Diversification And Excellence In Corporate Strategy

Overview of Google’s External Environment

Discuss about the Diversification and Excellence in Corporate Strategy.

This assignment is based on the organization Google and its operational activities. The sarcasm lies in the fact that if someone is asked the definition of Google then he will have to take the help of Google only. If the Google search engine is used for its definition then the probable answers can be, a widely used search engine that uses certain methods and techniques to find out the results relevant to the searches made by the user (Brett et al., 2017). Google has transformed itself gradually from the searches of the primary words to widely known words. The webpage of the Google is set as the standard benchmark for the assessment of most of the internet companies. The success that has been achieved by Google has become possible as it has utilized its competencies to face the challenges strategically in order to be the leading technological innovators globally. This can be considered as a remarkable achievement if the present global crisis in the economy is paid attention. It also puts emphasis on the interdependent relationship between globalization and technology. If the financial report of the competitors of Google can be reviewed then it can be seen that Google had not only taken care of its own progress but also led the market in sharing data and growth categories. It has achieved the second position in the all round category of profitability. The previous figures and numbers of Google have given the competitors a tough competition in the run for finance and market share.

In order to analyze the competitive industries that the company Google operates in cannot be specified using a fixed code (Cordray et al, 2015). It has a diversified portfolio which is spread in the vast arena of products and services which have evolved around the opportunities that are brought in by the internet.  So it can be an extremely ineffective discussion about the aspects of the strategies of Google which are associated with the two most outstanding offerings of web search and advertising. For the reasons that are mentioned above, an overview of the external environment of Google industry can be well attained by the main competitors such as Yahoo, Apple and Microsoft that are faced by the company in its offerings arena. The competitive environment of Google is complex as different markets and industries are involved with their separate set of challenges and competitors (Cusumano, 2016).

Using PESTLE to Analyze the External Environment

To analyze the external environment of the organization, PESTLE can be used which takes into consideration the political, economical, social, technological, legal and environmental perspective.

Political factors- it is a widespread statement that Google follows monopoly. This system has led to mistrust of action and it had been called for changing the way in which it carries out the operational activities. Criticism has also given rise to the fact that Google has tried to control their power over the flow of information. So the technical experts have observed the fact that the search results provided by Google can influence the outcome of election.

Economic factors- By accumulating a lot of finance, there lay a risk of inflation for Google. If there is a chance of drop in the currency value, then it would immediately affect the   organizational value. The cash accumulated by the company can be threatening for the currency market and the exchange rates (Edelman & Geradin, 2016).

Social factors- With the decrease in the use of primitive computers or laptops, the company value will be affected. It has been reported that the increase in the use of social media applications such as Face book and Whatsapp for those  activities which were previously done on the internet including video streaming, search, online shopping and money transfer.

Technological factors- The technological factors that have affected the business of Google include the increase in the use of mobile devices for connecting to the internet. The popular competitors of Google who have introduced search algorithms include Microsoft and Amazon. With the increasing affinity for the social media solutions and instant messaging services have changed the way in which Google used to conduct its business (Encheva & Pedersen, 2014).

Legal factors- Google have already penetrated the highly regulated fields such as insurance, finance, automobiles and communications. This system is responsible for putting up severe limitations on its operational activities. The cost of liabilities might increase with Google’s entry in the field of insurance and the experiments done with the delivery services.

Environmental factors- The business model of Google is totally reliable on the data centers and the other infrastructure of internet which consumes a lot of electricity. Therefore the efforts put for controlling global warming is to encourage the use of expensive sources of green energy for producing electricity to increase the operating cost of Google.

The BCG matrix can also be used as one of the strategies for analyzing the external environment of the Google organization. The BCG or the Boston Consulting Group analysis is a portfolio diagram which includes cash cows, dogs, question marks and stars. The cash cows are considered when the company has high market share in a slow industry. The dogs refer to a low market share in a slow but developed industry. The question marks consider those businesses which are functioning with a low market share in the high growth market. Finally, stars are those units with a high market share in the fast industry (Erhemjamts, Li & Venkateswaran, 2013).

