Biz Policy- Google

8/3/2019 Biz Policy- Google

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Business Policy

Strategic Analysisof



Introduction to Google

Larry Page and Sergey Brin met at Stanford ² 1995.

Larry and Sergey, then Stanford computer science grad

students, begin collaborating on a search engine calledBackRub ² 1996.

They change the name to Google ² 1997.

GOOGOL = 10100



Sustainability Analysis (Added Value) - Imitation

Not easily imitated because of the large infrastructure

requirements to serve the relevant pages quickly.

Path dependency

Time to collect the data to provide results

and even more time to analyze both the content and users

reactions to the results.

Causal ambiguity Some of Google·s success is due to its strategic management

or simply to the luck of being at the right place at the right

time.

Bing



Sustainability Analysis (Added Value) -

Substitution

For Googlers:

Switching costs are negligible.

No perfect substitutes exist online. Libraries

Time consuming

Difficult to be exhaustive.

For Advertisers:

Facebook, Twitter.



Sustainability Analysis (Appropriated Value) -

Holdup

No single customer i.e. ad-making partner/ad-receiving

individual has a controlling interest.

No single account contributes more than 3% to net revenue

and less than 5% of the revenue is generated by any given

network partner site.



Sustainability Analysis (Appropriated Value) -

Slack

Productive slack:

Enables engineers to spend one day a week working on

projects that aren't necessarily part of job descriptions.

can be used the time to develop something new,

can be used the time to fix something that's broken.



Sources of Irreversibility

Sunk costs(irreversibility through lock-in):

Infrastructure investments.

Brand build and the skills of the employees.

Opportunity costs (irreversibility through lock-out):

Google is a synonym of "SUCCESS" and "INNOVATION´.

Google uses a cost-benefit approach to manage its

business.



Strategic Commitments Android platform- Acquisition of Motorola Mobility

Superior capabilities Acquired patents( atleast 17,000) -> easing way for

innovation

Tight software integration

Can boost the roll out of phones supporting NFC and the

Google Wallet- for mobile payments

Irreversible commitment to Android ecosystem through-

Sunk costs - $12.5 billion Opportunity costs- of other businesses/resources

Time lags- global fight to dominate the market for smart

mobile devices



Google·s Commitment to Renewable

Energy

Google has invested about US$1 billion in renewable

energy in 7 projects-

$280M toward residential solar power with SolarCity in June

Spent $100 million for a majority stake in the a wind powerproject- The World·s Largest Wind Farm in April

$168 million investment in BrightSource Energy·s Solar Electric

Generating System

Can be used for its huge database and infrastructure Google has hinted that the creation of Google Energy, its

wholesale electricity purchasing subsidiary, makes it more

feasible to procure clean energy for its own operations



VERTICAL INTEGRATION

& DIVERSIFICATION

(ACQUISITIONS)



Google·s Acquisition Strategy

Small but very talented development team

Interesting and innovative products and/or

technology/IP

Private start-up with a relatively cheap price tag

Target company should be either of the three:

a. Revenue generating

b. Competitor·s revenue cutting

c. A little of both



Google ² Double Click Acquisition

$3.1b purchase deal of DoubleClick

Brilliantly positioned Google to further dominate

Internet advertising. (approx ² 80%)

Default Internet advertising broker/platform for:

keywords, website display ads, and TV, radio,

newspaper/magazine advertising for the average

large advertiser.



Google ² Double Click Acquisition

(Contd..)

Strategic Implications:

extremely well-positioned to predatorily disrupt

multiple industries and curb competition

Achieve Google·s ultimate goal: to dominate all formsof Internet advertising in the future.

first-mover advantages of offering advertisers the

super efficiencies of cross-media-platform advertising

optimization



Google ² Youtube Acquisition

Instead of developing its own ´google vediosµ into

a competitive brand, google acquired you-tube.

Acquired youtube for $1.65 billion shares in stock

The acquisition combines one of the largest and

fastest growing online video entertainment

communities with Google's expertise in organizing

information and creating new models foradvertising on the Internet



Google ² Youtube Acquisition

(Contd..)

Strategic Implications:

Google could curb the competition in the feild of video

sharing and itself become the market leader.

Google gained access to videos and information that isuploaded to the site.

Since Google has such a large advertising base, they

were able to incorporate this with YouTube·s advertising

as well



Google ² Motorola Acquisition

Entered hardware business by announcing $12.5

billion acquisition of Motorola on 15th Aug

Motorola Mobility purchase gives Google the

opportunity to pursue their pure vision of Android

Motorola has a reserve of around 1700 patents



Google ² Motorola Acquisition

(Contd..)

Strategic Challenges:

The Illinois-based Motorola Mobility makes mobile

phones, tablet computers and TV set-top boxes ² areas

where Google has no experience other than writing thesoftware to power the devices.

Merger of two entirely different business models, work

culture etc

Google·s complete inexperience in running global hardware business

Possibility of restructuring



S. No Acquisition

Date

Company Business Used as

1 Feb 12, 2001 Deja Usenet Google groups

2 Sept 20, 2001 Outride Web Search Engine iGoogle

3 Feb, 2003 Pyra Labs Weblog Software Blogger

4 April, 2003 Applied

Semantics

Online Advertizing Adwords, Adsense

5 Sept, 2004 Zip Dash Traffic Analysis Google Maps forMobile

6 Oct 27, 2004 Keyhole, Inc Map Analysis Google Earth



S. No Acquisition

Date


7 May 12, 2005 Dodgeball Social

NetworkingService

Google Latitude

8 Aug 17, 2005 Android Mobile Software Android

9 Dec 27, 2005 Phatbits Widget Engine Google Desktop

10 Mar 9, 2006 Upstartle Word Processor Google Docs

11 Mar 14, 2006 @Last Software 3D ModellingSoftware

Google Sketchup

12 Oct 9, 2006 YouTube Video Sharing YouTube



S. No Acquisition

Date


13 Apr 19, 2007 Marratech Videoconferencin

g

Google Talk

14 May 11, 2007 GreenBorder Computer Secrity Google Crome

15 Sept 16, 2009 reCAPTCHA Security Google Books

16 Dec 3, 2010 Widevine Technologies DRM Google TV

17 Mar 7, 2011 BeatThatQuote.com Price Comparison

Service

Google Advisor

18 July 21, 2011 Fridge Social Groups Google+



Android Platform

The mobile phoneplatform started by ex-Danger leader AndyRubin

50 million dollars in theyear 2005

Attractiveness: High

Cost of Entry: Low

Better-off: High



Applied Semantics

Known for its semantictext processingtechnology required forAdSense

April 2003 for 102million dollars

Attractiveness: High

Cost of entry: Medium

Better-off: High



Google Desktop

Phatbits, started by GeoffreyElliot, had a widget engine

December 27, 2005 forunknown price

September 2011, it isdiscontinued

Attractiveness: Medium

Cost of entry: Undisclosed

Better-off: High



Discontinue the product ² ´Will fade awayµ

Google Desktop, Google Notebook

Remove the stand-alone status and merge them into

existing products

Google Web Security (acquired from Postini), Google

Local (Google Maps), Personalized Search (iGoogle)

Exit Strategy

Biz Policy- Google

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