy)
4.3 Business Model (Henry)
Apple’s business model is a combination of various others including direct sales, indirect sales,
freemium, and subscription model. They have multiple revenue streams, which makes it unique
and provides them with strategic advantage. The direct sales involve Apple’s retail stores,
network carriers, and third party retailers that sell their product. This is because salespeople are
selling the iPhones, iPods, iPads, and macbooks directly to you. [to be continued]
4.5 Corporate Structure (Henry)
4.6 Corporate Culture (Roy)
4.7 Corporate Resources (Henry)
4.7.1 Marketing
4.7.2 Finance
4.7.3 Research and Development
4.7.4 Operations and Logistics
4.7.5 Human Resources
4.7.6 Information System
4.8 IFAS Table (Roy)
V. Analysis of Strategic Factors (SWOT)
5.1 Situational analysis (SFAS Table)
5.2 Review of Mission and Objectives
(_Heidi)
VI.Strategic Alternatives and Recommended
Strategy (Amina, Rosario)
6.1 Tows Matrix
6.2 Strategic Alternatives
6.2.1 Pros and Cons
6.3 Recommended Strategy
6.3.1 Corporate Strategy
6.3.2 Business Strategy
6.3.3 Functional Strategy
6.3.4 Policies
VII. Implementation (Shiyu, Xiaoxi)
7.1 - Implementation program
7.2 - What must be done
7.2.1 - Program activities
7.2.2 - Action Steps
7.2.3 - Who implements strategy
7.2.4 - Matrix of change
7.3 - Organizing for action
7.3.1 - Corporates structure
7.3.2 - Job Creation
7.4 - Action Plan
VIII. Evaluation and Control (______)
8.1 - Measuring performance (Reecha)
8.2 - Balanced scorecard (Nadja,
8.2.1 - Financial
8.2.2 - Customer
8.2.3 - Internal Business process
8.2.4 - Learning and Growth
IX. Appendix
X. Works cited
Work cited
Brunette, Brandon. "Apple Inc Objectives and Strategies." N.p., 21 July 2015. Web. 06
July 2017.
Paczkowski, John. “Breaking Down Apple’s Retail Distribution Strategy.” Allthingsd.
Web. 06 July 2017.
Dudovskiy, John. "Apple Business Strategy - Product Differentiation in Design and
Functionality." Research
Methodology. N.p., 12 Mar. 2017. Web. 06 July 2017.
"Policies." Policies - Shopping Help - Apple. Apple Inc., 2017. Web. 06 July 2017.
AAPL Income Statement | Apple Inc. Stock - Yahoo Finance. (2017). Finance.yahoo.com.
Retrieved 8 July 2017, from https://finance.yahoo.com/quote/AAPL/financials?p=AAPL
[http://www.investopedia.com/ask/answers/042315/what-apples-current-missionstatement-and-how-does-it-differ-steve-jobs-original-ideals.asp]
From left to right: Larry Page, Eric Schmidt and Sergey Brin
2010 Was The Year
Of Google
Kacey K. Chea
TABLE OF CONTENT
I. CURRENT SITUATION...................................................................................................4
● HISTORY...................................................................................................................4
● CURRENT PERFORMANCE...................................................................................4
○ RATIO ANALYSIS........................................................................................5
○ COMPETITOR COMPARISON...................................................................5
○ INDUSTRY COMPARISON..........................................................................5
● MISSION....................................................................................................................6
● OBJECTIVES.............................................................................................................6
● STRATEGIC POSTURE............................................................................................7
○ CORPORATE STRATEGY............................................................................9
■ DIRECTIONAL..................................................................................9
■ PORTFOLIO ANALYSIS..................................................................10
■ PARENTING STRATEGY.................................................................13
○ BUSINESS STRATEGY.................................................................................13
○ FUNCTIONAL STRATEGY..........................................................................13
● POLICIES...................................................................................................................13
● ALIGNMENT.............................................................................................................13
II. CORPORATE GOVERNANCE.......................................................................................14
● BOARD OF DIRECTORS.........................................................................................14
● TOP MANAGEMENT...............................................................................................15
III. EXTERNAL ENVIRONMENT: OPPORTUNITIES AND THREATS (SWOT)............16
● NATURAL PHYSICAL ENVIRONMENT: SUSTAINABILITY ISSUES...............16
● SOCIETAL ENVIRONMENT...................................................................................16
○ ECONOMIC...................................................................................................16
○ TECHNOLOGICAL.......................................................................................16
○ POLITICAL-LEGAL......................................................................................17
○ SOCIO-CULTURE.........................................................................................17
● TASK ENVIRONMENT.............................................................................................18
○ THREAT OF NEW ENTRANCE....................................................................18
○ BARGAINING POWER OF SUPPLIERS.....................................................19
○ THREAT OF SUBSTITUTE PRODUCTS OR SERVICES..........................19
○ BARGAINING POWER OF BUYERS...........................................................20
○ RIVALRY AMONG EXISTING FIRMS.......................................................20
○ THE 6TH FORCE..........................................................................................20
● EFAS TABLE.............................................................................................................21
IV. INTERNAL ENVIRONMENT: STRENGTHS AND WEAKNESSES (SWOT).............23
● CORE COMPETENCIES.........................................................................................23
● VRIO ANALYSIS.......................................................................................................23
● BUSINESS MODEL..................................................................................................24
● CORPORATE STRUCTURE...................................................................................24
● CORPORATE CULTURE........................................................................................25
● CORPORATE RESOURCE.....................................................................................25
2
○ MARKETING...............................................................................................25
○ FINANCE.......................................................................................................26
○ RESEARCH & DEVELOPMENT................................................................27
○ OPERATIONS AND LOGISTICS................................................................27
○ HUMAN RESOURCE...................................................................................27
○ INFORMATION SYSTEM...........................................................................27
● IFAS TABLE..............................................................................................................28
V. ANALYSIS OF STRATEGIC FACTOR ANALYSIS (SWOT)........................................28
● SITUATIONAL ANALYSIS (SFAS TABLE)...........................................................29
VI. STRATEGIC ALTERNATIVES AND RECOMMENDED STRATEGY......................30
● TOWS MATRIX........................................................................................................31
● STRATEGIES ALTERNATIVES..............................................................................32
● RECOMMENDED STRATEGY................................................................................33
VII. IMPLEMENTATION.....................................................................................................33
VIII. EVALUATION AND CONTROL.................................................................................34
X. WORKS CITED.................................................................................................................35
3
I. CURRENT SITUATION
1.1 -HISTORY
Larry Page and Sergey Brin, two graduate students met at Stanford University in 1995 and
began exchanging and forming ideas that lead to the founding of Google in 1998. The company was
founded upon $100,000 of funding from Sun Microsystems, a deal engineered by top executive - Eric
Schmidt, who is now Executive Chairman of Google’s Board of Directors. “The name Google was
chosen as a play on “googol”, a mathematical term for the number one, followed by one hundred
zeros.” It is said that the founders used this term because it related to the web, which is
“exponentially growing”. Google grew quickly and was instantly recognized as being a better search
engine then its competitors.