Using BCG Matrix to Analyze the External Environment

The cash cows in the matrix are the search engine of Google is widely used and a reliable source since its inception. The product has been responsible for bringing in constant revenue. The stars in the matrix include the applications such as Gmail, Blogger, Google maps, and Google docs, Android, Advertising and YouTube. The question marks represent the Chrome book which refers to the new product and the uncertainty of its success or failure that is attached to it. The dog in the analysis signifies Google Mar and Google TV which were unable to reach the expectation of the market share (Gamble & Thompson, 2014).

The internal environment involves those events and styles inside the organization which has an impact on the management, employees and the culture of the organization. The statement that is provided by Google about organizing the world to make universal and useful information globally accessible, throws light on the fact that the organization is less interested in maximizing its profit and at the same time works hard to meet up to the expectations of the customers by providing a high quality product. That is why, Google delivers high value product which meets the consumer needs with a quick and efficient action. According to the organization, the place where they are placed currently has been possible for their customers (Taufick, 2015). They have gained this position because of their strategy to hire smart and confident people who might not be experienced but able enough. The employees of the organization might share a common goal and objective although they belong to different cultural background, speak a variety of languages and come from different parts of the world. They put maximum effort to maintain the organizational culture keeping in mind the different race and background of the employees which provides an effective internal environment to work for.

The strategic analysis of Google serves at a direction which is different from the external forces applied in the industry environment. Therefore, Porter’s five forces are used for clarifying the direction strategically. After it was established in 1998, Google has attained a prestigious position in the industry for instance, online advertising market. Being such a large enterprise Google has around 57000 employees in various locations all around the globe. When the five forces model of Porter is used for analyzing the current business scenario of Google, the characteristics of the company’s industry environment can be easily determined. The consistent success of the organization lies on the basis of the organization’s ability to consider the internal factors (Team, 2014). 

Google’s Internal Environment

The five forces analysis of the internal environment of Google involves- strong competitive rivalry from the competitors; weak bargaining from the side of the buyers; weak bargaining power of the suppliers; moderate threat of substitutes and moderate threats of the new entrants. On the basis of Porter’s five forces analysis, the competition from the rivals of the company is considered as a strong factor for the company. The factors of the threats of substitution along with the threat of new entrants are considered as moderate factors in the internal environment of the Google industry. The bargaining power from the buyers and the suppliers are considered as the least significant factors of the industry environment.

Competitive rivalry is the strong force faced by the Google organization. Under the analysis by Porter’s five forces, the competition from the rival companies have restricted the growth and development of the firm. The factors that are a part of strong competitive rivalry are- large number of firms, large diversity of firms and low costs for switching.

The bargaining powers of the buyers are poor in encouraging the business of Google (Stevenson, 2014). In the particular analysis model, a weak external force has minimum consideration while making strategic decisions. The small size of the buyers is considered as weak force; high and increasing expectation and demand from the buyers are also considered as weak force; the moderate quality of information refers to the moderate force of the analysis. Every individual buyer only makes a little contribution in the revenue gaining of Google, thus applies only a weak force on the company. The moderate quality of information actually implies the limited knowledge of the customers. For instance, the advertisers might access the analytics but those data will be limited to inform the advertisers regarding the dynamics and complexity of the environment of online advertising (Team, 2014).

Bargaining power of suppliers is weak when it comes to the organization, Google. In the given analysis of Porter’s five forces, it is seen that when there comes a method of selection among the suppliers, then the bargaining power is weak. The weak effect of force is applied on the organization due to high availability of supply and large population of suppliers. The large availability of the supply mixed with the wide population of suppliers reduces the effect of the bargaining power of an individual supplier in the business plan of Google (Steiber & Alänge, 2013).

Using Porter’s Five Forces to Analyze the Competitive Environment

Moderate threats of substitution are experienced by Google that involves advertising channels for instance radio, TV and print media. The factors that are considered by Google in this respect are low switching costs and moderate to high availability of substitutes both of which are considered as the moderate force in the organization. The low switching costs is easy for the customers to shift from the Google’s advertising services towards the substitute services. In this model of porter’s five forces, a moderate force is exerted on the business of Google (Shaw & Graham, 2017). Therefore the all round effect of the factors provides moderate threat of substitution against the products and services of Google.

