Executive summary
The company has continued to dominate the market for the last five years. It enjoys market share of about 70 percent, though the market is changing bringing about new challenges. The company has also been experiencing a number of problems that it needs to address. These problems include lack of the popular social networking avenues.
Secondly, there is a problem of ‘click fraud’, which continues to threaten the company’s advertisers now, and in future. Thirdly, the company has continued to face competition from social networking services such as face book and twitter. Finally, acquisition plans undertaken by the company has not materialized in the past.
To enable the company increase and maintain its market share now and in future several expansion strategies are necessary. These strategies will also help to deal with the problems that exist at the present. First, the company needs to increase its users by using more and variant languages and providing quality information.
Secondly, the company needs to form alliances with social network providers to meet all the needs of the customers. Thirdly, preventing customers from ‘click fraud’ increases the number of advertisers.
Finally, institutionalized management will ensure continuity of the company’s leadership in future. Adding users and advertisements are quick application strategies while forming alliance and institutionalized management structures are long term and gradual implementation strategies.
Introduction
The Google Company has been doing well since its establishment in 2006. Its revenues and market share have continued to grow over the years. The company has continued to use its strength as a strategy to dominate the market. However, the company has several weaknesses that threaten its future business stability. This report analysis some of the weaknesses that the company is currently facing in its future plans.
Summary
Despite the enormous strengths Google possesses, it has several weaknesses that it needs to address. First, ‘click fraud’ is one of the major challenges that Google faces. This problem can have negative effects to the revenue collected from advertisement in future. Click fraud is not only significant to this company but also affects all the other online advertising companies.
The problem is likely to reduce the number of online advertisers in future since it increases the advertisement charges. Although Google has continuously strived to protect its advertisers from this problem, it has not made considerable advances. As a result, Click fraud has remained an issue to the company.
‘Click fraud’ usually lowers the confidence of the advertisers, which may lead to their termination of the advertisement deals with the company. There is therefore a need for the company to address this problem to prevent future losses of revenue due to loss of advertisers’ confidence with the company and hence terminating their advertisement deals.
Another weakness that the 2009 Annual Report identifies is depended on the few members of the management team (Google Inc., 2009, p.27). The low number of the management puts the success of the company in jeopardy in it happens to lose services of one of these members. Thus, the company needs to look for ways of creating a culture where the success of the company does not lie on the hands of these few individuals but on the collective participation of all the stakeholders.
Thirdly, the company has not been able to raise satisfactory revenue from its latest acquisitions such as You Tube, which has also raised many questions towards the management. The inability of the company to realize the expected benefits from the acquisition is another major challenge facing the Google Company. There are also external threats to the future of the company.
These include increased competition from social network sites such as face book, MySpace, twitter among others. According to Lindsay, Byrd and Pan (2008) there is also competition from other information companies such as yahoo, Amazon and many others (p.131). The Google Company does not offer social network services. However, it may require the company to look for ways to co-work with social network providers in future.
The company also faces antitrust scrutiny claims that it is not abiding to the practices of business competition. As noted by Clemons and Madhani (2010), developing anti-trust policies as required by the law may be necessary (p.43). This will enable the company to reduce accusations from its competitors.
Analysis
Although the above-mentioned challenges face Google Company, it has many strengths and opportunities that the management can utilize to brighten the future of the company. Since the company began in 2006, its share in the market has continued to increase annually due to the quality service provided to its customers. Currently, the company has the highest market share of about 70 percent.
It has continued to meet its mission through organization and making of the world information useful and accessible to all. The company uses the latest technology to make information available on time to all its users in the globe. It has also continued to provide numerous domains where the users can access videos, maps, news headlines, quotes, and many others.
The company has also come up with numerous web applications such as goggle calendar, Gmail, and goggle docs, which enable users to collaborate and communicate. It has also worked with smart phone companies, which have made information more accessible and friendly to the users. The revenue of the company has been growing due to ever-increasing market share of the company.
As more and more customers continue to use its services, the company’s revenue is likely to increase. In 2008, the company reported a profit of $ 4.2 billion, which indicated a significant increase in profit from the previous year. The paper attributes the growth of the company to the strategies applied for last five years.
These strategies include, increasing users, venturing into foreign market, exploring new digital services and maximizing on the advertisement revenue. These four strategies have enabled the company to continue increasing its market share despite competition from the social network sites.