By the turn of the century Google could be used in 15 different languages, which made it
internationally recognized and expanded its number of users around the world. Mid 2004 shares of
Google began to be offered making the company public. In 2006 Gmail a Google free email service
became available, and many other Google services followed such as Google Docs, Google Apps,
Google Chrome, and many other technological services that Google now offers known as “Google
Technology”.
By 2010 Google was seen around the world as a leader in the technology world. Due to its
rapid growth as a search engine and the implementation of all of its services, products, and
applications Google became among the strongest, and most recognized brands.
1.2 - CURRENT PERFORMANCE
In the past six years Google’s financial statements show they had extraordinary revenue growth. It is
expected for a decrease in growth due to the online advertising market reaching its maturity, as well
as stronger competition.
4
1.2.1 - RATIO ANALYSIS
The current ratio of Google in 2010 is 4.158. Current ratio is total assets over total liability.
Generally ratio that ranges from 1.5 - 3 means the companies are doing well in terms of assets over
liability. In this case, Google’s current ratio is at 4.158, which is over 3 meaning; Google is
generating more assets than its liability.
In 2010 Google’s debt to equity is .25. The debt to equity is the amount of debt a firm takes into
finance their assets, therefore, the lower debt equity number the better.
Quick ratio tells the short-term liquidity in the firm, it also measures the short-term debt. A
higher quick ratio means how fast a firm paying off their short-term debt. In this case, Google’s quick
ratio is 4.16.
1.2.2 - COMPETITOR COMPARISON
1.2.3 -INDUSTRY COMPARISON
As people around the world increasing their use of the Internet, marketing space grows; this
has made an increasing number of companies want to reach the constantly increasing number of
Internet users. Google's currently dominant position in the market gives them an advantage.
The search engine providers’ market share that Google holds in the US continues to grow.
Additionally the use of other programs that Google offers such as Google Chrome and Gmail
continues expanding since their introduction. Google's advertising revenues depend on this large and
expanding user base.
5
1.3 - MISSION
Beginning Mission: To create the ultimate search engine to help users tame the unruly and
exponentially growing repository of information that is the Internet.
Current Mission: To organize the world’s information and make it universally accessible and useful.
Google’s mission is to serve 3 primary groups - users, advertisers and Google network
members and content providers. Users are a bulk a Google’s consumers so it is of utmost important to
satisfy its users and ensure retention and ‘stickiness’ across its products by providing a pleasant UI
and UEX which will urge the consumer to continue to use Google’s products and ensure long term
sustainability. Secondly, Google generates 97% of its revenue through advertisers who understand
user behavior through search history and offer ads based on demographics such as age, gender and
geographic location. Lastly, network members and content providers gain access to AdSense which
allows revenue sharing among companies, thus strengthening business relationships.
1.4 -OBJECTIVES
● Ease of access to information: Google sticks to its roots of search engine technology by
providing the best possible search results based on freshness, speed, relevance and
comprehensiveness. Founder Larry Page admits, “Access to information will play a key role,”
in terms of global economies, politics and societies. Google’s search functions empowers
access to information across borders, languages, cultures, tablets, mobile phones, desktops,
operating systems, etc. and aims to offer its services and target as many platforms as possible.
●
Free communication for all: Google has democratized the communication industry as it
aims to offer free communication and enhance interactivity among its users. CEO, Larry Page
takes pride in the creation of Gmail as it entered the market by offering 100x the space offered
by leading competing rivals, and now has over 10 million users.
●
Provide relevant ads: It is no unknown fact that ads are a predominant portion of what pays
the bill for Google. However, the company is focused on providing a user experience of
utmost quality that is fast, precise and extremely intuitive and easy to use. The company’s
belief is as follows: “Put your message in front of potential customers right when they're
searching for what you have to offer”. Enabling support activities not only ensures
sustainability for Google, but it also empowers businesses around the world through its
AdWords advertising platform, which operates through an auction system. Simply said, the
highest bidder gets their ad displayed on Google properties.
●
Enhance video offerings through Youtube: The acquisition of Youtube was a massive win
for Google as it opened up whole new playing field in sharing and accessing video content.
Youtube enables users to access video content whenever they want and on any device, and
6
also share it with the world. Youtube’s sign up services are extremely easy to set up an
account and upload videos within a few seconds or minutes. Google strongly believes video is
a powerful medium and the company is devoted to vastly allocating resources in enhancing
Youtube’s services and strengthening its dominance in the video sharing space.
●
Enable livelihoods through online Google products: As mentioned above, Youtube is an
extremely powerful medium in terms of effectively propagating digital information. Google
embraces the motto, “A video is worth a million words,” thus affirming video’s necessity and
ability to spread information more efficiently than any other form of media. For example,
Salman Khan, founder of online education resource platform Khan Academy, quit his full
time job as a hedge fund manager to create a virtual resource where he explains principles in
subjects ranging from finance to chemistry. He has uploaded over 2000 videos, which have
been viewed more than 45 million times. Thus, individual aspirations to transform the
education industry are a small example of how people may make a livelihood through
Google’s useful product offerings. Furthermore, more than 1 million people use AdWords as a
sole medium of expanding business through marketing and finding users through clicks within
Google’s search results.
●
Focus on mobile: Nearly 10% of Youtube’s views come from mobile devices. This
magnificent feat was fuelled by enhance network connectivity and the introduction of
advanced cell phone offering from Samsung and Apple’s iPhone among others. The PC is
slowly losing its market share as information is easier for the user to access on mobile devices
on the go and convenient to carry because of its small size.
1.5 - STRATEGIC POSTURE
●
Shape the future:
Google made the Internet more attractive to new and current users. They made global
information very accessible to everyone. Google sets a standard for other and future
companies who want to be in its industry. People use Google to help ease their web search
tasks and Google provides that for their users and they demand perfection and creativity from
their employees. Google has exceeded their top competitors Yahoo and Microsoft Bing in the
field of search engine.
Google’s Android operating system began to become a deadly threat to Iphone’s IOS.
Google has turned mobile phones with their efficient operating system into a true smartphone.
Android is catching up with Apple mobile application market. The war between these two
giant mobile operating systems will revolutionize the smartphone industry within the near
future.
●
Adapt to the Future:
7
○
○
○
○
○
●
Google is looking to stay competitive in the future, which is why they have made
many key acquisitions in 2010.
In 2010 Google bought travel software firm ITA. “Today, almost half of all airline
tickets are sold online” Marissa Mayer, vice president of search products and user
experience at Google. With this acquisition Google has leaped forward against their
competitors because it helps make it easier for business and busy suitors to book their
flights while on the go.
One of the biggest issues of Google is security breach. A company is as big as Google
is always prone to theft. In August 2010, Google acquired Zetawire, a Canadian
company that allows consumers to make payments on their smartphones using near
field communications (NFC) technology. All credit, debit, and check payment systems
are now securely embedded in your phone. This helps reduce the risk of identity theft,
a crime that has rose dramatically within the past years.
Google also trying to stay on top of the food chain by completing the acquisition of
Phonetic Arts, it creates synthetic voices that will read words in a natural, expressive
way. With this Google mobile will be able to keep up with the Iphone giant.
“In 2009, Google Docs was introduced. It allowed a user to upload all file types,
including ZIP files, in order to work with those files online.” (Case study, Page 568).