Threats of new entry have moderate effect on the business model of Google. The new entrants can come in the form of new ventures and investments of huge technology companies and also the start- up companies which deliver the similar products as that of Google. In this five forces model of Porter, the factors that contribute to the moderate threat of new entrants include moderate cost of conducting the business. The weak force is exerted on the high cost of brand development whereas strong force is applicable on the regulatory requirements which can be easily fulfilled. The moderate cost of conducting a business refers to the fact that a certain number of start- up companies and some other firms can penetrate the market to come in competition with Google. Moreover, it is easy to fulfill the regulatory requirements thus, providing an easy way for the new entrants to get connected and compete with Google (Shaughnessy, 2014). But due to the high cost of brand development, it might be difficult for some start- up companies and the other firms to sustain a long- term operation  and also because Google has already become one of the leading and popular brands in the world.

At present, Google has been pursuing the generic level strategy of differentiation in the business by providing different products and services which are unique in their own way and appealing to the customers. The web search engine of Google is the most famous service offered by it which helps the user to get hold of a reliable way for searching. The biggest advantage of the differentiation business strategy of Google is the establishment of the loyalty of the customers. The current figure of Google’s web search engine is 66% with respect to the worldwide internet searches. The customers are consistently using the Google search engine for the ease and reliability of the search results (Schmidt & Rosenberg, 2014).

Google has launched its new service Google Instant which decreases the required time of search and provide the customers with more predictions and better dynamic results. This service was actually provided by Bing and Google has won over the competitive advantage because the time required in searching in Google is much less compared to Bing. Also, the instant effect on the cost of paid searches in the search engines was used to be higher than the competitors. But then recently the pricing strategy has been revised by Google and has become moderate as compared to its competitors which have given the company with competitive advantage. The prevalent market of the Google search has continued to observe modification in trends and styles because of the expansion in the market of internet user and their diversified needs. The strategic direction has been considered as product development and market penetration along with diversification in the market (Rushdi & Kamal, 2014).

Google’s functionality of web search is the vital feature of internet which is crucial for their business. The programmers and engineers employed in the company contribute most of their time to make relevant page rankings and search results. They follow the four prime types of corporate strategies which include stability, growth, retrenchment and combination strategies.

Google uses stability approach to make a steady position for them (Perlin et al., 2017). They are able to focus on their resources and develop a competitive advantage in the market by using this approach. They have also used the sustainable growth strategy which will help them to remain in the market for a long time. The retrenchment strategies involve different stages such as turnover, disinvestment and liquidation strategy. This approach is used when the company’s survival is at risk, so this is not applicable in the case of Google. Combination strategies are the integration of all the three approaches of stability, retrenchment and growth in a simultaneous or sequential way. Google has strictly adhered to these corporate level strategies to cope up with the vibrant and constantly changing environment. They have used the strategy of innovation which has developed their brand loyalty by making modifications and at the same time making way for an open- source environment. They have increased their total corporate value by implementing the aforesaid corporate strategies. The strategies can be termed ass corporate strategic planning because it engages strategic planning at a corporate level. Google has been able to win over the competitors such as Microsoft, Yahoo and other search engines because of the four elements of speed, relevance, user experience and comprehensiveness (Pamuk, 2016). Google has succeeded in gaining momentum because of their innovations such as PageRank Technology and Hypertext- Matching Analysis. Therefore, Google has been able to stick to its position since its establishment because they have always depended upon their innovation and focused on improving their new competitive advantages.  

Google is technically the most creative acquirers of in the technology space. They have spent a lot of money, around 10 billion dollars to acquire 180 companies. But the fact is that the existence of a constant Google merger and acquisition strategies seemed to be impossible (Ludolph, Allam & Schulz, 2016).  They focus on three elements in their merger and acquisition strategy, people, businesses which are associated with the main search of Google and the strategic investments for the future of technology. As per an article published in Time regarding the acquisition strategy of the company, it had hired 221 fresh founders in 8 years of acquisition. They have always looked for talent while implementing the acquisition strategy. Their previous records showed that they have always acquired great people who are expert in their own domain. These people have been responsible for delivering a unique product which offers a strong value proposition.

