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Google Inc.’s Business Strategy and Company Analysis Research Paper

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Updated: Sep 5th, 2021

Introduction

The internet is the subject of rapid and relentless change. The search engines like Google are constantly trying to increase their coverage of the web and to improve their functionality. Information professionals, therefore, need to work extremely hard to keep up to date with developments in order to ensure that they are up to speed on which are the best search engines, whether in terms of the extent of their coverage; their functionality; or, in the case of specialist search engines which limit themselves to resources pertinent to their subject specialism, the quality of the sites they list. Google was founded in 1996, and in 11 years become one of the leading search engines and advertising companies in the world.

Product – Service Lines

Google proposes products and services for two main market segments: the general public and businesses. The main categories of products/services are Web applications, solutions for businesses, and advertising networks. Advertising is the main activity of the company bringing $10.492 billion in advertising. Many global companies use the Internet itself the Google search engine to advertise their services or products.

Google uses Content Network, AdSense, and AdWords to advertise other sites. Also, Google generates money from licensing agreements ($112 million). In the second place are search engine services. According to the financial report, Google obtains a 53.6% market share. Google launched such services as Google Video and Google Earth, Google Labs, and Google Space to attract new users. In the third place are applications for businesses. For instance, in 2007, Google introduces the Google Apps program aimed to improve e-mail, API access, and premium support services for business users (Mccullough & Holmberg 20050.

Geographical Distribution

Channel selection has a great bearing on Google’s financial requirements and market capability. Given the total range of services supplied by a channel Google is able to distribute to broader market areas and to expand its production capabilities. Geographically, Google search engine services cover all regions around the world with the Internet assessment. Its advertising services and business applications are more popular in America, Europe, and some Asian countries (China, India, Japan). Notwithstanding, channels are shaped by changing demand configurations and current business structures (Gozzi 2006).

The concentration or diffusion of markets, their geographic spread, and customer wants and needs affect channel decisions. In most situations, however, the choice is neither direct nor simple. Workable rather than optimal choices must be made because of the lack of complete information (Campbell, 997; Horn 2006).

Google Competitor Analysis

The main competitors of Google are Yahoo! and Live Search. Both of these companies obtain a strong market position insuring moderate growth. They maintain a relatively competitive position and market share. Yahoo! has a (19.9%) market share and a Live Search (12.9%) market share. Since there are more competitors, there is a great tendency for market shares to decline. Strong use is made of promotional activities to maintain market position. Yahoo! differentiates itself by proposing such services as a search engine, internet communication services, contents providers, mobile, shopping, Yahoo! Domains, Yahoo! Web Hosting, Yahoo! Merchant Solutions, advertising (Yahoo! Home Page. 2008).

In contrast to Google, marketing services (search advertising) are the main source of revenue for Yahoo!, about 88% of total revenues. For instance, in 2006 Yahoo! received $6 426 million in sales. Similar to Google, Yahoo! advertises and distributes its services around the globe, but it is more popular in America than in other countries. Live Search

Increase competition, the flood of new products, the shortening of the average product life, the complexities of the marketplace, and trends toward diversification and expansion, have all accentuated the need for planning. Live Search is a Microsoft search engine concentrated on search services only (Marks 2005). Live Search differentiates itself from competitors proposing unique search services such as Live Search Academic, Live Search Books, Live Search Celebrity crank, etc. Also, it proposes end consumers Webmaster Services and Live Search mobile. At the end of 2006, its sales brought $462 million. Similar to Google and Yahoo!, Live Search penetrates Europe and Asia, but it is less popular in these countries (Carroll & Buchholz 2000).

R&D Budget

Every year, Google increases its spending on R&D from $91 million in 2003 to $484 million in 2005. “Yahoo spends as heavily on product development and R&D as Google and Microsoft…falling behind in this arms race would spell big trouble” (Innovation: inversely proportional 2005). It spends approximately $384 billion in total. Microsoft spends annually about $7 billion on R&D (Live Search Home Page, 2008).