This is very useful for students and working professionals because it allows users to
edit and contribute to the documents in real time. It also eliminates the hassle of
carrying portable flash drives.
Reserving the right to play:
○ In order for Google to survive in the future, they must continue to become the most
secure and reliable source of web searches and mobile processor. It tries to reach the
number one spot in web search engine and mobile operating system by acquiring those
companies. They have made it clear that they want to stay competitive in the near
future.
To work at Google, all employees must know the following ten things:
(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. (10) Great just isn’t good enough.
8
1.5.1 - CORPORATE STRATEGY
Google makes money through advertising. “To maximize profits, it is in Google’s interest to learn as
much as it can about its users. With more information, it can sell more accurately targeted ads, and
therefore more expensive ones”. Their goal is to be the leading innovator in providing information
and in modern technology including mobile, search engine and cloud computing.
1.5.1.1 –DIRECTIONAL
Google’s directional strategy is leaning towards growth in mobile and social strategy. “When
using Google products, the company already knows who your most important contacts are, what your
core interests are, and where your default locations are.” This makes it easier for users because they
are using products that already know their preferences.
“Google’s 2010 acquisition of AdMob boosted the company to the head of the class of mobile ad
networks, with a commanding 59 percent share of all US mobile ad revenue according to IDC.”
9
For Google, their smartphone subscribers are only trailing behind those of Black Berry, which is
plummeting, but for Google their subscribers have increased 3 folds over the year. The acquisition of
AdMob helped Google excel in becoming the leading competitor against IOS.
1.5.1.2 – PORTFOLIO ANALYSIS
● Google, owner of the world's most popular search engine, will widen its lead in the $877
million U.S. market for mobile advertising, ending the year with a 59 percent share, according
to research firm IDC. During the year, Google has taken more than half of the mobile ads
market shares from its main competitors (Yahoo & Microsoft). This was the turnaround year
for the company because it gained the public trust in mobile business.
● In 2010, for the month of August, Google's share dipped slightly to 65.4 percent from 65.8
percent. This small dip could lead to a big problem if Google doesn’t do anything about it.
● During that short falling month of Google. Yahoo gained more customers. “Web users ran
almost 15.7 billion explicit core searches in August. Out of those, Google led the pack, of
course, with 10.3 billion searches. Yahoo claimed second place with 2.7 billion searches, a
gain of 3 percent from July, while Microsoft came in third with 1.7 billion searches, up 2
percent from July.” Google needs to continue to provide the best search results on the web
and keep it basic and simple in order for their dominance in search engine to continue.
Google 2010 Quarterly earnings:
First Quarter: (April 15, 2010)
Total Assets: $42,871,000,000
Revenues:
1 United States: $3,196,000,000
2 United Kingdom: $842,000,000
3 Rest of the world: $2,737,000,000
a Total Revenue: $6,755,000,000
●
●
●
Cash and cash equivalents at end of period: $9,192,000,000
Dividend Yield: 5.9%
Closing stock price of $567.12 of our Class A common stock on March 31, 2010.
●
“Growth rate has generally declined over time, and we expect it will continue to do so as a
result of a number of factors including increasing competition, the difficulty of maintaining
growth rates as our revenues increase to higher levels and increasing maturity of the online
advertising market in certain countries.”
10
Second Quarter: (July 15, 2010)
Total Assets: $48,045,000,000
Revenues:
1 United States: $3,288,000,000
2 United Kingdom: $770,000,000
3 Rest of the world: 2,762,000,000
a Total Revenue: $6,820,000,000
●
●
●
Cash and cash equivalents at end of period: $10,713,000,000
Dividend Yield: 5.7%
Closing stock price of $444.95 of our Class A common stock on June 30, 2010.
Third Quarter: (October 14, 2010)
Total Assets: $53,342,000,000
Revenues:
1 United States: $3,517,000,000
2 United Kingdom: $840,000,000
3 Rest of the world: $2,929,000,000
a Total Revenue: $7,286,000,000
●
●
●
Cash and cash equivalents at end of period: $10,198,000,000
Dividend Yield: 5.4%
Closing stock price of $525.79 of our Class A common stock on September 30, 2010.
Fourth Quarter: (January 20, 2011)
Total Assets: $57,851,000,000
Revenues: (Accumulative from the past three quarters)
1 United States: $14,056,000,000
2 United Kingdom: $3,329,000,000
3 Rest of the world: $11,936,000,000
a Total Revenue: $29,321,000,000
●
●
●
Cash and cash equivalents at end of period: $13,630,000,000
Dividend Yield: 5.4%
Closing stock price of $593.97 of our Class A common stock on December 31, 2010
Sales/Revenue (2010) = $29,321,000,000
11
Google’s market share by the end of 2010 was 84.33% according to the historical data analysis on
Google.com. According to the data, Google was a giant amongst the Internet service providers.
They are still the leading company in the industry. Google has more than half of the market share
and they are still renovating to make human life easier and information around the world easily
accessible (sticking to their current mission statement).
High Growth
High Market Share
Google’s star product is Android OS. The
mobile industry has boomed because of Apple
iPhone IOS revolutionized the mobile industry,
but not everyone is happy about the IOS because
it requires users to purchase products, Apps and
updates only though Apple. Google’s Android
OS is an open platform for users. It has become
one of IOS greatest competitor. Android IOS
has the second highest market share in the
mobile industry.
Google still hadn’t found a way to make
Youtube a constant revenue generator. Youtube
is a growing demand for users because it allows
anyone anywhere to upload and watch the
uploaded videos for free. YouTube’s videos
viewed grew 139% to 12.2 billion in November
and unique visitors grew 32% Y/Y to 129
million.
Youtube is a growing product for Google and
Google needs to keep investing in the site in
order for it to keep growing.
Low Growth
Low Market Share
Google’s cash cow is their powerful online
search engine. They have and continuously
making money from it. In 2009, Google website
made $15,723 Million and increases to $19,444
Million in 2010. The search engine is one of
Google’s main steady cash stream for the
company. Their total advertising revenue in
2010 is $29,321 Million.
Google is looking to jump into the social media
world next year, but this will be hard for the
company to do so because Facebook and Twitter
are already a well known established social
media site and retaining customers from them
are hard and very costly. This is why Google
Plus is in this box; they must not go through
with project and continue on with search engine
and mobile.
12
1.5.1.3 – PARENTING STRATEGY
Google’s parenting strategy centers on examining its business unit to its strategic factors.
Google has long established a center of excellence through its search engine, and recognize its strong
capabilities and value creation that its search engine creates. Even the word Google has become a
popular word to use for Internet search. With its search engine as a shining example of Google’s
excellence, the company pursuit to uphold the same excellences throughout all of its other services
and products, as well as current and future acquisitions.
1.5.2 – BUSINESS STRATEGY
Within the business strategies, Google chose to focus on differentiation to increase its
competitive advantage. To continue to establish itself as the premier company for Internet searches
and technological advance and innovations, Google continues to provide new products, services, and
increased its company acquisitions to diversify its portfolio. The product rollout of Gmail and
Android, as well as the acquisition of Youtube are just some of the many examples of Google’s effort
to diversify, and increase its competitive advantage among its growing rivals.
