Google inc. case study

Zaman University

Business Strategy

MIS 411 Section 1

Instructor: Timothy John Costelloe

Case Study: Google Inc.

Sovanna Suos

01/11/2016

Case study Sovanna suos

Content

I. Introduction

II. Company overview

III. Products and services

IV. Main competitors 2015

V. Profitability and US market share 2013

VI. Market Segmentation

VII. SWOT analysis

VIII. Google innovative corporate culture

IX. Business strategy

a) Early success

b) Google’s way of business expansion

c) 4Es of Google strategy


I. Introduction

Business strategy is a plan which businesses must have in order to achieve its long-term business

planning, and by defining strategic plan clearly, businesses can outperform competitors and

achieve superior profitability. Business strategy gives detail information regarding how to retain

and attract more customers, compete against rivals and position the company in the marketplace.

In addition, it anticipants to unexpected occurrences such as changing economic and market

conditions, and depicts ways to capitalize on attractive chances to growth and achieve the

company’s performance targets.

The present case study will look closely to the current situation analysis of the Google Inc. on the

basis of its segmentation, market share, competitors, SWOT analysis and business strategy.

II. Company overview

Google is the leading internet search engine machine, which accounts for approximately 66

percent of market share of desktop users worldwide and a proportion of 91 among mobile phone

and tablet devices. It was founded in 1998 in the United States. Although Google started with

internet searching service, in the present it owns more than 20 products and services. The most

generated profit service is Adword, an online advertising that specifies to who the advertisements

appear and focuses largely on key words.

”Google’s mission is to organize the world’s information and make it universally accessible and

useful.”

III. Popular products and services

Type of products Product names

Search engine Google Search

Productivity software Google Docs, Gmail

Cloud storage service Google Drive

Online advertising service AdSense, AdWords

Social networking service Google+


IV. Industry identification and main competitors 2015

Industry Competitors

Search engine machine Bing

Yahoo

Baidu

Live

AOL

ASK

Lycos

V. Profitability and US Market Share 2013

Bottom-line, Google main competitors are Yahoo and Microsoft (Bing). Among the three search

engines, Bing recorded a loss of $1.3 billion dollar annually although they cut down operation

loss sharply in the last three quarters. Google and Yahoo experienced net profits of $12,9 billion

dollar and $1, billion dollar respectively.

Looking at the market share of the search engine market, Google remained dominant which was

at the largest proportion of 67.3% in 2013. It is north worthy to mention that Bing took

customers from Yahoo and increased its share to 18.2% in this period. Yahoo reported a decline

of its market share from 11.2 in November to 10.8 % in December 2013.


VI. Segmentation analysis

1. Student: They are young people from the age of 18 – 28 from middle to upper-

middle class families. Their generation familiar very well with technologies and

internet. They use Google products and services for education, entertainment and

communication.

2. Expanding Enterprises: They are all businesses from a big corporation to family

business. They use Google products and services to reduce its operational cost

and to gain more customers in different geographic. They understand about

internet based market trend.

3. The leisurely fad-following families: They are middle-class to upper-middle-class

small families who have office works. Their purposes of using Google products

are for relaxation, entertainment and communication.


VII. SWOT analysis

Strengths

• Market leader in search engine market

• Google provides open source products and services, and they always strive to offer

customers the best quality and has built trust and brand loyalty among global users.

• They now hold the largest market share.

• All of their product are integrated to one another and easily access, even from smart

phone.

• Their leadership and culture of empowerment and innovation play a major strength in

driving the success of this company.

Weaknesses

• Google relies mostly on profit from advertising which is equal to over 90% of its total

revenues. There are only 10% of profits comes from licensing and other revenues in

2014.