The fact is that Google will influence the potential of their brand as well as their steady management team for acquiring start ups and take an advanced step in their mission. Their insatiable hunger have them one of the most aggressive tech giant when it comes to using of merger and acquisition strategies for growth and development. Google had started merger and acquisitions from 2010 and had spent around $28 billion on it (Lin & Yazdanifard, 2014). Out of the 187 mergers, those that became the turning point in the business model of Google are as follows. When Android merged with Google it became one of their best deals. Their open source operating system was worked upon for improvisation and involved in the competitive run with the iOS. The motive behind this was not only to make Android a Operating system but a software ecosystem totally independent from hardware and freely accessible to the developers. Similarly, the acquisition with YouTube, Where 2 Technologies, Applied Semantics and Waze proved to be extremely beneficial for the company.

Google, the internet monster, has created a record of $22.9 billion by means of their advertising revenue and thus became the indubitable leader in the market of Internet search (Levinson & Salinger, 2014). Their market share had suggested a terrible increase of more $1000 per share. Their share had increased by 1200% in less than 10 years. Their strategy is to arrange the global information and make it accessible world- wide. Their primary mission has always been to enable a successful search technology which has expanded their product and services much beyond internet search. Their cooperative strategies are remarkable and an achievement which is worthy of imitation by the competitors.

The operation of Google takes place in a competitive environment. With their wide range of products and services they face stiff competition from organizations of various industries. Their sustainable competitive advantage is obvious in certain ways, especially in their superior infrastructure. In the earliest forms, the search engine of Google had received critical commendation being in the list of top 100 websites and search engines in the year 1998 (Kunz, 2016). The number of searches increased from the following years which increased from 10000 to 500000 on a daily basis. Google started to refine their search engines from and improvised their new and innovative features. In a single year, they had 516 improvements such as Instant search which gives effective results. Without any doubt, it can be regarded as the best search engine which gives tough competition to the competitors such as Microsoft’s Bing and Yahoo Search. They have to control more than 3 billion daily searches which account for 67% market share. On the other hand, Bing and Yahoo account for 16% and 13% market share respectively. They follow the strategy of expanding their range of services and tools which will enable sustainable competitive advantage (Johnson et al., 2016). They also follow the strategy of resource based view with the intention of gaining sustainable advantage by fulfilling the criteria of being valuable, rare, imperfectly imitable and non- substitutable (VRIN). Their cooperative strategies and use of resources have helped them to attain sustainable competitive advantage.

Google is one of the widely used search engine which is spread in around 144 countries. They have a market share of 60% in the world requests of search engines. As it was originated in the United States, therefore it has a 10% higher market share in Europe than in the US. They have around 20 US based offices, 13 in Asia- Pacific, 26 in Europe, 3 in Canada and Latin America each and 5 offices in the Middle East. Google has also planned to rapidly expand their broad area of new markets. They can easily do so because there lays simplicity in their user interface and assessment of their back- office operations have enabled them to increase quickly. They have become a popular global brand with their 70 offices located in US few years back (Geradin & Edelman, 2016).

In duration of 10 years, Google has developed their international structure of marketing to build its presence in more than 144 countries. The presence ranged from simple representational offices to complicated partnerships with the competitors in foreign countries. Their mission arranging the worldly information and the accessibility to one and all has enabled them to be a brand which is not only identified in the English speaking countries but on the worldly basis. There is a long list of language specific Google applications and the length at which they deliver the culturally relevant applications shows their excellence in international marketing. They have understood the requirement for an international internet media provider and have taken over approximately 50 companies for expanding their services. This in turn will be transformed for their internally acclaimed exportable business. Although all the internet media applications of Google are not available in all the countries, but the extent to which the English speaking users dominate the internet can be easily understood.  The company has an intention to continue their spread in the foreign countries for offering a satisfactory internet experience all over the world (George, 2014).

Conclusion

Therefore it can be concluded from the assignment that the company Google has experienced a long journey from its simple business to business giant in the internet sector. It has to face tough competition in almost all the industries that is under its control, but the main trans- industry challenge has come from the icons of digital age such as Apple, Microsoft and Yahoo. Although Google has an excellent position in terms of technology, finance and culture, they still have to cross a lot of barriers. Such barriers take the shape of growth for their movable platform, a consistently weakening situation in China and the increasing action on the user privacy that are unaddressed, could be threatening for the status of Google. They have faced a rapidly transforming world and a technological landscape that is in constant move. Their strategy of providing the premium services to the end users has won over the computing hearts and brain without any extra cost. Moreover, due to the thorough and undiversified revenue stream, it is important to continue innovation, by keeping the ears on the ground and not rely only on the present strong base.

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