1.5.3 – FUNCTIONAL STRATEGY
Google Uses Human Resource Management Strategy to maximize productivity, as well as to
achieve its corporate and business objectives, therefore Google set out to hire the best and the
brightest people for the company. Google value its employee very highly, and gives out various
benefits to their employee. By retain its talent pool, Google is able to keep a steady stream of
innovation, and pull ahead of its competitors. Google also employs a diverse workforce, which often
shows an increase in higher productivity after a growth strategy.
1.6 - POLICIES
"Google policy is to get right up to the creepy line and not cross it. With your permission you
give us more information about you, about your friends, and we can improve the quality of our
searches. We don't need you to type at all. We know where you are. We know where you’ve been.
We can more or less know what you're thinking about." Eric Schmidt, CEO of Google. Google
works better when
1.7 – ALIGNMENT
Google’s current mission is to organize the world’s information and make it universally
accessible and useful. They want to serve 3 primary groups - users, advertisers and Google network
members.
13
Google has produced many useful products for all of their users, currently their most
recognized and used include Google Docs, which is a free, Web-based word processor, spreadsheet,
presentation and data storage service. Gmail a free, advertising-supported webmail. Google Chrome a
web browser, Picasa an image organizer and image viewer for organizing and editing digital photos
and integrates photo-sharing, Google Earth a virtual globe, map and geographic information program,
and many more programs.
Overall, it can be observed that Google’s mission and strategy are in alignment. It could be
said that their strategies and actions exceed their mission. The company over-delivers in launching its
products, which do not only necessarily “organize the world”. Therefore, one may conclude that the
company is accomplishing their mission, but additionally doing much more for the better.
II. CORPORATE GOVERNANCE
2.1 – BOARD OF DIRECTOR
1
2
3
4
Nine current members on the Board of Directors
Former Sun Microsystems executive Eric Schmidt has served as Chairman of the Board two
different times, and is currently. The Google founders Larry Page and Sergey Brin are
members of the Board of Directors.
Most members have been involved with Google for at least 5 years.
All of the members are very prestigious, having or having had additional top executive
positions such as top positions of the best Universities, and other organizations.
14
2.2 – TOP MANAGEMENT
Larry, Sergey, Eric, and other members of the senior management team are what make it
possible to execute Google’s business strategy.
The future success of Google depends largely on the continued service of key members of the
senior management team. In particular, Larry Page, Sergey Brin, and Eric E. Schmidt are critical to
the overall management of Google, as well as the development of the technology, the culture, and the
strategic direction. All of the executive officers and key employees are at-will employees. The loss of
any of the current management team could seriously harm business.
15
III. EXTERNAL ENVIRONMENT: OPPORTUNITIES AND THREATS (SWOT)
3.1 –NATURAL PHYSICAL ENVIRONMENT: SUSTAINABILITY ISSUES
According to the Google case study from the textbook. The only physical environmental
issues that could possibly impact Google is the seasonal changes. Different seasons could impact
Google’s profit earning due to the companies inquire less or more advertisements for their products
and services. For example, in the clothing or shoes, or fashion industry in general. Firms will have
stocked inventory that are from last season. Those products from the previous seasons become less
valuable. These retail firms need to get the passed season product out of their hands by advertising
sales or distribute them to outlets. These retail firms would need Google’s advertise division to help
get rid of the passed season products by the end of the year. While Google is helping the firms to
catch more customers’ attention, these retail firms are also helping Google generating profit. Every
Time these advertisements appear on Google, customers who are interested, even though they do not
buy it, when each user clicked in, Google can earn the profit from the retail firms that they are
advertising for.
3.2 – SOCIETAL ENVIRONMENT
Google established itself as one of the most used search engine around the world. To tailor to it’s
international customers, Google adapted its website so that it will appeal to the various culture,
religion, and values from different countries. One major factor that pushed Google to change and
restrict some of its content was due to government pressure from countries such as China, Germany,
and France, where some information are deemed too sensitive and negative to be posted publicly.
3.2.1 – ECONOMIC
Many companies during 2010 were indicating slumps and slow growth due to the economic downturn
from the previous years. Google recovered and overcame the general economic outlook by taking
advantage of the growing technology and Internet sector. The company continues to expand its search
engine services as well as other services across the globe, and see increases in profits. Google
continues to acquire more companies, and helped Google stabilized and expand the company.
3.2.2 – TECHNOLOGICAL
Google’s continue to acquire more company to complement and improve its services. Companies like
AppJet was acquired due to its real time collaborative editor for Google Doc, while Agnilux was
merged to provide server technology start up for Google’s Android platform.
Due to Google’s heavily reliant on advertising revenue, any disruption from its online search services,
and falsify visits will hurt Google greatly. Problems from fraudulent clicks, spammers, can all
potential hinder Google’s profit margin because of refunds to advertisers, and the lost of confidence
from its customers. Failure to keep the servers online due to natural disasters, hackers, and
16
infrastructure problem has also hindered Google’s services in the past. To try to lessen the impact of
these technological issues, Google has contingency plans set up, and are exploring new ways to cover
and solve the issues.
3.2.3 – POLITICAL-LEGAL
● Google has encountered some political issues especially when concerning foreign countries.
Many other countries laws and politics do not align with the US and therefore an international
company such as Google must personalize according to each country. One such country is
China; Google was having trouble with the Chinese market because of their laws. But in
March of 2010 Google announced, “it will end its self-censorship of harmful information in
accordance with Chinese law”. This triggered many discussions; many believe that
multinational corporations should abide by their host country's laws.
● Google being and online company deals with many legal issues concerning the Internet and its
content. One important issue that arises from this is the constant application of laws to protect
against content on the Internet. This affects Google because these laws could affect their
ability to provide useful products and services to users.
● In addition Google has 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 with the
release of a copyright information page. This page provides t information regarding digital
info and
● Provides links to notify both Google and the U.S. Copyright Office of suspected infringement.
3.2.4 – SOCIO-CULTURE
Everyone is becoming more connected to one another due to the new innovations in
communication available especially through the Internet. Google helps people be able to navigate the
Internet. “As Internet use increases among all age groups and across all cultures, we will become
increasingly more dependent on internet search.”
Additionally, most existing phones are now Internet capable devices. These mobile devices
are used for anything you can think of; maps, to locate any place on earth, staying updated with sports,
download music, and even quick research. Google benefits greatly from this considering they are an
all-technological Internet based company. Google is continuing to find new ways to help people get
connected with services through 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.
Also Google is using their cultural awareness and social competence to maximize its profits
by tailoring products to the regional needs of its users.
17
3.3 – TASK ENVIRONMENT
The existence of Google depends on the external factors such as: competitors, customers and
suppliers. These factors or what make the organization.
1
2
3
Competitors: Competition is what drives for improvement. Organizations want to win, they
want to triumph over others threatening their top place and Google’s competition keeps it
pushing to be the best and offer the best to all of its users. The goals that Google sets are in
accordance with the competition and they strive to achieve these goals set.