• Google does not perform will with the next generation computing platforms

Opportunities

• Android operating system

• Products are complementary to one another

• Google Play and Glasses

• Cloud computing

Threats

• Competition with Facebook, Apple and Samsung

VIII. Google Innovative Corporate Culture

Google respects and values everyone within their company. Google created a unique work

environment that attracts, encourages, and retains the best players in the field. For instance,


people work at Google receive free breakfast, lunch, health and dental, haircuts, gyms and

swimming pools, hybrid car subsidies, nap pods, video games, foosball, ping pong and more . It

was ranked in Fortune magazine as the 4 best companies to work for in 2010. Google believes

that “You can be serious without a suit.” (Google, 2008)

Another interesting fact is that at Google there is a 70/20/10 rule. The rule divides working hour

at Google into three parts. Employees spend 70 percent of their time on their job tasks, 20

percent on related projects, and 10 percent on unrelated new businesses.

IX. Business Strategy

An initial success of Google was from the quality of their search machine. Google gained its

popularity and trust from their simple, clean and fast search machine. Google delivers their

customers only the results that they want to see to make sure the information is useful.

a) What are Google business strategies?

Based on Porter’s model, Google uses differentiation strategy, with intensive growth strategies of

market penetration and product development. Google made their products or services different

from and more attractive than those of their competitors. Google differentiate itself through the

uniqueness of its products. They achieved this uniqueness by being a highly innovative

company. The increasing range of its products such as Google Search, Google Fiber and Google

Glass, is a display of this innovation under the differentiation strategy. The Google Search also

advances over time to guarantee competitive advantage against Yahoo and Microsoft.

b) What is the Google way of business expansion?

Google practiced three ways of expansion: new start-ups, acquisition, and strategic alliances.

Initiatives and startups: There is a rule at Google that all employees can have 20% of their

working time to spend on projects which are not related to their job fields. This practice has

returned them positive results for all years by not only focus on their core competencies well but

higher their employees’ engagement and motivation as well as helping them to keep innovating

and diversifying into new untouched businesses, for example, Google News and Gmail.


Acquisitions: Besides having their own initiatives, Google also purchases new startups which

have potentially advantages to their expansion. Two current well-known web application sites

which were bought by Google are Docs and Youtube.

Alliances: In 2010 there was an arrangement concerning two Google and Yahoo to share

resources to undertake a specific, mutually beneficial projects to deliver exciting new cloud-

based products and services with the android platform.

c) The 4E's of Google Strategy

According to Steve Faktor, CEO of IdeaFaktory innovation incubator and an author of

Econovations, explains Google strategy using an approach he refers to as 4E’s strategy. This

approach can be divided into 4 elements: Earn, Entice, Expand, and Experiment.

Earn: Google makes 95% of its money from advertising. Secondly, it attracts people to use

services that can either deliver ads or collect data to improve targeting. Expand category where

Google pursues to rise internet usage. If you're online more, Google knows it will at the end of

the day benefit. Projects like self-driving cars or Wi-Fi balloons in Africa. Last but not least,

Google lets employees experiment. Some become developed products. (Faktor)


References:

Bulygo, Z. (n.d.). Inside Google’s Culture of Success and Employee Happiness. Retrieved January 11, 2016, from https://blog.kissmetrics.com/googles-culture-of-success/Customer Profile for Google Inc. (n.d.). Retrieved January 11, 2016, from

http://www.slideshare.net/abail019/customer-profile-for-google-inc

Customer Profile for Google Inc. (n.d.). Retrieved January 11, 2016, from

http://www.slideshare.net/abail019/customer-profile-for-google-inc

Faktor, S. (2013, June 28). Google's Strategy Explained. Retrieved January 11, 2016. Retrieved January 11, 2016, https://www.linkedin.com/pulse/20130628195308-4802093-google-s-strategy-explained

Google: Distribution of revenue by source 2014 | Statistic. (n.d.). Retrieved January 11, 2016,

from http://www.statista.com/statistics/266471/distribution-of-googles-revenues-by-source/

THOMPSON, A. (2015, August 20). Google’s Generic Strategy & Intensive Growth Strategies.

Retrieved January 11, 2016, http://panmore.com/google-generic-strategy-intensive-growth-

strategies


Google inc. case study

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