Case Study Analysis Of Google

Case Study Analysis Anh Nguyen

Case Study Road Map Industry Situational Analysis Company Situational Analysis Strategy Recommendation Implementation Recommendation

Dominant Economic Characteristics Market size & Growth Rate Revenue: $39 billion (2004) Revenue: $50 billion (2005) Predicted growth rate (2007) 27% Main Rivals Google, Yahoo!, Time Warner, AOL, Microsoft, Ask.com, Paid search providers

Dominant Economic Characteristics Scope of Competition Global Presence Stronger competition Degree of Product Differentiation Product Innovation Google = Domino effect

Competition Analysis Rivalry among competing sellers Strong Google’s market share dominance Threat of potential entry Strong Inexpensive start-up costs Risk of brand new technologies coming in the market

Competition Analysis Power of substitutes Strong Zero switching costs Power of Suppliers Inexistent Power of Buyers (advertisers) Moderate

Driving Forces Increasing Globalization Product Innovation Regulatory influences & Government Policies Privacy Issues Chinese Government censor

Competitive Position of Main Companies

Competitor Analysis Profile Competitors/Predict Moves Company Competitive Scope Strategic Intent Market Share Objective Competitive Position/ Situation Strategic Posture Competitive Strategy Google Global Maintain the position of leader of the search engine market Expand through more advertisers and user access Strongest competitor in the market Combination of Offense and Defense Broad Differentiation Yahoo! Global Be among the top in the industry Expand through new search technology (Panama) Getting Stronger Combination of offense and defense Broad Differentiation Ask.com Global Be among the top in the industry Expand through advertisement and development of brand name Still weak Combination of offense and defense Broad Differentiation

Key Success Factors Technology-Related: Expertise in a particular technology Marketing- Related: A well-known and respected brand Skills and Capability Related: Product Innovation Skills Related: Global Distribution Capabilities

Overall Attractiveness of Industry Attractive Factors Increased number of users Unattractive Factors Very competitive Issues Privacy Profit Outlook Favorable

Evaluation of the Current Strategy Qualitatively: Google is a focused differentiation (or market niche) strategy Complementary strategic strategy: offensive strategic moves, outsourcing value chain activities, and unique website strategies

Quantitatively Evaluation of Current Strategy Financial Performance Analysis 2003 2004 2005 2006 Net Revenues $1.5 billion $3.2 billion $6.1 billion $10.6 billion Net Earning $106 million $399 million $1.5 billion $3 billion Shareholders’ Equity $588 million $2.9 billion $9.4 billion $17 billion Shares Outstanding 160 million 275 million 296 million 309 million Current Ratio 2.4 7.9 12.1 10.0

Strong Market Position Proprietary Technology & Technological Infrastructure AdWorks and AdSense Programs Google Network Members Social Networking Domain Lack of Product Information Asia Internet Usage Online Ad Spending in the US Growth in Online Videos Competition from Microsoft and Yahoo Click Fraud and Invalid Clicks Data Scams S W O T A N A L Y S I S

Analysis of Company’s Price & Cost Competitiveness Value Chain Diagram

Value Chain Analysis: Most vital are Sales & Marketing, Technology, and Systems Development Price Competitiveness comes from Delivering Online Advertising - AdWorks and AdSense Branching out into Different Product Lines - Google Books - Google Maps - YouTube - Google Earth - gPhone Analysis of Company’s Price & Cost Competitiveness

Weighted Competitive Strength Assessment Weighted Competitive Strength Matrix Key Success Factor/ Strength Measure Importance Weights Google Yahoo Microsoft Ask.com Expertise in a Particular Technology .3 8/2.7 7/2.5 6/1.5 5/2.0 Well-Known and Respected Brand .2 8/1.8 7/1.4 6/1.4 5/1.0 Product Innovation .3 9/2.5 8/2.0 7/.8 7/1.5 Global Distribution Capabilities .2 9/1.7 8/1.7 6/1.5 6/1.6 Sum of Weights 1.00 Weighted overall Strength Rating 8.7 7.6 5.2 6.1

Weighted Competitive Strength Assessment Weighted Competitive Strength Matrix Analysis - Google has superior strength over competitors - Yahoo falls in second place due to name brand recognition - Ask.com is increasing product innovation - Microsoft came in last due to lack of product innovation

Strategic Issues Analysis Will Google be able to compete with MySpace and Facebook to become the premier social networking site? Will Google be able to capture the Asian Market and make China the leader in internet usage, especially by using Google as their main search engine site?

Strategic Inflection Point Government Reform Structural Crisis Information Explosion

Strategic Vision Mission/ Vision: Who What Where Google stands Where Google is heading

Strategic Objectives Key Strategic Objectives Gain 53% of U.S market share Expand to China Invest up to $ 20 million in online ad spending Diversify in mobile industry Key Financial Objectives Increase revenue in Chinese market by 19% first quarter 2007 Double capital expenditure in 2007 Increase in revenue by 38% in 2008 by online advertising

Strategy Options Generic Competitive Strategy: Focused Differentiation Complementary Strategies: Strategic alliances Collaborative partnership Acquisition Offensives moves Outsourcing its value chain

Functional Area Missions and Task Statements R&D Engineering Production Marketing & sales Human resources Finance

Timing Initiatives Immediate (1 st year) Long range (2 nd through 4 years)

Building a Capable Organization Strategy Critical Position Recruit & Retain Talented Employees Strategy Critical Core & Distinctive Competencies Match Organizational Structure to Strategy

Strategy Critical Positions Managers Must: Thinking Clearly Problem Solve Positive Outcomes Implementing: Solve Problems in Business Training Day 1: Establish Problems Training Day 2: Establish Improvements

Recruiting and Retaining Employees Recruiting Screen applications thoroughly Loyalty Integrity Intellect Retaining Provide Reward System Employee Empowerment

Core & Distinctive Competencies Core Hardware Software “ Cutting Edge” Distinctive Human Resource Department

Match Organizational Structure to Strategy Value Chain Activities Strategy Activities Authority Cross-Unit Coordination Collaboration

Link Budget Supply Money to Research & Development Supply Money Internationally China India Human Resources

Policies and Procedures Providing Handbooks to Employees Examination of Procedures Probation Period

Best Practices & Continuous Improvement Competition: Yahoo!, Ask.com, MSN Prevent Competition from Benchmarking Causing change in Information Technology Department

Information & Operation Systems Developing Updates for Technology

Rewards Systems Full Benefits Plans Health Insurance Plans Fun Work Environment Maternity Leave Tuition Reimbursement Gift Matching Program

Supportive Corporate Culture Empowering Employees “ Can-do” Attitudes

Critical Management Behaviors Staying Involved with Employees Constructive Pressure on Organization Innovation of Core Competencies Ethical Integrity Corrective Adjustments

Conclusion Bright Future Continued Expansion

Case Study Analysis Of Google

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Case Study Analysis Of Google