Customers: All organizations exist because there is a market for what they offer; Google is all
about the users. If Google didn’t have loyal users and new users every day they would not be
able to continue expanding or even existing. Additionally Google strives to maintain their
loyal users and continue acquiring new users, to do this they cannot sit by idly, they need to
continue providing better and newer products and services
Suppliers: The suppliers in the case of Google would be those adding advertisements. The
advertisements added help generate a large portion of the revenue. Google needs to keep their
suppliers happy and generate views for them to help them generate business.
3.3.1 – THREAT OF NEW ENTRANCE
Almost all firms will face potential threat of new market and industry competition. It is
somewhat ubiquitous. However, the more stable, and strongly positioned a company is, the tougher
the challenge for the new firms to compete with the firms that already established its position in its
industry. In this case, Since Google specializes in being the number one search engine in the world;
there are many challenging barriers for the new competitors to step into this industry. Being able to
start a search engine, one needs to have a good financial back up or background to be invested by the
bank or other firms. In this case, Google is already one step ahead of other competitors. Since Google
already has the strong infrastructure and popularity, it allows Google to have extra strengths and
advantages to deal with the threat of new entrants.
Although Google specializes in its search engine, and it is unlikely that competitors will
develop new search engine to overcome Google in the near future, other competitors can focus on
developing mobile software, applications, or software for small businesses to compete with Google’s
current applications such as Google maps, translation, cloud, drive, plus and many more.
Another potential threat of new entrants is the social media sites. Before Facebook, Tumblr,
Instagram, Twitter and other social media sites came out. Google dominates being the number
advertising sites. However, for example, Facebook has become the number one site where people
visits once or more a day. The uprising social media sites can be a potential threat to Google because
it gives the advertisers more options to choose whether to let Google advertise their products or
Facebook.
Overall, Google does not have to worry about the upcoming threat of new entrants for at least
the next 20 years. One main reason of it is that, not only Google had already established its position
in its industry, but also innovating applications, software to benefits online consumers, small
18
businesses and education. Google continues to innovate, gives the public of an image of how
aggressive they are to strive for success. Google is already not one step, but steps ahead of its
competitors, and with its aggressive innovating attitude, it will only leave its competitors far more
behind.
3.3.2 – BARGAINING POWER OF SUPPLIERS
When it comes to the bargaining power of supplier, it is not so relevant or significant to this
organization because Google itself is the supplier. Google supplies information, application software,
innovative new technologies, real time software, and so on. In other words, Google’s best supplier is
the online Internet surfer. Any surfer that uses Google, are practically Google’s supplier. However,
there are still some important factors that Google depends on in order to survive.
For example, since it is free for the surfers who use Google, Google needs to find another way
to generate profit. Therefore, Google largely depend on the long-term support and investment of
online advertisers. According to the Forbes.com, Google generate 97% of all the revenue from
advertising for other retail firms. In this case, all the advertisers are pretty much Google’s main
supplier. However,
Google is also the advertisers suppliers. Because Google is not the only option for the
advertisers to choose to advertise one, at the same time, those advertisers are not Google’s only
option. The relationship between Google and its advertisers are suppliers and customers, and the
relationship can be reversed. However, advertisers having other options to advertise their product are
one of the main reasons why it has leverage and bargaining power. If all the advertisers choose to not
use Google instead they use Bing, or Yahoo to advertise. Not only Google will lose its customers, but
it will also help its competitors such as Bing or Yahoo to grow. In this case, losing customers which
leads to help competitors grow is a lose situation.
3.3.3 – THREAT OF SUBSTITUTE PRODUCTS OR SERVICES
Since Google has already established its searched engine position in the industry. It is hard to
compete with Google because of its continuous innovation. In this case, Google plays in a defensive
role to protect itself from the threats. However, one the major substitute products or services that
Google is facing current, are Microsoft’s Bing, Yahoo, and Bing in the Chinese market. Although
Google are known as the number one search engine, but it needs to be constantly innovating not only
on search engine, but also stepping into other categories, which it already had.
Another potential threat of substitute products or services that Google encounter is social
media sites, such as Facebook, Instagram, twitter and so on. Google generates 97% of the revenue
from advertising for retail firms. However, due to the raising popularity of social media sites, many
advertisers choose to invest in the social media sites instead of Google.
Overall, Google has already been a well-known search engine in public’s eyes. However, it
has yet attracted the biggest market, which is the Chinese market. According to AOL.inc, there are
more than 400 millions of users that China but over 90% of them use Baidu. Google needs to step
into the Chinese market, in order to maintain its position in the long run.
19
3.3.4 - BARGAINING POWER OF BUYERS
In this case, Google’s biggest buyers are the online surfers who use Google. Google generates
97% of the income from advertising. However, the major reason advertisers choose to invest in
Google is that Google provides, free and the best services to online surfers. Which attracts more and
more Internet surfer’s everyday. As Google’s brand loyalty increased, advertisers would want to
invest in Google because they know many users use Google’s search engine.
3.3.5 – RIVALRY AMONG EXISTING FIRMS
Although Google are known for its search engine abilities, it has also stepped into many other
categories such as mobile software, hardwares and applications. Because Google has reached out of
the search engine categories, its competitors also increased. In the search engine, industry, Google’s
major rivalries are the firms that we addressed earlier Yahoo, Bing and Baidu. In the mobile industry,
Google has recently bought Motorola; it is one less big competitor for Google. However, there are
still other existing firms that potential stand as threats to Google in the mobile industry, which are
Apple, Samsung, HTC, and Apple’s IOS.
Google has also come up with Google Doc, Drive, Cloud, Plus and many other cloud services
to compete with Microsoft Word. Many small businesses and School choose to use Google services
over Microsoft because it is a cloud service, which means people who are given access to, are able to
view and edit the documents at different location. Another major, and most factual advantage Google
holds is that all the services we mentioned above, are free of charge.
3.3.6 – THE 6TH FORCE
The sixth force that Porter mentioned, is the Relative Power of Other Stakeholders. These
stakeholders can be special interest groups, creditors and shareholder, governments, unions, creditors
and shareholders. One of the main concerns that Google is encountering is government regulation.
Google serves as an internationally, which also means it will have to satisfy different consumer, and
countries, with different cultures, and regulations. For example, Google could not satisfy the Chinese
market because Baidu indexes more or most Chinese pages, when Google indexes mostly English
pages. In U.S, Google is the number one search engine, however it needs to take the Chinese market
shares in order to sustain its position.
20
3.4 – EFAS TABLE I V. INTERNAL ENVIRONMENT: STRENGTHS AND WEAKNESSES
(SWOT)
External Factor Analysis Summary (EFAS)
Opportunities
Weight
Rating
Weighted Score
Comments
Mobile partnerships 0.13
and enhancements
5
0.65
There is a mobile device
in most pockets today,
Google is following and
adding to this trend to
continue expanding.
Innovation of
products in the
market
0.11
4
0.44
The future is coming fast
and Google is leading the
innovations and
encouraging more in the
market.
Expansion by
acquisition
0.08
2
0.16
Google has currently
acquired many companies
and if they continue, there
is no stopping its growth.
Online market
0.05
2
0.1
People using the internet
for all products and
services will help grow
Google
Threats
Weight
Rating
Weighted Score
Comments
Competing search
engines
0.14
3
0.42
Yahoo and Bing still hold
a large share of the
market.