Google’s Business Strategy

To compete in the international market Google uses a mixed strategy that combines elements of market assessment and sourcing efficiency reason. This strategy is based on the goals and objectives of Google especially because it operates with multiple goals in mind. However, one goal will most likely be primary, while the others will be secondary and set up so-called boundary conditions. For Google sourcing efficiency reasons is a primary goal while a market assessment is a secondary task that has been recently developed (Horn 2007). These goals help Google to gain a sustainable position on the market and compete with numerous competitors.

Sites change, and what was a good site a few months ago may no longer have the very things on it that made it so good previously. Google uses a mergers and acquisition strategy to enter Asian and east European markets, Africa and South America. Also, Google “competes against existing companies with traditional services” (What is Google’s s business strategy 2007). Google sustains and improves its strong brand image as a market leader. This strategy allows the company to attract online and offline customers. “From Google’s lastest move to acquire a radio advertising agency dMarc Broadcasting Inc., Google is approaching other meida as well” (What is Google’ s business strategy 2007).

To sustain strong market position, Google has to develop an aggressive marketing campaign in order to attract new customers and deliver customer satisfaction gaining customers loyalty. Using differentiation strategy Google achieves unique product attributes and effective marketing communications. Product differentiation and brand loyalty are the main criteria for this strategic alternative.

The benefit of this alternative is brand loyalty that helps to increase the costs for customers of switching the products of new competitors. Recognition of the significant link between customer retention and profitability will lead to new and better strategies for strengthening customer satisfaction. The cost of this alternative is high, because it will need to double advertising budget in order to create a strong image of the Brita brand in consumers’ minds adding psychological value to the brand (Nakhomovsky & Myers 2003; Smith 2007).

Organization of Life Cycle

For different products, the length of the cycle, the duration of each phase, and the exact shape of the curve vary. For instance, for advertising products life cycle has the following structure: development of the idea, introduction of new service, growth (for instance partnership agreements with AOL), and maturity. Each stage is based on the following: product, price, distribution, and promotion. For instance, Google Video is at the ‘growth’ stage. Google establishes low prices in order to attract users and potential advertisers. This service is distributed through the Google website and promoted on the Internet. Products now seem to mature more rapidly, and their life cycles are getting shorter.

This means that product lines will have to be audited more carefully and strategies directed to capitalize on the life-cycle situation. the life cycle of products dictates changes, and products in developmental phases must have sufficient market capability to overcome the loss of those in stages of decline. Multiproduct firms such as Google must have a mix that is growing in total potential and profits. Although product change is rapid and inevitable, products must solve problems for sellers long enough to justify the risks of research, development, and commercialization.

Control Strategy

From a corporate standpoint, control exists within the corporate system by bringing the marketing factors into balance with those of other functional areas, such as production and finance. Google follows a market control strategy which helps the company to control market position and sales. This strategy allows the company to concentrate on its changing external environment through factors in the marketing mix. A total marketing control system has two major components: a monitoring process and an adjustment process (Robbins, 2002). Monitoring results from the generation of marketing intelligence and the use of criteria of marketing performance.

It attempts to check, evaluate, and ascertain whether performance quality is within proper limits. It is designed to search for symptoms that indicate that marketing operations must be directed, realigned, or rebuilt. Information, particularly feedback, is a significant part of any marketing-control system, for the quality and quantity of knowledge available are fundamental to control performance. Feedback presents a way of shaping marketing by taking into account the results of past performance and learning from it the actions to take in the future.

Change Management

Product/service type of change is used by Google to attract a wide target audience and remain competitive. In recent years, the company introduces such services as Goggle Video and Google Earth which attract millions of users around the world. Google offers the right goods at the right time, at the right price, in the right quantities, in the right place. For Google, referring to the process of evolving new products, it is closely associated with market development.

It focuses on the future product line, on products that should be added or deleted, on the impact of products on price, promotion, warranty, and service, and on the development of criteria to evaluate product performance. By assessing new or modified products/services that can be added by acquisition and internal development, product development becomes the lifeblood of a business. Product development combines the scientist’s function of analyzing, classifying, and organizing information into commercially feasible new products, and the marketer’s function of assessing unsatisfied wants and needs and identifying profitable market opportunities.