Strategies
Adding users
Adding users has been the main reason for growth of the company. Increased internet accessibility in many parts of the world has greatly enhanced adding users Out of the four strategies applied; adding users presents the highest potential of increasing the company’s market share. Many people in the contemporary world do not use Google for various reasons.
To add the number of users, the company needs to address reasons. One of the reasons cited by most of these people is the level accuracy of the information posted on Google. Although there have been some efforts to enhance accuracy of the information, the company needs to do more to improve the quality of the information provided.
These are possibly achievable by using mechanisms to censor the information before posting it for public access. This will improve the level of confidence on the accuracy of information provided by Google. Consequently, the number of users will increase thus raising the revenue of the company. Language limitation is another reason cited by those who do not access Google.
The company has however expanded into new foreign market since 2010 and currently offers into ten different languages. The company should still consider expanding into more languages to increase the number of the users. Though Google provide services in main global languages, there are many more languages, which have great potential to increase the number of users.
The company may consider expanding its operations in the developing countries such as India, which offers a large potential market. Increased internet accessibility in the developing countries offers a large potential market for the company.
Use of advertisements
Placing advertisements also offers the company a potential market that will help to increase its revenue. This will involve improving target of the advertisement and employing services of other digital services. The company has attained high level of influence in the market. As a result, the company will attract many companies to advertise their products through Google.
Improved internet accessibility in all parts of the globe will make many companies to choose on-line advertisements thus increasing potential market for this company. Improving targeting and accountability power of the information will increase the market share of the company. The use of r digital services such as smart phones, television, and other computing devices offers a major growth strategy for the company.
Improving the amount of information accessible through mobile phones will increase the number of users of the company’s services. Compared to other internet device, mobile phones have more users in all parts of the world.
Forming alliance
One of the main competitors of the Google Company is social network providers such as face book and twitter. Google does not offer services for social networking, which have become popular among the internet users. Thus, it is important for the company to evaluate how it can benefit in future from social networking services as well.
The company can achieve this by introducing forum for social networking in the Google or by forming an alliance with one of the companies that offer these services such as twitter or face book. Though there are many challenges that come with such alliance, if successful it will expand the Google’s market.
‘Click fraud’
Google has faced this challenge for the past few years in it operation. Inability to protect its advertisers from this problem poses a great threat to future advertisement market of the company. The company therefore needs to come up with a strategy of protecting its advertisers as a way of maintaining its customers. This will guarantee the company more revenue in future from advertising.
Institutionalized Management
The company depends on the leadership of the few individuals in the management team for its success. Indeed the Google’s leadership depends on individuals, not on structures. This poses a great and future danger for the company. The company should establish a good succession system to ensure that the exit or retirement of these key individuals does not affect the future operation of the company.
Recommendations
The company has continued to dominate the market for a number of years since its establishment. However, due to challenges in the contemporary business world, the paper makes the following recommendations for the company as it focuses on its future:
- To increase the number of users, the company should venture into foreign markets using different languages.
- The company should ensure high level of accuracy of the information posted in the site to raise the level of confidence of the users.
- Google should form alliances with social network providers to benefit from them as well and increase its market share.
- Come up with ways to protect company’s advertisers from ‘click fraud’ problem.
- The company should increase the number of advertisements to raise its revenue.
- Google should adopt institutionalized management structures to ensure future stability of its leadership
Implementation
The company should to consider all the strategies discussed above according to their priority. The company has all the resources required to implement some of these strategies at the present but some may be gradual and long-term. Presently, the company can implement several strategies.
Adding the number of users in foreign countries, improving accuracy of information, and preventing ‘click fraud’ are some of these strategies. The company can implement forming alliances and institutionalized management gradually or in future.
Conclusion
Although the company owns a large portion of the market share, it needs to put more efforts to maintain that position in future. The company needs to continue increasing its users through provision of quality information and in variety of languages. Preventing its users from ‘click fraud’ is also important. Finally, forming alliance with social network providers will also increase and maintain market share of the company.
References
Clemons, E. K., & Madhani, N. (2010). Regulation of Digital Businesses with Natural Monopolies or Third-Party Payment Business Models: Antitrust Lessons from the Analysis of Google. Journal of Management Information Systems, 27(3), 43-80.
Google Inc. (2009). 2009 Annual Report. Web.
Lindsay, J., Byrd, A., & Pan, P. (2008). U.S. Internet — The end of the beginning. Black Book – U.S. Internet. The end of the beginning, preceding, 1-310.