Competing ecommerce sites
0.15
4
0.6
Amazon and Ebay are
older and already had
loyal customers.
Legal Issues
0.05
2
0.1
Concerning the
distribution of certain
material to specifically
minor.
Security Issues
0.09
3
0.27
Google needs to be able
to protect the privacy of
its users.
Intellectual
0.08
2
0.16
Google has to protect
21
Property
Total Scores
themselves from possibly
being imitated.
1
5.98
Opportunities
Mobile: Google partnering with android is helping enhance the mobile world with the creation of
applications and other services. Additionally they offer these free of cost, simply with having the
mobile device you have access to their services. They are focused on developing easy to use ad
products to help advertisers extend their reach, help create revenue opportunities for our publisher
partners, and deliver relevant and useful ads to users on the go.
Innovation: Google needs to continue to innovate and provide products and services that are useful
to users, if we don’t then may not remain competitive, and our revenues and operating results will be
affected.
Employees: Google hires the best and brightest minds. If they continue to keep their standards at the
highest levels then are likely to continue having the best ideas, products and services.
Expansion by acquisition: Google has already acquired many strong companies such as YouTube
and others. If they continue adding their name to existing and widely used companies their
recognition will grow and will continue to gain loyal customers and users.
Online Market: Everything is available through the net, products and services. Google is a leader in
technology and the Internet.
Threats
Competing search engines: Bing is becoming a serious competitor to Google with the help of
Microsoft and its marketing power.
Competing e-commerce sites: E-Commerce sites such as Amazon and Ebay are older and were for
their shares of the market.
Legal Issues: Google gives the ability to access anything on the web, which could give them legal
issues. Many US and international laws restrict and even prohibit distribution of certain materials.
Security Issues: Security breaches are always possible with all of the information on the internet,
Google being a site used for internet searches and providing information they could be liable for the
release of prohibited information.
Intellectual Property: Google has many trademarks because of all of the services and application
they have created. There is the threat of having their trademarks imitated; therefore they need to keep
their guards up.
22
IV. INTERNAL ENVIRONMENT: STRENGTHS AND WEAKNESSES (SWOT).
4.1 – CORE COMPETENCIES
Core competency is when a firm understands what its competitive advantage, and utilizes the
advantage to create unique offering to its customers, creating a unique organization. In this case,
Google understands its power in the search engine industry, and rate of innovation.
Google generates 97% of its revenue from its advertisers. By offering consumers, free
services such as Google doc, Drive, and so on. Google then attracts both consumers and advertisers to
invest in it. This is one of the core competencies Google holds and hard for the competitors to copy
because of Google’s advantage in the power of search engine.
Another major core competency Google has is the rate of innovation. Although Google is
already a well-known search engine firm, it does not stop Google from developing outside of the
search engine category. Google has developed Android platform, which helps Google reach into the
mobile industry. By combining the search engine power and its mobile applications, allows Google to
provide consumers a one of the kind services.
4.2 - VRIO ANALYSIS
Value
Rareness
Imitability
Organization
Customer
Service
Yes, Allows users
to quickly search
or Google their
questions and
preferences.
No, Google is the
top search engine
company, but it
also competes
with Yahoo and
Bing.
Yes. The Internet
has a very low
barrier to entry
and anyone could
use and create
anything.
Yes, because it
follows their
mission statement
to organize the
world information
and make it
universally
accessible and
useful.
Google Mobile
Yes, due to the
profitability on
the growing
mobile market,
Google intend to
grow and lead the
way into the
future of mobile
platforms.
No, because it is
an open platform
where anyone
could reprogram
the device.
No, because
Google has a
patent on their
Mobile services.
Yes, Google is
experienced with
its search engine
and has
tremendous
resources to start
up and market its
mobile platform.
Google
Applications
(Docs, Groups,
Reader, etc.)
Yes, many small
businesses and
school
organizations
Yes the Google
Doc service is
rare because it
specializes in
Yes, it is possible
for other firms
such as Yahoo,
Bing to come up
Yes, Google
attracts consumer
by providing
many services.
23
choose to use, for
example, Google
Doc because it
allows them to
edit, view the
documents
together at
different
locations.
cloud services.
All the data are
saved within the
Google cloud
drive. Although
Microsoft has
Microsoft Word,
but it does not
provide cloud
services, which
restricts users
from viewing,
editing the
documents at
different
locations.
applications like
Google Doc.
However, because
of the Google
brand loyalty and
the advantage of
being the first in
the industry,
consumers will
choose to use
Google other than
other tech giants.
Not only its
services benefits
individuals, but
also educational
organizations and
small businesses.
4.3 - BUSINESS MODEL
Google’s business model helps them gain and retain profit by being the best information
provider service agency. When someone wants their questions answered, they usually go online and
Google their thoughts. And when they use Google search engine, Google receives a small portion
from the website that you click on Google.com. Google’s mission is to organize the world’s
information and make it universally accessible and useful. The more Google knows about you, the
better the service Google provides you. When using Google products, the company already knows
who your most important contacts are, what your core interests are, and where your default locations
are. This allows Google to be one of the best customer service providers in term of technology, search
engine and mobile. The more users they gain, the more companies will want to advertise with
Google, which allows them to gain more revenue.
4.4 – CORPORATE STRUCTURE
Google’s corporate structure is coped with multidivisional functional structure. The value
chain of Google are the based of management positions. Because Google is a global corporation, it is
necessary to divide its management into different regions. In Google’s management positions, each of
them is in charge of a section. For examples, engineering, marketing, sales, products, and so on. In
the product section there is a product management segment. Marketing section there is a marketing
management segment. Every value chains within Google corporate structure have its own segments
that are accounted for each section.
Google also specifies in hiring young, innovative employees. Google needs the constantly,
creative young adults to help its corporate structure grow fast, and grow as a whole. Google is not
looking for someone who is good at particular area, or specialists in one department. Google is
looking for employees who are good at everything Google needs him to be, and that just a couple
years, but in long term.
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4.5 - CORPORATE CULTURE
Google claims its corporate culture vision is to strive for an open culture. Or what Jack Welch
mentioned in his book “Winning”, Candor. Google says that it wants its employees to be able to
express, contribute ideas to the company whether you are a CEO, top managers, or new hired
employees. According to Google, it has weekly all hands (TGIF) meetings where Googlers are able to
ask questions directly to board members such as Larry, and Sergey. Google believes that everyone,
not just board members, have the obligation to contribute, and give ideas to further improve Google
as a whole.
Another corporate culture Google specifies is the working environment, according to
Google.com, it states, “Our offices and cafes are designed to encourage interactions between
Googlers within and across teams, and to spark conversation about work as well as play.” By
providing Googlers an enjoyable, and relaxed environment, it allows the Googlers to have
motivations, and drives to work for Google. Google also claims that it favors ability over experience.
Google wants employees who are innovative, creative, and young.
4.6 – CORPORATE RESOURCE
Google spent $3.76 Billion in the R&D department in 2010. This is the second highest
investment in R&D after Microsoft. It shows that Google really wants to stay competitive in the
future. Google is a company that is really about giving customers ease of access to information.
They keep improving this area, which they are really good at every year and the investment spent on
the R&D department helps strengthen the company.
