Strategic Audit PresentationBy: Cody Fergusson

Professor: Kathleen FitzsimmonsAdvisor: David PollonDate: May 6th, 2011

• Current Strategy– Current Performance

• Internal / External Scan• Strategic Alternatives• Growth Strategy

• Cloud Computing– Research and

Development– Mergers and Acquisitions

• Mobile– Strategic Partnerships

• Evaluation and Control

Table of Contents

Current Strategy

• Have a growth strategy– Mobile First– Cloud Computing– Socializing their services– Hiring new employees

• US Internet Search Market Share = 66%• Cash = $34.975 Billion• 96% of revenues still come from advertising• Have acquired 95 companies since 2001

Current Performance Analysis

Internal Analysis

• Strengths– Brand name– Cash reserves ($35 billion)– Corporate culture

• Weakness– Lack of infrastructure• Android• Cloud computing

– Inability to socialize search

2004 2005 2006 2007 2008 2009 2010

Sales $3,189,223 $6,138,560 $10,604,917 $16,593,986 $21,795,550 $23,651,000 $29,321,000

Gross Profit $640,192 $2,017,278 $3,549,996 $5,084,400 $6,631,969 $8,312,000 $10,381,000

Gross Margin 20% 33% 33% 31% 30% 35% 35%

General and Administrative $188,151 $386,532 $751,787 $1,279,250 $1,802,639 $1,668,000 $1,962,000

Total long-term liabilities $43,927 $107,472 $128,924 $610,525 $1,226,623 $1,746,000 $1,614,000

Google Internal Financial Analysis

External Analysis

• Threats– Predicting the future correctly– Competition: Yahoo! and Bing– Loss of engineers and managers

• Opportunities– Technology– Personal Advertising

Google Microsoft Apple RIM Nokia

Profit Margin 28.43% 31.76% 22.36% 17.14% 4.26%

Operating Margin 34.35% 40.10% 29.02% 23.30% 5.13%

Return on Assets 12.99% 18.63% 20.88% 25.13% 3.82%

Return on Equity 20.19% 43.96% 38.78% 41.24% 8.80%

Total Debt $ 5.10 B $ 13.16 B 0 0 6.94 B

Current Ratio 4.9 2.76 1.93 2.06 1.65

P/E Ratio 19.73 10.17 16.51 7.59 12.49

Market Capitalization $ 173.21 B $ 215.84 B $ 320.33 B 25.07 B 34.28 B

Total Cash $ 36.68 B $ 48.72 B $ 29.23 B 2.12 B 17.10 B

Operating Cash Flow $ 11.67 B $ 26.66 B $ 26.48 B 4.01 B 5.4 B

External 2010 Financial Analysis

• Retrenchment– Too hot

• Stability– Why?

• Growth– Yes, but how?

Strategic Alternatives

Growth Strategy

• Continue to invest in our future through…– Cloud Computing• Research and Development• Mergers and Acquisitions

– Mobile• Strategic Partnerships

• Invest heavily in cloud computing– Servers & infrastructure around the world to

prevent outages, overloads– Boost division (R&D)– Renewable energy– Security

Cloud Computing First

• Location: Redwood City, CA• Estimated Price: $90 million• Added Value: – Security in the cloud– 2,500+ customers

Cloud Computing: Altor Networks

Cloud Computing: Appirio

• Location: San Mateo, CA• Estimated Price: $70 million• Added Value: – 5,000+ Customers– Employees: Pioneering the field

Cloud Computing

• License Google Cloud to public and private sector

• Sell advertisements through new data collected

• Create better synergies around Google

Future of Mobile

• Google supplies: – Phone, brand name

• Visa, MasterCard, Discover, Amex supply: – Security, engineering, worldwide operations,

brand name– Visa already has PayWave (VPay in Europe)– MasterCard has PayPass Service

Search data and transaction data

Mobile: Strategic Partnerships

• Why?– Dependence– Highly targeted mobile advertising = $– Increase synergy with Google Offers = $• Discounts if you pay w/ Android• Collect data on consumer spending

Mobile: Strategic Partnerships

• Cloud Computing– Users, both private and public sector– Market share

• Mobile – Market share– Increased advertising sales (revenue)

Evaluation and Control

• http://www.google.com/apps/intl/en/business/cloud.html

• http://appirio.force.com/cloudecosystem/• http://www.networkworld.com/supp/2009/

ndc3/051809-cloud-companies-to-watch.html

Sources