Growth Objectives

Corporate growth and survival require that the management of change is the first order of business. Marketing managers accept the task of developing and implementing strategies that will overcome resistance to change. It is possible to say that historical sales and growth, guarantee that Google will meet its growth objectives. Also, as this occurs, innovation, research, and development become more integral parts of the marketing function. Internal balance is achieved by the coordination of all marketing activity and its integration with the other areas of the business.

External balance is concerned with the continuous adjustment of a company to its market environments through changes in product, price, package, channels, advertising, and selling (Fill, 1999). In this sense, marketing forces are viewed as shaping the total organization and all the business functions. The marketing philosophy is the natural reaction of management in attempting to meet the needs of a keenly competitive, constantly changing environment. It is designed to direct the entire business to serve those customer wants and needs that are in line with the objectives of the corporation (Crawford 2003).

Departmentalization

R&D, advertising, and marketing departments are organic while financial departments are mechanics. Managers must set objectives for the marketing departments that are in line with overall corporate objectives. They must instill in executives of other functional areas the acceptance of the philosophy for total operation and must manage the marketing sector so that tasks are achieved efficiently. Flexibility is crucial for the R&D and advertising departments. Requiring different forms of organization, Google makes widespread use of committees in product development, pricing, sales forecasting, and marketing planning. In fact, top marketing-management executives will tend to be more involved in committees than those in lower positions of authority (Google Home Page, 2008).

Recommendations

Google should reconsider and improve its understructure. Implementation of the marketing-management concept has resulted in more operationally structured organizations. In understructure situations, strategies are chosen and standards are set by various managers to achieve what they feel is important and to evaluate effectiveness. Overstructured situations are highly organized and formalized but still result in conflict and confusion. For example, conflicting directives may be given from one source to increase sales, from another to reduce advertising, and from a third to limit style changes (Wells et al 2005; Robbins, 2002). This change is important for Google because it will help to improve its market position and reduce operational costs.

Bibliography

Campbell, D.J. 1997, Organizations and the Business Environment. Oxford: Butterworth-Heinemann.

Carroll, A. and Buchholz, A. 2000, Business and Society: Ethics and Stakeholder Management 4th ed. Cincinnati, OH: South-Western Publishing Co.

Crawford C. Merle. 2003, New Products Management. Irwin-McGraw Hill. 7th edn.

Horn, von R. The Earth on the Web. Phi Delta Kappan, vol. 87, p. 408.

Horn, van R. 2007, Web Applications and Google. Phi Delta Kappan, vol. 88, pp. 727-728.

Fill, C. 1999, Marketing Communication: Contexts, Contents, and Strategies 2 eds. Upper Saddle River, NJ: Prentice Hall.

Form 10-Q for MICROSOFT CORP. 2006. Web.

Gozzi, R. Google. 2006, ETC.: A Review of General Semantics, vol. 63, pp. 444-445.

Google Home Page. 2008. Web.

Innovation: inversely proportional to size of budget. Web.

Live Search Home Page. 2008. Web.

Marks, R. E. 2005, A New Tool for Scholars. Australian Journal of Management, vol. 30, p. i.

Mccullough, M., Holmberg, M. 2005, Using the Google Search Engine to Detect Word-for-Word Plagiarism in Master’s Theses: A Preliminary Study. College Student Journal, 39, pp. 435.

Nakhomovsky, A., Myers, T. 2003, Google, Amazon, and Beyond: Creating and Consuming Web Services. Apress; 1 edition.

Robbins, S. 2002, Organizational Behavior. Pearson Higher.

Smith, Ch. 2007, Markets as Definitional Practices. Canadian Journal of Sociology, vol. 32, p. 1.

What is Google’ s business strategy? 2007. Web.

Wells, W.P., Mariarty, S., Burnett, J. 2005, Advertising: Principles and Practice. Prentice Hall; 7 edn.

Yahoo! Home Page. 2008. Web.

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