Employees are their most important resource because it is the employees that come up with
new ideas of innovative technologies that make Google who they are. They only hire top-notch
students and young geniuses to work and intern at their facility. This shows the world that Google is
serious about modern innovation and staying creative in the future.
4.6.1 – MARKETING
Google recently became a powerful brand after knocking its competitors, Yahoo and Bing.
When Google became a verb, the company has done its job in penetrating the market. Gathering the
world’s information is helping Google gain more users and more companies wanting to feature in
their search engine; through this Google gains revenue through pay per click.
The company has switched the marketing strategy towards mobile because Google believes that in
the future, products will reach customers faster than the traditional advertisements of radio, TV, or
the Internet. Going into mobile, Google can further generate more revenue by running the
advertisements through Android platform.
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4.6.2 – FINANCE
Google continues to show strong financial result from year 2004 all the way to 2009 as seen
on the income statement. Despite a significant drop to $307.65 million in stock price in the year of
2008 due to the economic recession, Google’s revenue continue to increase, managed recovered it’s
stock price to its previous level to $619.98 million at 2009. With its increasing profit margin, Google
continue to reinvest into its R&D, services capabilities, and company acquisitions.
(Dollar amount in millions)
26
4.6.3 – RESEARCH & DEVELOPMENT
Heavily invested in its R&D branch, Google worked on various projects to provide new
innovation and services to its customers. Google hired the best and brightest people to work in its
research development, and also reward those who are pursuing research in mutual interest. The
company worked on many research projects such as the advancement of artificial intelligence
software enabling automobiles that can drive by it. Google also established a research program in the
company with multiple research areas and publications, discovering new ways to improve Google’s
infrastructure, computer coding and programs, and various new discoveries that aids the scientific
community.
4.6.4 –OPERATIONS AND LOGISTICS
As of 2010, Google is only operating with software and online search engine. There have
been rumors that Google is looking into cloud computing after 2010. If this is true, it will put Google
on top of the rest of their competitors because they are the best online solutions in bring information
back and forth to consumers and businesses.
4.6.5 –HUMAN RESOURCE
Google is an online-based company and like any other companies, they need human resource
to succeed. By hiring the brightest and talented workers, Google is able to stay ahead of their
competitors. They also need people’s information as much as possible because when using Google
products, the company already knows who your most important contacts are, what your core interests
are, and where your default locations are. From those information provided, Google is able to bring
user experience to the best of the consumer likings. All and all, employees are Google’s main human
resource to stay competitive now and the future.
4.6.6 – INFORMATION SYSTEM
In order to maintain power and becoming the best web search engine, Google has been
rigorously working to gather information about everyone as much as possible. This is their best way
to move forward because it aligns with their mission to provide information worldwide. When they
bought AdMob, it allows them to benefit more when people click on their website. Google has
becoming one of the world’s leading information providers to the public. The more information they
could collect the more users will go on their site and the more companies will pay Google to do
advertisement.
Going into the mobile industry is also good for Google and the market because as of 2010,
Apple IOS seems to dominate the market in a way a monopoly company would do. With Android
platform, Google can bring back the competition and with competition, products are best and prices
are low.
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4.7 – IFAS TABLE
Internal Factor Analysis Summary (IFAS)
Weight
Rating
Weighted
Score
Comments
Strengths
1
Growth Rate
.1
5
0.5
Google’s growth rate has
always been consistent
2
Human Capital
.15
5
0.75
Employees are rewarded for
their performance
3
Brand Recognition
.15
5
0.75
Established its position in
the industry
4
Android Platform
.05
4
0.2
Reach into mobile market
5
Online Applications
.1
4
0.4
Benefits online users and
small businesses
Weaknesses
1
Variety of Services
.05
2
0.1
Increased of Cost
2
Antitrust Probes
.15
4
0.45
Attempt to Monopolize
Search Engine Industry
3
Chinese Market
.1
3
0.3
Unable to satisfy Chinese
Consumers
4
Tax Avoidance
.05
2
0.1
Exploiting legal loopholes to
avoid tax
5
Privacy
.1
2
0.2
With so many information
within Google, they must do
a better job to protect them
from increasing hackers
Total Scores
1
3.75
Strengths
Growth Rate: Google’s Growth rate has not only been consistent but also growing much faster than
its competitors. Not only Google provides retail firms for online advertising, it only provides
hardware, software to further benefits the individuals, small businesses and educations.
Employees: According to Forbes.com, Employees in Google benefits from free haircuts, gourmet
food, on site doctor, and the death benefits. If a former Google employee passed away all his stocks
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will vests immediately and life insurance payout. And they will be paid half of what they made in
Google for the next 10 years. The major advantage of Google providing such great employees
benefits is to give its employees more drive and motivations to work hard, and work as a team. Let
the employees know they are valuable to the company.
Brand Recognition: Google has established its position in the search engine industry. In public’s
eyes, Google has already become a verb. Not only Google has a strong recognition in the web, it is
also reaching out to developing softwares, hardwares to benefit the public; they are Android, Google
mail, Google drive, Google plus and many other applications to benefit school educations and small
businesses. Google Nexus, both phones and tablets will fall under Google’s Hardware.
Android Platform: Although having the Android platform is not yet helping Google generate profits,
however, it helps Google to reach into the mobile industry. By stepping into the mobile market with
Android platform, Google can further generate more revenue by running the advertisements through
the platform.
Provides best online software: According to Forbes.com, many school and small business organize
their internal structure by using Google’s software such as Google mail, Google Drive, and Google
cloud. Students use Google Documents to allow them to share and work the projects together at
different locations. Google Document also allows small businesses leaders to view employee’s
presentations, files overseas.
Weaknesses
Variety of Services: Google provides many services to the online users, but also individuals, schools,
and small businesses. However, most of the services that Google provides are free of charge. This
“free of charge” could be a potential threat to Google because it costs a lot of money for Google to
maintain its security, and updates.
Antitrust Probes: According Time Magazine, Google is using its dominant power of the search
engine to key out its competitors information, and advertisements. Google would give the priority to
the advertisers that paid Google. This action was being investigated by FTC, and many other
competitors such as Microsoft, FairSearch, Yahoo, has urged federal action against Google.
Chinese Market: Although Google has established its position in the U.S. It is also important for
Google to get the consumers outside of U.S., for example China. China is currently the biggest
market of online users, however, according to AOL.inc, there are approximately 420 millions of
people who have Internet access in China, and 97% of them uses Baidu. Google needs to get this
sector of market share in order to stabilize its position. Major reason that the Chinese consumers
choose to use Baidu over Google is that Baidu indexes Chinese pages; While Google indexes mostly
English pages.
29
Tax Avoidance: By exploiting legal loopholes, Google was able to avoid more than 3 billion dollars
worth of tax between 2007-2009. The company significantly lowered its tax rate to 2.4% even though
the average corporate tax is well over 20%. Tax avoidance by Google decreases government revenue
significantly, and affects the company’s reputation negatively.
Privacy: Not only individuals depend on Google, but also businesses and school educations. In the
near future, people are concerned that how secure is Google. Will the data be revealed, especially for
corporations? Google needs to work on its security system and tells the public how will they manage
the data that are saved on its cloud service.
V. ANALYSIS OF STRATEGIC FACTOR ANALYSIS (SWOT)
5.1 SITUATIONAL ANALYSIS (SFAS TABLE)
Weight
Rating
Weighted
Score
Comments
S
I
L
S
Human
Capital
0.15
5
0.75
Innovative ideas and
creativity
S
Brand
Recognition
0.15
4
0.6
Consumer’s loyalty to
Google
W
Antitrust
Probes
0.1
3
0.3
Attempt to Monopolize
Search Engine Industry
W
Chinese
Market
0.1
3
0.3
Needs to gain more
users in the Chinese
market
x
O
Mobile
0.1
4
0.4
Compete and win
market shares against
Apple IOS
x
O
Innovation
0.15
5
0.75
One of Google’s
greatest strength is
innovation. They’ve
done by meeting
customer needs with
modern technologies
that makes life easier
x
x
T
Competing
search
0.15
3
0.45
Competing with other
tech giants, Yahoo, and
x
x
30
x
x
x
x
x
engines
T
Bing.
Competing ecommerce
sites
0.1
Total Scores:
1
3
0.3
Competing with firms
that hold the advantage
of being the first in the
industry, such as
Amazon and Ebay.
x
3.85
VI. STRATEGIC ALTERNATIVES AND RECOMMENDED STRATEGY
Tows Matrix:
Internal Factors (ROW)
-External Factors (Column)
2 Strengths
2 Weaknesses
2 Opportunities
1. Employees - Google only
hires high educated. Top-notch
young employees. Google are
looking for employees that are
good at many things, not
specialists in one particular
area. According to Google jobs,
things changes fast within
Google like the internet speed.
Google is looking for people
that are good not just right now
but long term.
2. Research and Development
- Although Google has already
established its position in the
search engine industry, it is still
constantly innovating outside
of the search engine category
such as Android Platform,
Google Doc, and many other
services.
1. Mobile Market - Although
Android platform stands as a
weakness when it comes to
generating revenue. However,
by innovating Android
platform, it allows Google to
step into the Mobile market, to
further advertise in the mobile
industry.
2. Variety of Services - By
providing free services such as
Google Doc, although Google
is not generating income from
Google doc, it attracts
consumers to use Google Doc
and gain more brand loyalty.
When Google established its
brand loyalty, it will then
attract advertisers to invest in
Google.
2 Threats
ST – Strategies that use
WT – Strategies that minimizes
31
Strengths to take advantage of
Threats
1. Intellectual Property Although heavy investments
have to be made to protect
Google’s intellectual property,
the value of those properties
will increase in the long run.
By protecting the intellectual
property, the unique services
allow Google to secure its lead
in the market, and gain higher
revenues from ads and
consumers.
Weaknesses to avoid Threats
1. Youtube Acquisition- When
Google took over Youtube on
2006, it minimizes weaknesses
to avoid threat by using
Youtube’s popularity to keep
the advertisers from investing
in Youtube. If Google did not
buy Youtube, it could
potentially lose advertisers who
choose to invest in Youtube
over Google.
2. Employees - They hire and
recruit mostly young intellects
with very creative minds to
2. In 2010 Google bought
work with Google. By doing
travel software firm ITA.
so, they keep the company
“Today, almost half of all
intact with current products and
airline tickets are sold online”
technologies that are appealing
Marissa Mayer, vice president
to the younger generations. If
of search products and user
such employee is hired by their
experience at Google. With this rivalry, it will make Google
less competitive.
acquisition Google has leaped
forward against their
competitors because it helps
make it easier for business and
busy suitors to book their
flights while on the go.
Strategies alternatives
According to the tables and analysis of this company, we conclude that Google needs to
improve in the Chinese market and fair play. China is a growing country and many believes that they
will lead the world in economy comes 2030. It is not easy in penetrating their market due to their
ample volume of population and brand loyalty to their own Chinese search engine, Baidu.com. When
Google became global, the board members did not take in the fact that each country has its own law
on the Internet. Now that they are aware of this, Google must continue to perfect their search engine
to align with each country’s law.
Playing fair is also a good business practice. Google was accused of monopolizing the search
engine industry when they were blamed for censoring out their competitors information on their
search engine. This action was being investigated by FTC, and many other competitors such as
32
Microsoft, FairSearch, Yahoo, has urged federal action against Google. Google must conduct their
business practice fairly and ethically.
Google is also jumping into the social media world. They are trying to create a social
interaction platform, called Google Plus. We think that this is a bad idea because Facebook, Twitter,
Instagram, Myspace, etc. already are established companies in that area. Winning customers over
from them is really hard and costly if Google is starting from scratch, which they are. Google Plus
just started and Google gains the least revenue and customers. They need to discontinue with the
service. We see that the best approach for Google is to either acquire or partner up with one of the
top social network companies. This may be costly also but the amount of customers that they will
bring is worth the risk.
Having brand recognition is what all companies shoot for. Google has become such a
powerful brand that they have gained insurmountable of followers worldwide. For example, if a
normal brick cost one dollar per brick and if Google decided to make bricks too, chances are that
Google could charge more than the normal brand and would still sell. This is power of brand
recognition. Google has that and they need to continue and stay improving in this area.
Recommendation
According to this case study, we recommend Google to keep investing in human capital and
brand recognition. The company is now known as having the best work environment for employees
for they are mainly hiring employees that are in the top 10% of their school only. Human resource is
important not in just Google, but every company that ever existed needs human capital to succeed.
Google made sure they hire only the best of the best. Google needs to continue on scouting for the
best talent and skills, for they bring innovation, creativity and modernity, which is what Google, is
known for.
Another recommendation is that they must win over the Chinese market because it offers
many benefits once Google can win them over. In order to do so, Google must obey China’s Internet
law. With China’s population, Google could become the most valuable company in the market in the
search engine industry.
VII. IMPLEMENTATION
Google has become the most successful company through purely advertising. They’ve made
information available to Internet and mobile users globally. They have become a multi billion-dollar
company through providing users with quick and available information. Most of the Internet users
are switching from Yahoo!, Bing, AOl and ASK.com to Google because Google has become the
prime example of a company that put their users first. All Google products are user friendly and
because customers are switching to them. They need to continue to concentrate on users.
33
Google’s mission is to organize the world’s information and make it universally accessible
and useful. They have implemented this mission into each of their employee. Each of Google’s
product and service allows users to access information anywhere via Internet connection. So far,
Google has aligned their mission with their strategies. They must keep up the good work in order to
stay competitive.
VIII. EVALUATION AND CONTROL
Google is one of top companies in the world. They have done so through careful selections of
selecting employees, following and implementing their mission statement and creating products that
are affordable and user friendly. By doing the following, Google has knocked of their top
competitors, Yahoo! And Bing, in the search engine industry. They have also neared their mobile
competitor, Apple IOS, and Google has projected that they will gain more market shares from IOS in
the near future. According to this case study, Google has met their most of their objectives expect
they must make improvement in foreign policy law and continuing on fair practice. Google has a
rising projected growth rate, which makes them very attractive to investors. They continuously
innovating the web search engine and making almost everything is accessible through their website
and mobile.
34
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